Direct Student Loans Make Education Possible

A direct student loan is a federal student loan. Title IV of the Higher Education Act is what makes these possible. They can be offered directly to students, and they’re usually offered with the help of the college or university financial aid office. They can be used as a supplement to the student’s own resources to pay for college, or they can be used in conjunction with other programs like workstudy, scholarships, or even grants. They come in both subsidized and unsubsidized types.

The Difference

Both types are backed by the US Department of Education, and both kinds can be offered directly to the student or through a bank or other lending agency. Almost any student can receive a student loan. A direct student loan has to be paid back or six months after the six months after the student has graduated or student is no longer at least half time status. A direct student loan will average at about $5,500 per year for freshman students, $6,500 per year for sophomores and $7,500 for juniors and seniors in undergraduate school. These direct student loan rates for those students who are dependents those still claimed on their parent’s income tax returns. Independent undergraduates have higher limits on direct student loans ranging from $9,500 per year for freshmen to $10,500 per year for sophomores and $12,500 per year for juniors and seniors. For many of these loans, the federal government takes care of the interest while the student is still in school. Other types of direct student loans have the interest accumulate unpaid and the student owes it as well as principle upon graduation.

While most direct student loans are subsidized by the federal government, some direct student loans are not guaranteed or subsidized. Almost all student are eligible for loans whether they can show a financial need or not, which is different from grants where money does not have to be repaid.

Why Is a Direct Student Loan A Good Deal?

Why is a direct student loan a good deal? Imagine a student coming from a modest income family with three children. Paying for a college education for all three children could be a major hardship for the family, but the parents obviously want their children to attend college and better themselves. Also man of the students are quite willing to pay for their college education themselves, but working full time while attending school full time leaves little time for study. Many people have taken this route successfully but not everyone can. The direct student loan is perfect for those in this situation. It defers the cost of the education until the student has received it and is able to work full time at a better paying job and therefore pay it off easier while rising in society and contributing. In this manner a direct student loan benefits society as well as the student.