Direct Loan program is a Federal plan that provides student loans. Under this program, low interest loans are provided to students and parents in order to help them pay for education beyond high school.
These loans are issued directly by The U.S. Department of Education
The U.S. Department of Education issues these student loans directly, without involving any banks. As you will be borrowing directly from the federal government, you will be able to administer everything regarding your loans using the Direct Loan Servicing Center. This will be much easier for you, especially if you have multiple loans from different schools.
Many types of student loans fall under the Direct Loan Program
The Direct Loan Program has many different kinds of loans that come under it. These different loan programs have some important differences that you should know about, and their interest charges.
Subsidized Loan
Students who have a financial need, which is determined by federal regulations, are eligible for the subsidized loan. This type of loan has no interest charges while the student is in school at least half time. It does not charge any interest during the six month grace period following the completion or termination of classes, nor any deferment periods.
The Unsubsidized Student Loan
The unsubsidized student loan does not depend on financial need, and the interest will be charged as soon as the money is distributed. This means that although you will not have to pay on the loan while in school, you will be charged interest during this period. Interest will also be charged during the six month grace period and any deferment periods.
The Plus loan
The Plus loan is a type of an unsubsidized loan which is given to the parent of the student in order to help cover any educational costs, that are not covered by any other financial assistance. Interest is charged during all periods for this type of loan.
Consolidation Loan
A Consolidation loan is also available that combines any eligible federal student loans into one Direct Consolidation Loan. This can lead to lower monthly payments as the loan is spread out over a longer term. Although the monthly payment will be lower, more interest will be charged as the term will be longer.
You can apply for Direct Loans by filling out the Federal Student Aid application online. The information in the application will be transmitted to the school that you will list in the applications and it will be used to determine all financial aid that might be available to the student.
