Direct Student Loans

The Direct Student Loan Program is one of the Federal Student Aid (FSA) programs offered by the Department of Education, and it provides students with a simple, low-priced way to borrow money to pay for education after high school.

The Federal Student Aid Programs are the largest source of college financial assistance, each year providing billions of dollars in funding through a variety of methods:

1. As gift aid in the form of grants (money that does not have to be repaid).
2. As self-help aid in the form of work study (job earnings).
3. As loans (money that must be paid back at interest).

The Federal Student Aids are:

• Pell grants
• PLUS loans for parents and graduate/professional students (also available through the DL or FFEL programs)
• Consolidation loans (DL or FFEL)
• Federal Work Study (FWS)
• Perkins loans
• Federal Supplemental Educational Opportunity Grants (FSEOG)

How to apply for a direct loan:

1. Students must complete one application, the Free Application for Federal Student Aid (FAFSA). (The online version of the application is mostly preferred because of its advantages.)
2. The student’s prospective school will draft an aid package, which might include a Direct Loan. If the student decides to accept the loan, he or she must sign a loan agreement called a master promissory note (MPN), which, depending on the school, the student might be able to complete electronically. The financial aid office of the school can say how much a student can borrow.
3. Direct Loans are not sold. Since borrowing is directly through the federal government, borrowers make loan payments to the Department of Education for the life of their loans. It’s “one-stop-shopping” from loan application through repayment.
4. Borrowers have flexible repayment options. There are four repayment plans in the Direct Loan Program: standard, extended, graduated, and income contingent. Students can change options when they need to without a fee at any time during the life of the loan.

 Loading ...