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Direct Lending Student Loans

December 14, 2011

Direct Lending Student Loans

Direct lending student loans are any loans that come from the William D. Ford Federal Direct Loan Program, which are set up for the purpose of providing both parents as well as students with loans that have low interest rates, compared to other lenders, especially private. The source that is acutally doing the lending of direct student loans is the US Department of Education themselves. The direct loans that are made available through the Federal Direct Student Loan Program (FDSLP) consist of:

  1. PLUS Loans – These are the loans that are designated for applicants to be either the parent or gaurdian, or in some cases the step parent or a dependable student. Direct lending student loans from the PLUS Loans program consist of borrowers paying fixed 7.9 percent interest rates with benefits that include; no early repayment penalties, interest rate discounts when enrolling in automatic debit as well as you can borrow up to the amount which you need to pay for the students education.
  2. Undergraduate Subsidized Student Loans – These are made available for undergraduate students with fixed interest rates that stand at 3.4 percent, which subsidized loans are for those who have the most financial need. These come in the form of Stafford Loans.
  3. Graduate Subsidized Student Loans – Made available specifically for graduate students, which they pay a fixed interest rate of 6.8 percent. Graduate direct lending student loans also come as Stafford Loans.
  4. Direct Unsubsidized Loans – Which these are for every applicant to apply for and has a fixed interest rate which is at 6.8 percent as well.

(Fixed interest rates are rates that will never go up or down, stay the same, throughout the life of your repayment term.)

Direct Lending Student Loans

Direct lending loans for students allow their eligible applicants to not have to pay any payments on their loan debt until after they graduate, under the circumstances that they enroll in a class schedule that is half time, which is at least 6 credits per semester.

Direct Lending Student Loans Repayment

When it comes to the repayment of direct lending student loans, the terms are the same for most all other federal loan programs, which include:

  • Standard Repayment – Repayment lasts up to 10 years which the minimum payment must exceed $50.
  • Extended Repayment – This options allow one to be able to pay their loans off over 25 years, but they must have at least $30,000 in student loan debt.
  • Graduated Repayment – This direct lending student loan option starts your payments out on the low end, and gradually go up over time, usually increasing every year or two.
  • Income Based Repayment – This program is designated to assist those who are going through a “partial financial hardship”.
  • Income Contigent Repayment – This repayment option has payments that are set up to be 20 percent of what you make each month. This options is only made available for subsidized direct lending student loans.

If you are interested in applying for direct lending student loans, all you have to do is fill out a Free Application for Federal Student Aid (FAFSA), which then your school will have the ultimate say in the amount of money you will be eligible for.