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Direct Loan Schools (About the Direct Loan)
The Department of Education offers a number of loan programs to students who need to supplement their gift aid for higher education. The Direct loan program is offered as an inexpensive loan program to help finance your college education. These loans are issued to Direct loan schools from the government to the student, hence the name. There are a variety of loans offered by Direct loan schools and they sometimes vary according to which loans the school itself is willing to handle. There are a few major types of loans that are almost universally offered. They are:
- Stafford loans – these loans are offered to students to supplement their federal gift aid in an attempt to cover the full expense of a college education. These loans can be subsidized or unsubsidized and have specific amounts offered to students depending on academic level, grades and financial need. Direct loan schools that handle Stafford loans encompass nearly every public college or university and many private ones as well.
- PLUS loans – these loans are offered to parents of the students (undergraduate or graduate) to help cover the entire cost of school. Since they are issued to the parents, the loans enter repayment almost immediately and can be consolidated.
Applying for Direct Loans
To apply for these loan programs you have to first make sure that you are attending any of the Direct loan schools. Then you need to submit a FAFSA and indicate that you are interested in receiving a loan from the Direct loan program. When you receive your award letter, the amount of the Direct loan offered will be indicated. To accept the loan you have to sign a promissory note with your financial aid office on campus.
Repaying Direct Loans
Direct loan schools can usually give you a rundown of what happens in repayment for your loans. There are generally four repayment plans offered (standard, extended, graduated and income based) so you can choose the one that best suits your payment style, income options and desire. The way you pay can also be changed each year if you would like to test each style to pick the one you like best. The repayment period begins six to nine months after you graduate, drop below half time enrollment or drop out altogether. Since you are legally bound to repay the loan, you should make sure you make on time payments each month to keep your credit in good standing and avoid serious financial trouble. |
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