Direct Loans The William D Ford Federal Direct Loan Program

Since the 1940s the U.S. federal government has been designing ways to help students pay for college. More recent legislation passed in 1993 included the William D Ford Federal Direct Student Loans program. This important education act improved the delivery of loans to students in need of financial assistance. As the name “Direct Loan” implies, students can now borrow directly through participating schools. The schools in turn request the funds from the U.S. Department of Education. In other words, the lender on record is the U.S. Department of Education instead of a bank or financial institution.

Warning, the Direct Loan program is not a “fee free” program! Just because the U.S. Department of Education passed the legislation doesn't mean they too don't require processing fees. In addition to paying interest, a fee of up to 4% can be deducted before you receive any loan money.

Types of Direct Loans for Students

The William D Ford Federal Direct Student Loans program currently originates four student loan types: Subsidized Stafford Loans, Unsubsidized Stafford Loans, PLUS Loans, and Student Loan Consolidation. To learn more about each student loan type, please visit their respective web pages after you have finished reading this page. The loan specific web pages discuss eligibility requirements, maximum loan amounts, current student loan interest rates, and student loan repayment options.

Benefits of Using the Direct Loan Program

All student loan servicing centers must strive to keep interest rates low, and to make the overall process of receiving and paying back the loans as painless as possible. For those schools whom participate in the Direct Loan program, additional benefits may be realized.

  • Single point of contact through the Direct Loan Servicing Center, regardless if you have multiple student loans, student loans from different schools, or wish to later consolidate your student loans.
  • Account access is available online, so you can review your account details at any time.
  • Several repayment plans exist and some switching of repayment plans is allowed. This can be beneficial to you as your career advances and your income grows.

Where and How to Apply

As we mentioned previously, the Direct Loan student program is administered by schools that participate in the Direct Loan program. A simple call to the Financial Aid Office of your college of choice is the recommended method for those in need. For students entering or continuing their education, a bare minimum requirement of being enrolled at least half-time exists among others. Since the eligibility requirements, funding amounts, and student loan maximums vary by student loan type, please visit our Subsidized Stafford Loans, Unsubsidized Stafford Loans, PLUS Loans, and Student Loan Consolidation web pages for more details.

Before You Apply Check Your Credit Report

Obtain a free credit score from all 3 bureaus before you apply for student or parent education loans. The link provided allows online access to your credit reports from all three reporting agencies: TransUnion, Equifax, and Experian. Knowing your credit score and being aware of any credit issues is important when applying for student and parent college loans. Your interest rate depends upon your credit score if you wish to use alternative methods to finance your education.

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