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Federal Direct Loan

by professionalseo

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Federal Direct Loan –

Know All About It In Details


Federal Direct Loans are education loans from the U.S. government. They provide low-interest loans for students and parents to help them pay for the cost of a student's education after high school. It is the most widely-used loan for college students and is available to both graduate and undergraduate students. The eligibility criteria to qualify for both the loans are determined using your financial aid application.


Types of Federal Direct loan

There are mainly two types of Federal direct loan. Let’s take a look:

  1. A subsidized loan which is awarded on the basis of financial needs. No interest will be charged before repayment or during authorized periods of deferment.


  1. Unsubsidized loan which is not based on financial need. Interest will be charged from the time the loan is sanctioned until it is paid in full.



Eligibility criteria for Federal Direct loan

Well, the students who have enrolled in an eligible program for at least half time, may receive a Federal Direct Loan. They must meet the other general eligibility requirements as well.


Borrowing limits for the loan

Yes, there are borrowing limits for Federal Direct loan. It will depend upon your class level. The limits for such loans are as follows:


$20,500 Graduate Students—Unsubsidized

$7,500 Juniors/Seniors (maximum subsidized $5,500)

$6,500 Sophomores (maximum subsidized $4,500)

$5,500 Freshmen (maximum subsidized $3,500)


Interest rates and fees charged on Federal Direct loan

In case of the direct subsidized loan, you will have to pay 0% interest rate if you are enrolled for around half-time. You will have to pay 3.4% interest rate during the 6 month grace period after you leave school and during repayment plan.


However, it should be noted here that from 7/1/2013, the interest rate on repayment and grace will be increased to 6.8%. Apart from this, there is 1.0% origination fee and this fee will be deducted from each disbursement.


In case of loans which are Direct unsubsidized, there will be a 6.8% interest rate if you are enrolled for at least half-time or during a 6-month grace period after you leave school. It will also remain same during the repayment period. Apart from this, there will be an origination fee of 1.0%.


Credit check requirements

It should be noted here that there is no credit check required for getting a Federal Direct loan. If you haven’t defaulted on a prior educational loan or don’t owe any federal grant funds, you will be able to qualify for this loan.  But again, as stated earlier, you will have to meet all other federal aid eligibility requirements to get the Federal Direct loan.


Repayment of the loan

The repayment period of the Federal Direct loan begins six months after you graduate or drop below half-time enrolment. The loan repayment period is for ten years.  


Now that you know all about Federal Direct loan, you can opt for this in order to afford the higher education of your children. You can contact the concerned authorities and get this loan.

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