Direct Student Loans

Direct student loans are designed to help students and their parents pay for continuing education after high school. Funds from a direct student loan may be used for school tuition, books, supplies, housing, transportation, computer purchase or any expense related to gaining a higher education. Funded by the United States Department of Education, participating colleges, universities and career schools disburse the funds to the student.

Below are 5 facts you may not know about direct student loans:

1) Payments are deferred as long as the student attends school half-time or more.

2) The interest rates are generally lower then private loans.

3) To apply for a direct student loan, fill out the Free Application for Federal Student Aid (FAFSA), available online or at your school’s financial aid office.

4) Several repayment plans are available and the repayment plan may be changed if necessary.

5) The direct student loans program offers 4 types of loans:

* Subsidized – Developed for students with a demonstrated financial need. To qualify, the student must meet strict federal guidelines. Interest is not charged on subsidized direct student loans while the student is in school, during deferments or grace periods.

* Unsubsidized – Unsubsidized loans are not based on financial need. Interest is charged even while the student attends school.

* PLUS – Unsubsidized loans are for the parents of dependent students and for graduate/professional students. Applicants must not have an adverse credit history. Interest is charged even when the student is in school.

* Consolidation – An option to combine eligible federal student loans into one Direct Consolidation Loan.

You will be notified of loan approval by your school, usually in an award letter, which lists all forms of financial aid for which you are eligible. Remember that direct student loans and the ensuing interest must be paid back eventually, so read the loan offer carefully. You are not obligated to accept the loan or the amount offered. You may ask for a lesser amount if you find your needs have changed.

With low interest, deferred repayment and easy payment plans, direct student loans provide a wonderful opportunity for students to continue their education after graduating from high school.