Direct Education Loan

By: EconomyWatch Content   Date: 1 December 2009

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Direct Education Loans are low-interest loans for eligible students to help pay educational expenses after high school. These loans are Federal government advances to qualified students based on certain eligibility criteria. 

The highlighting features of the Direct Education Loans are: 

  • Single point of contact, the Direct Loan Servicing Center, to resolve all queries pertaining to interest rates, repayment and the amount of loan.

  • Online access to the exclusive Direct Loan account.

  • Range of repayment plans designed to meet the financial requirements of different borrowers. Direct Education Loans also offers the flexibility to switch between different plans as per convenience. 

Applying for Direct Education Loan

In the US, an individual needs to apply with the Free Application for Federal Student Aid (FAFSA for a direct education loan. These loans are usually awarded as a part of larger support package to help the student complete their college education and career school education. A student can fill in the online version of the application form as well. The information provided by the student in the application form is transferred to the named school. The school then uses this information to make a general enquiry about the financial status of the applicant before sanctioning aid.

 

Under Direct Education Loan program there are four types of advances that are made to the students. These are:

  • Subsidized aid: Students, whose families fall in the low-income group, as per Federal government standards, receive subsidized loans. No interest is charged.

  • Unsubsidized aid: Allotment of unsubsidized loans is not based on the financial position of the student. In this kind of loan, low-interest rates are charged during the entire period.

  • PLUS loans: These are unsubsidized loans for dependent students and for graduate or professional students. PLUS loans pay only for the expenses of attending classes. No additional financial assistance is covered. Interest rates are charged for the entire period of the loan.

  • Consolidation loans: Eligible students can consolidate their debts and pay back just one single consolidated loan. 

Student borrowers are not required to make repayments until when they graduate or leave the school. Students also receive entrance counseling from the concerned school authorities regarding loan obligations.

           

 


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