Federal Direct Loans!As a result of Federal legislation, Federal student loans will now be made through the U.S. Department of Education through the Direct Loan Program. The following types of loans are available:
You must fill out a FAFSA form to be considered for a Federal Direct Loan. Once the FAFSA has been processed, the school will inform you of your eligibility. If you are to receive a loan, you will have to sign a promissory note that will spell out the terms and conditions of the loan.
Maximum Loan AmountsThe maximum loan amount depends on your year of study and whether you are a dependent student. For dependent students:
For independent students or dependent students whose parents applied for, but were not able to get a PLUS loan:
What is the interest rate?Both Subsidized and unsubsidized Federal Direct loans have an interest rate fixed at 5.05 percent. For Graduate or Professional students, the unsubsidized Federal Direct Loans carry an interest rate of 6.6%.
If you have the financial need, some or all of your Direct Loans may be subsidized. This means that the federal government will pay the interest on the loans while you are attending school and for up to six months after you leave school. You may also be eligible to get some funds up to the yearly maximum as an unsubsidized loan.
Why didn't I get the whole amount?For loans first disbursed after 1 October 2017 and before 1 October 2018, the loan fee is 1.066%. For loans first disbursed after 1 October 2018 and before 1 October 2019, the loan fee is 1.062%. The loan fee will be deducted proportionately from each loan disbursement.
Can I get a Federal PLUS Loan?If you are a graduate or professional degree student or the parent of an undergraduate student, you may be eligible for a Direct PLUS Loan. One big difference between PLUS and Direct Loans is that for the PLUS loans, your credit history is taken into account. If you have credit issues, this may prevent you from qualifying for a PLUS Loan, though getting a cosigner with better credit may allow you to get the loan.
Direct PLUS Loans are more expensive than the regular Direct Loans. The interest rate is 7.6% and there is a 4.264% origination charge for loans disbursed after 1 October 2017 and before 1 October 2018 and 4.248% for loans disbursed after 1 October 2018 and before 1 October 2019 which is proportionately deducted from each loan disbursement.
What is a Direct Consolidation Loan?A Direct Consolidation Loan allows you to combine several loans into one larger loan and extend the period of repayment over a longer period of time. This will leave you with a single payment, which may be lower than the combined total of your existing loans. The interest rate will be determined by the weighted average of your existing loans and you may choose to repay over as much as 30 years.
What loans can be consolidated?Currently, most federal student loans are eligible, including the following:
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