A federal direct student loan is a loan offered by the government to students that need financial help for collage expenses. This program was started by the Department of education and with its help any student can now study properly without having to worry about his financial situation. Without this program, many students who had the intellectual ability of getting through collage but not the financial resources wouldn’t have any chance at higher education. But because the federal direct student loan aim for students with financial difficulties, anyone can now go to a great collage based on intelligence only and not on money.
There are many student loans available from many different lenders. Each student loan can offer a series or advantages over traditional loans, but a federal direct student loan can be better than any other private loan. This happens because of the interest rate. While lenders offer student loans with an interest rate that brings them profit, in the case of a federal direct student loan, the interest rate is lower because the loan is offered by the government. The loans are controlled by the federal government and the money given is taken from the federal capital. When a student repays his loan, the money will go back to the federal capital through the department of education.
If a student wants a federal direct student loan he has to complete a FAFSA (Free Application for Federal Student Aid). The information that you would write in this document will be verified and it has to be real. Based on it, the federal government will decide how much you could get from a federal direct student loan. When you apply for a loan, you might get a subsidized or an unsubsidized loan. For example, if you get a direct Stafford subsidized loan, it will be based on your financial needs and you will have to be at least a part time student. The advantage of this direct student loan is that the government will pay the interest for the whole duration of your studies. If you don’t qualify for the direct Stafford subsidized loan, you still have a chance at the unsubsidized one. This loan is not based on your financial situation and for the duration of the studies the interest won’t be paid by the government, but it will be capitalized. This means that you won’t have to pay it while in collage, but it will be added up to the total amount of your loan and you will have to pay it when the repayment process starts. If you have the financial means to pay your interest rate, you can opt for making payments while still in collage. Some students chose this option when if they have a federal direct student loan because it will decrease the overall value of the loan.
If students aren’t comfortable getting a loan at a young age, parents can get a student loan for their children. The PLUS loan offers almost the same advantages as any other federal direct student loan, but it depends on the credit rating of the parents. The interest rates can also be changed in time and that is why some students prefer the Stafford loan.
The main reason for choosing a federal direct student loan is the large number of repayment plans that you can get. No matter your financial situation, you will be able to find a student loan repayment plan that can satisfy your needs.