Direct Loan: Parents Can Get Them Too

A Direct Loan for parents is a federal student loan made in the name of the parents of the student rather than the student herself. In order to qualify, parents must have a dependent child enrolled in a recognized college, university or program. This type of loan is also available to students in graduate or professional programs. A Direct Loan parent lending instrument is not subsidized. Obtaining this type of loan involves a multistep process.

Step 1 - Gain Acceptance to a Recognized School

In order to qualify for a Direct Loan parent lending vehicle, the dependent student must be enrolled in a recognized educational institution. Entrance requirements will vary.

Step 2 - Fill Out Qualifying Paperwork

To obtain Direct Loan parent funding, a loan application must be filled out with the lending agency. Generally, parents must fill out the Free Application for Federal Student Aid (FAFSA). This type of loan is available regardless of the demonstrated financial need, but parents will need to be certain that:
Their dependent child is a U.S. citizen or eligible noncitizen;
That the child is under age 24, unmarried and has no dependents;
That requested amounts do not exceed anticipated educational needs;
That credit history is sufficient.

Step 3 - The Direct Loan Funding Payout

Once Direct Loan parent funding is approved, students must register for classes to receive the disbursement. Educational institutions generally use anticipated loan proceeds to cover tuition, books and some fees. The remainder of the money, if any, is issued in check for to the student or parent.


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