Choosing the Right Direct Loan Program

There are three different kinds of direct loan programs available from the U.S. Department of Education. Choosing which one is right for you depends on your financial, family and educational status.

Direct Student Loan

A direct student loan, also known as a direct Stafford loan, is made to the student. Since most undergraduates are quite young and don't have much financial history and little or no credit, there is no credit check to pass. These loans are available subsidized or unsubsidized. The maximum amount you can borrow depends on several factors; see this page for more information.

PLUS Loan for Parents

The direct PLUS loan is made to the parents of the student. This means that the burden of repayment is on them. There is a credit check. The yearly limit of a PLUS Parent loan is equal to the cost of attendance at school minus the amount of other financial aid the student is receiving. The interest rate is currently fixed at 5.01%.

PLUS Loan for Graduate and Professional Degree Students

The terms of this loan are the same as the Parent PLUS loan, except that it is made to the student.

Features in Common

Any federal direct loan program is disbursed in at least two payments over the course of the academic year. The repayment period begins when the student graduates, leaves school or drops to less than half-time status. For more information on the similarities and differences between direct loans, see the government's student aid Web site.

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