Direct Loans Explained

Direct loans are federal student loans provided to students and parents through the William D. Ford Federal Direct Loan program. Once approved, Direct loans are disbursed by the student's financial aid department.

Types of Direct Loans

Before you can apply for a Direct loan, you must fill out a Free Application for Federal Student Aid (FAFSA). The U.S. Department of Education will review your application information to determine whether you qualify for a subsidized or unsubsidized student loan. Subsidized Direct loans are need-based, and you are not responsible for paying interest on such a loan while you are enrolled in school or during deferment. Unsubsidized loans are not need-based, and interest accrues from the day you receive the funds.

If you are the parent of a college student, you may qualify for a Direct PLUS loan. These loans are unsubsidized federal loans to help parents finance their children's educations.

Repaying Direct Loans

When you graduate from college or drop below the federal attendance requirements, a six-month grace period will begin during which you do not have to repay your student loans. Once the grace period expires, you must repay your Direct loan in monthly installments. Should you suffer from a financial hardship or re-enroll in school, notify the Direct loan servicing center to obtain a deferment. Direct PLUS loans do not carry a grace period.

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