Federal Direct Student Loans

To provide loan capital directly from the Federal government to vocational, undergraduate, and graduate postsecondary school students and their parents.

The Federal Direct Student Loan program provides students and their families with funds to help meet postsecondary education costs.

The applicant must be a U.S. citizen, national, or person in the United States for other than a temporary purpose. A student borrower must be enrolled or accepted for enrollment in a degree or certificate program on at least a half-time basis as an undergraduate, graduate, or professional student at a participating postsecondary institution. An otherwise eligible student is eligible for loans during a single twelve-month period in which the student is enrolled in a non-degree/non-certificate course of study that the institution has determined is necessary in order for the student to enroll in a program leading to a degree or certificate. Under the Direct PLUS program, parents may borrow for dependent undergraduate students. Also, graduate and professional students are eligible to borrow PLUS Loans. Direct Unsubsidized and PLUS loans are available to eligible borrowers regardless of need. However, a financial needs test based on family income is required for an undergraduate student to receive a Direct Subsidized loan. A student that is presently enrolled at a participating institution must be maintaining satisfactory academic progress in the course of study that they are pursuing. The borrower may not owe a refund on any Title IV grant or be in default on any Title IV loan received for attendance at any institution. The borrower must also file a Statement of Registration compliance (Selective Service).

Vocational, undergraduate, and graduate postsecondary school students and their parents.

To help defray costs of education at participating institutions. Repayment on Federal Stafford loans begins six months after the student ceases to carry at least one-half the normal full-time academic workload. Repayment of principal and interest on PLUS loans generally begins within 60 days of disbursement of the last installment; repayment of a Consolidation loan begins within 60 days after the proceeds of the loan have been used to discharge the liability of the borrower on the loans selected for consolidation. Deferments and forbearance of payment may be granted for certain authorized periods.

Applicants may apply for a loan for any year of attendance at a postsecondary institution. There are four types of repayment plans available: (1) A standard repayment plan with a fixed monthly payment amount over a period of up to 10 years; (2) an extended repayment plan with a fixed monthly payment amount paid over a period of 12 to 30 years, depending on the amount owed; (3) a graduated repayment plan with a monthly payment that will increase generally every 2 years. The repayment period varies from 12 to 30 years, depending on the amount owed; and (4) except for Direct PLUS Loan borrowers, income-driven repayment (IDR) plans with a monthly payment that is adjusted annually based on borrower income and paid over a period of time not to exceed 25 years. Generally a borrower would not have to repay on a monthly basis more than 15 percent of their discretionary income, and outstanding balances would be forgiven after 20 or 25 years. Direct Loan borrowers who work in public service are eligible for forgiveness after making made the equivalent of 120 qualifying monthly payments. Public service includes a variety of public disciplines such as education, health, law, military service and public safety. Method of awarding/releasing assistance: Electronic transfer.

Institutions participate in the Direct Loan program either by originating loans or by using an alternative originator to originate loans. The institution must certify the borrower's eligibility to receive the funds. To obtain a Direct PLUS Loan, the parent completes an application and authorizes a credit check. If the parent does not have an adverse credit history, the loan may be disbursed. Institutions may disburse funds by crediting them directly to the student's account at the institution, issuing a check or cash, or by initiating an electronic funds transfer.