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Direct Federal Student Loans
Direct federal student loans are loans granted by the federal government to students who have completed their graduation and intend to continue their further education in universities and colleges.
The loan-agreement is solely between the U.S. Department of Education and the students and there is no intervention of a third party institution or a private agency.
In order to apply for a direct federal loan, you need to fill up the online FAFSA (Free Application for Federal Student Aid) form and provide all the necessary information and documents. Additionally, you need to complete the MPN (Master Promissory Note). The MPN clearly explains the agreement between the U.S. Department of Education and the Student. Moreover, it also states the exact procedure of repaying the loan and the terms and conditions you need to follow.
Once you get an approval for the loan, you need to sign up to the service center. The service center provides all the essential information related to your payments and lets you know about the balance amount. You are also eligible to opt for a counselor service that can guide you through the entire repayment procedure.
In order to qualify for a direct federal student loan, you need to attend a school or a college that participates in the direct loan program. You should be either a full or a part time student. The most common types of direct federal student loans available are subsidized Stafford loan and Unsubsidized Stafford loan. The subsidized loan includes an interest subsidy that the government is responsible for paying. Those awarded with a subsidized loan do not have to pay the interest amount and therefore, repaying this loan does not seem to be a burden. The students who have their parents to look after their schooling needs are offered an unsubsidized direct loan. This loan does not include an interest subsidy. Direct federal student loans have a fixed interest rate.