Federal Student Direct Loans

By Sam Ferdi

Direct Student Loans

Definition.

A direct loan is the best way to apply for a loan and direct loans are less expensive compared to other loan options. Direct loans can be taken to purchase a home, car or education. If you take out a direct loan, you only pay the fees and interest rates from a single lender.

Most direct loan servicing agencies and companies provide counseling for interested borrowers. Take advantage of free counseling services to find out if direct loan is really the right solution for your present money problems.

Direct loans are convenient, flexible and simple. A direct loan is a loan by a lender to a customer without the use of a third party. This type of loan enables the lender to have greater discretion in the distribution of loans.

Direct loans are easy to apply for. Most of the websites offer interest calculators from lenders to work out monthly payments, amount of the loan and period of the loan. These lenders offer the convenience of filling out applications online, and often times, interest rates are more reasonable.

Direct loans are widely used by both undergraduate and graduate students. Direct loan servicing online provides college and university students with an array of tools designed to help them monitor, manage, and take care of their federal student loans. Direct Loan Servicing includes both entrance counseling and exit interviews, and they make it a point to help students understand everything about their loans.

Students can apply for direct loans by filling out the Free Application for Federal Student Aid (FAFSA). Students can use the paper FAFSA, but is suggested to use the online edition of FAFSA.

There, students can calculate interest, make monthly payments, pay extra on the principle, access payment history, and manage billing and contact information. Students can apply for loan deferment right through the web site.

Typically, the lender is the U.S. Department of Education rather than a bank or financial institution offering several Federal Student Aid programs, providing the most widely-used means of financial aid for college students. Federal Student Aid programs offer everything from grants - which do not have to be paid back - to loans - which much be paid back, along with the interest - to work study programs, which allow students to work during college.

The federal government provides four types of direct loan financing.

• The Federal Direct Subsidized Stafford/Ford Loan is a direct loan, which means you do not pay the interest on the loan while you are school at least part-time.
• The Federal Direct Unsubsidized Stafford/Ford Loan is a direct loan the government charges you interest while you are in school.
• The Federal Direct PLUS Loan is a direct loan designed for parents without an adverse financial history who wish to borrow money for their dependent student
• The Federal Direct Consolidation Loan is a consolidation of one or more federal loans combined into a direct loan.