Direct Loans for Students


Direct Loans provided by the Department of Educations is a Federal Student Aid, (also referred to as FSA) program. Applying for Direct Loans is a simple process. To apply for a Direct Loan students only need to complete one application, the FAFSA (Free Application for Federal Student Aid). As a student you do not to submit an additional application to a bank.

Unlike the FFLEP, (also referred to as Federal Family Education Loan Program) the U.S. Government makes loans to student and parents through their school under the Direct Loan Program.

The types of loans that exist are: Direct Stafford Loans, both subsidized and unsubsidized.

  • Subsidized- the government will pay your interest while you are in school.
  • Unsubsidized- you are responsible for paying all interest that accrues.

Direct Stafford Loans Subsidized is awarded based on your financial needs. This is determined by the information you submitted on your FAFSA.

If you qualify for a subsidized loan, you will not have to pay your interest or principal balance of the loan while you are attending school or during your periods of deferment. The government will pay the interest of the loan during these times.

Unlike the Direct Stafford Loans Subsidized, the Direct Stafford Loans Unsubsidized is not based on financial need. Nor will the government cover any interest accrued for the loan. You will be obligated to make all payments on the loan. You may decide to postpone payments until and allow the interest to accumulate. At this point, your balance will be added to your principle amount. Your repay balance, of course, will be more.

It is recommended to pay the interest as it accumulates. In order to qualify as a borrower, you must be dependent and an undergraduate student.

Other criteria’s may apply. To find out more, consult your schools Financial Aid Advisor. You may borrow up to:

  • $2625.00 as a first year student and attend to be enrolled in college for the complete academic year.
  • $3,500 if you’ve completed your first year and you’re enrolled for a full academic year.
  • $5,500 a year if you’ve completed two years of study, and the remainder of your program is at least a full academic year.

If you are an independent undergraduate student or dependent student whose parents are unable to get a PLUS Loan, you may borrow up to:

  • $6,625 as a first year student and enrolled in a program that is the minimum of a full academic year. (A minimum of $4,000 of this amount must be in unsubsidized loans.)
  • $7,500 if you’ve completed your first year of study, and the remainder of your program is at least a full academic year. (A minimum of $4,000 of this amount must be in unsubsidized loans.)
  • $10,500 a year if you’ve completed two years of study, and the remainder of your program is at least a full academic year. (A minimum of $5,000 of this amount must be in unsubsidized loans.)

However, if you are a graduate student, you can borrow a maximum $18,500 each academic year.

The total amount of debt you can have outstanding from all Direct Loans and FFELP Loans combined is:

  • $23,000 as a dependent undergraduate student
  • $46,000 as an independent undergraduate student
  • $138,500 as a graduate or professional student

Loan Repayment
As a student you will be pleased with easy and flexible repayment options. There are four repayment options associated with Direct Loans plan, which are:

  • Standard Repayment Plan- allows you to make a fixed payment each month; of at the least $50.00, over a ten year period.
  • Extended Repayment Plan- allows you to extend your payment plan over 12-30 year period, depending on your loan amount.
  • Graduated Repayment Plan- begins with lower payment requirements and increases every two year, over a period of 12-30 years.
  • Income Contingent- allows your monthly payments to be based on your annual income and the amount of your loan.

All Direct Loans have variable interest rates, which change every year; however, never to exceed 8.25 percent, through the life of the loan.

The convenience of the above payment option is that the students have the capability of changing plans when needed without suffering penalties or fee’s during the life time of the loan.

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