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Federal Direct Student Loans - A Helping Hand From Government
Direct student loans are federal government loans provided through the William D. Ford Federal Direct Loan Program. These types of loans are designed to help students who have graduated from the high school and are continuing their education in colleges, universities or trade schools.

Direct student loans are part of the federal student aid programs administered by the US Department of Education. These loans are not offered through private lenders or companies. The loan agreement is between the student and the US Department of Education, without any agencies as a middle man.

Students that want to apply for direct student loans must complete a Free Application for Federal Student Aid (or FAFSA) over the internet and submit all required information and documentation. In addition each student will also have to complete a Master Promissory Note (or MPN). MPN is a legal document that explains the contract between the student and the Department of Education. It also outlines how the loan will be repaid and the specific terms and conditions of the loans.

After awarded with one of the direct student loans, you should sign up and use the Service Center. It provides you all the information of your payments and allows you to view the records on the balance you owe. If you need one, you can also obtain a counselor service from a Direct Loan Servicing site.

To be eligible for direct student loans, a student needs to attend the school that is participating in the direct loan program. Also, the student must be enrolling for at least on a part-time basis.

Types of Direct Student Loans

The two most common direct student loans are: (i) subsidized Stafford loan and (ii) unsubsidized Stafford loan. The subsidized loan has an interest subsidy and paid by the Government. Students who are awarded don't need to worry about paying interest and hence can concentrate on his or her study in full.

Not all students will receive subsidized direct loans (Stafford loan). Only those students with very few resources and with greater financial needs are qualified for subsidized loans. Students who are dependent, or have parents that are able to help pay for their schooling are usually given the unsubsidized direct loan which doesn't have an interest subsidy.

For graduate students who are considered independent or have families of their own to support, or no living parents to assist with educational funding can apply for PLUS loans. PLUS loans are low interest loans for graduate students and parents. These loans are under the same criteria as the Stafford loans, you're required to complete and submit FAFSA and a MPN. Typically direct student loans have a limit on the total amount. Most students manage to get by with loans of $8,000.

Direct student loans have a fixed interest rate that is set every July 1st. There is also a loan fee that can be up to 4%. This fee is usually used to offset the cost of the programs or services.


Article Title : Federal Direct Student Loans - A Helping Hand From Government
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Education is one of the most basic right of any human, but with the increase in prices and the costs involved in education this has made these rights turn into a privilege which very few can enjoy. Any normal person today in the whole of United States has to take an education loan at one point of time to pay for their education fees.

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Schools Will No Longer Receive Paper FAFSA Forms
(September 20, 2007)

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