December 11, 2017

How To Get Direct Student Loans

There are two primary sources of funding for federally funded direct student loans. One is the Federal Direct Loan program and the other is through the Federal Family Education Loan program. The direct loan program is run by the U. S. Department Of Education whereas the other program is serviced by individual lenders.

Direct Student Loans

Both programs include Stafford loans, PLUS loans, and Federal consolidation loans. Some colleges and universities participate in one program whereas others will utilize services provided by the other. More colleges today, however, are using both sources of funding as the need to find alternatives for covering the every-growing costs of higher education continues.

With the Direct Student Loan program one works directly with the Federal government’s office that administrators that program. This U. S. Government managed and operated loan program has flexible repayment terms and can accommodate many needs. Stafford loans, PLUS loans, and consolidation loans are all included. The account is managed online and has fixed loan fees and interest rates.

To qualify for this type of loan students must be U. S. Citizens, eligible non-citizens, or residents. These loans are primarily designed for students in lower socioeconomic income brackets who have never defaulted on a loan before. Therefore, it’s important to check in advance what the income eligibility criteria of the direct loan service as well as the school are as each will have their own scale.

Applying for these loans is fairly easy nowadays with the addition of online services. One must have completed the FAFSA and filed it at the earliest date possible. High school counselors as well as college financial aid officers are more than happy to assist in the completion of documentation required to qualify for this program. They will also inform students of the supporting evidence required that will need to be submitted in order to complete the process.

Once accepted to a college or university award letters will be issued. These will include an itemized list of the types of financial aid available to an individual. The direct Stafford loans or PLUS loans require completion of a Master Promissory note as well. This is a legal contract between the Department Of Education and the student. The Department Of Education serves as the lender and they will be the one to whom they debt is repaid.

As with most student loans, that direct loan comes with a six-month grace period after graduation. There are four repayment plans from which to choose. With a standard plan there are fixed monthly payments over a 10 year period. An extended plan is designed for those with $30,000 or more of debt. Repayment is established with fixed or graduated amounts over a 25 year period. With a graduated repayment plan payments are made within a 10 year period, but the payments increase over the life of the loan. Finally, and income-contingent loan is reconfigured annually based on income. As an individual’s income increases, so does this size of the payment.

Many students opt to consolidate their loans once they graduate in order to make repayment more manageable. The newest option available is the Income-Based Repayment plan. This has many advantages that will help to ensure individuals are only paying as much as they can afford based on the income earned. Direct student loans have helped many complete their educational goals as well as survive the transition from graduate to career professional. The best place to begin, however, is with research into the options available.

Additional resource links: http://www.direct.ed.gov/student.html

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