Direct Loan

A Direct Loan is a type of student loan that is available through the federal government’s Direct Loan Program and is available to students pursuing a post-secondary education.  Direct Loans are administered by the Department of Education and are made available through the Direct loan Program. 

The Direct Loan is part of the William D Ford Federal Direct Loan Program, which was established in 1993. The Direct Loan Program was created to allow federal government agencies to ability to lend students financial aid directly.  Prior to this program, only banks were allowed to lend money to students wanting financial aid.  By establishing a direct lending practice, the government had more control over the lending practicing and procedures, which lowered administration and lending costs.  These lower costs ultimately led to lower direct loan interest rates and more favorable repayment options that many private banks are not able to offer.  
The Direct Loan consists of the Stafford Loan, which is mainly for undergraduate students attending a post-secondary institution, as well as the Plus loan, which is mainly for graduate students and parents.  There are two types of Plus loans available, which include the Parent Plus Loan and the Graduate Plus Loan.

The Stafford Loan is mainly for undergraduate students attending an approved post-secondary institution.  The Plus loan is for graduate students and parents of undergraduate students looking for additional financial aid to pay for their education.  Students for both the Stafford and Plus student loan must attend a Title IV institution, which meets all federal government education requirements.

Your school’s financial aid office will administered all Direct Loan Payments for the current semester.  Most financial aid offices will take the cost of tuition and any other school fees out before making the final distribution to the student.  Any remaining funds will be distributed within the first few weeks of the new school semester.  Most financial aid offices will either send you a check for all the remaining student loan funds or will complete a direct deposit into your banking account.

Direct loans do not have to be repaid until the student has graduated or is no longer attending school.  Students that have a Direct Loan will have a six month grace period from the date they’ve graduated to start repaying their loan.  There are also Direct Loan Deferment, Forgiveness and Forbearance options available for students that are unable to repay their student loans.   

Once a student completes their program and starts the repayment process, all payments will be made directly to the Department of Education.  The direct loan program offers many favorable repayment options based on financial status.  They also offer interest rate reductions if you participate in certain repayment programs.

In order to be eligible for a direct loan, you must complete the FAFSA or Free Application for Federal Student Aid.  This application takes into consideration your current financial status and cost of attendance to determine how much you are expected to contribute to your education. 
 


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