Funding for higher studies is not always easy. Student loans are the best way out for most promising youngsters seeking to pay for their college education. Consider the Federal Direct student loans and their eligibility criterions. Federal student loans involve simpler application process and quicker disbursement. A student can consider alternative loans if the living expenses and other educational expenses are not covered by federal student aid. Check out more details on direct loan servicing.
Federal direct loan
FDSCLP (Federal Direct Student Loan Program) allows students to avail low-interest loans to finance their education. This federally funded loan program is provided by the U.S. Department of Education. Federal direct loans are either subsidized or unsubsidized. Rates for federal student loans change annually.
A subsidized direct student loan is one that is granted on grounds of financial necessity. The interest during full-time enrollment in college and grace periods is subsidized by the government.
On the other hand, an unsubsidized direct student loan is charged with interest for the entire period of the federal direct loan. There is a provision to accumulate the interest, which adds to the principal amount. But here too the student must complete the FAFSA (Free Application for Federal Student Aid) so as to get the loan processed. The FAFSA is easily accessible online and you can check the Student Aid statement to check for your eligibility for different student aid options and programs.
Federal student loans are disbursed directly to the student's account in two parts - one during Fall and one in Spring. Students need to attend an Entrance Interview before the disbursement of the direct student loan. Grace period of 6 months is when there is no charge on principal and interest for subsidized federal student loans.
Deferment on the direct student loan can be obtained for certain reasons such as economic hardship, unemployment or part-time study at a post-secondary institution. When a student accepts a Federal direct loan, he or she must complete the Master Promissory Note. The promissory note authorizes the school to credit the funds to the student account. The MPN eliminates the need to sign new promissory notes for each new loan taken during the education.
Payment on Federal student loan begins after six months of graduation or leaving school. Typically, direct student loans can be availed under different repayment plans. You can choose to pay the direct student loan within 10 years as in the case of the Standard Plan or extend it from 12 - 30 years under the Graduated Plan. Try the interactive calculator available online to check out which payment plan works best for you.
Federal Direct Loan Consolidation
It is prudent to go in for Federal direct loan consolidation to lock in when the interest rate is low. Taking advantage of a good direct loan consolidation program you can reduce your monthly payments on the direct student loan. Lowered repayments on your direct loans can make it easier on your monthly budget.
Direct loan servicing
Direct student loans, as the name indicates, are offered to the student without the intervention of any third party. Direct loan servicing is offered by many organizations in different areas. Check out the direct loan servicing centers of these organizations to find out details on the application process. Many non-profit agencies also lend direct student loans. Private direct loan servicing involves paying an interest rate that is slightly higher than federal direct student loan rates. Besides, they will check your credit history and documentation to evaluate how much you can borrow and the payment terms.