What Types of Direct Loans are Available for Students? How to Apply for Federal Loans?

Direct loans are excellent sources of financing for students with modest financial possibilities. They are seen by many experts as the best options for students currently available on the market, as they are highly flexible and convenient. These loans are offered by the government, directly to students, without the intervention of banks or other lenders. The lender in this case is the United States’ Department of Education – the one that offers four ways of financing, which feature different requirements and repayment schedules.

The first possibility you may have is to apply for one of the two types of Stafford loans – which can be subsidized or unsubsidized. If you manage to get a subsidized loan, you will not have to pay the interest during the time you are still in school. However, this kind of direct loan strongly relies on the existence of a visible financial need, so you have real chances to qualify only if you are in a huge financial need. Unsubsidized Stafford loans are not based on an extreme financial need, but they require that you pay the interest during the time you are in school.

Another direct loan that students can benefit from is the Federal Direct PLUS loan, which allows students to receive money for college through their parents. Parents who have a good financial history and have their children as dependants can borrow money from the government. Students are considered to be dependant when they are less than 24 years old, they are not graduates or professionals, they do not have legal dependants, they are not orphans and nor are they a ward of the court.

Finally, the last types of direct loans offered by the government are the Federal Direct Consolidation Loans; this is actually an additional option that offers students the possibility to consolidate one or many federal loans into one direct loan, in order to obtain a low interest rate and make just one monthly payment towards the U.S. Department of Education.

Direct loans offered by the federal government are available to all students enrolled in college at least part time. The application process does not involve credit checks, so those with bad credit history should lie still. All you have to do in order to apply for a loan is fill out the standard Free Application for Federal Student Aid. This application will also help you be evaluated for grants or work programs. It is advisable that all students fill out this application, which is available on the FAFSA official website.

The best time to apply for direct loans is January; the deadline for filling out the Free Application for Federal Student aid being February 15th. You should start by requesting a PIN number, which will later allow you to apply for federal student aid in the next years and keep track of your online records. Parents and students should have separated PIN numbers.

The data you will have to type down includes your name, your social security number, all kind of information concerning your assets and incomes, as well as the name of the college you plan on attending. Parents will also need to provide information about their incomes and assets, if the student is their dependant. Students will not become eligible for obtaining direct loans from the government unless they fill out this application with all the required data.

After submitting the application, students will receive an electronic document known as SAR – Student Aid Report. This report aims to be a confirmation and a brief summary of their financial profile.

Direct loans have multiple benefits, some of which refer to the smooth delivery of loan funds, the simple process which involves just one lender, the fact that they are available to all students and that they do not imply a credit check, the fact that they are scheduled on easy repayment plans, and the overall decrease in interest rates.

The most important thing you must do in order to have some certainty about your financial future is to start thinking about ways to finance your high education program early. It is necessary to choose the college that you want to attend, to gather all information required for completing the application for federal student aid, and to submit this application in time. It is vital to determine whether or not you are eligible for receiving direct loans from the government, because, otherwise, you will have to start looking for private lenders.

If your request is approved, you can manage your account and find essential information about loan consolidation and your current financial situation on the website www.dl.ed.gov; the website also allows you to pay your loan online.

Now that you have found all the strategic information about direct loans provided by the government and the extent to which they manage to help a significant number of students, it is time to fill out your application and take the future in your own hands.