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Direct Student Loans

If you’re planning to start college soon, then also work on the financial aid chapter. In this endeavor, the most instrumental document for submission is the Free Application for Federal Student Aid (FAFSA). The federal government analyzes your FAFSA and decides your financial need on the basis of which you’re awarded grants, direct student loans, and employment.

About Direct Student Loans:

Direct student loans are loans offered by the Department of Education that can be borrowed by students like you to fund your college expenses. There are basically three types:

  • Stafford Loan
  • PLUS Loan
  • Consolidated Loan

Stafford Direct Student Loans:

Stafford loans are unarguably the most popular student loans as they can also be borrowed by students who don’t display a financial need in their FAFSA. However, if you fall among such students, then you’ll get the unsubsidized version of the direct student loans on which the interest is charged while you’re in college. For needy students, the government pays the interest on their loan during their college education and grace period; this is the subsidized version of the direct student loans. Other significant features of the Stafford direct student loans are as follows:

  • The interest rate is fixed on both types: subsidized loan has 3.4% interest rate whereas unsubsidized loan has 6.8% interest rate.
  • The grace period is six months for you to start arranging for funds by looking for a job.
  • Loan can be repaid in 10-25 years.
  • Unlike private student loans, Stafford direct student loans don’t require a credit history check or cosigner.

PLUS Direct Student Loans:

If you’re a dependent student, then your parents can borrow a PLUS loan on your behalf. This type of direct student loans requires a credit history check. If you’re a graduate student, then you can also borrow a PLUS loan; however, you should have a clean credit history or you should arrange for an endorser.

Consolidated Direct Student Loans:

At the end of the day, you may have multiple loan debts on your shoulders. This may be quite confusing after graduation, so you’ve the option of consolidating all your direct student loans into one loan. The result is a single payment per month for your federal loans, which makes life quite uncomplicated.