William D. Ford Federal Direct Loans
Direct Loans are low-interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the U.S. Department of Education rather than a bank or other financial institution. In the Direct Loan program, you borrow directly from the federal government and have a single point of contact, the Direct Loan Servicing Center, for everything related to the repayment of your loans, even if you receive Direct Loans at different schools.
If you're a dependent undergraduate student, you can borrow up to the following amounts:
- $5,500 if you're a first year student enrolled in a program of study that is at least a full academic year. (At least $2,000 of this amount must be in unsubsidized loans).
- >$6,500 if you've completed your first year of study and the remainder of your program is at least a full academic year. (At least $2,000 of this amount must be in unsubsidized loans).
If you're an independent undergraduate student or a dependent student whose parents are unable to get a PLUS loan you can borrow up to:
- $9,500 if you're a first year student enrolled in a program of study that is at least a full academic year. (At least $6,000 of this amount must be in unsubsidized loans).
- $10,500 if you've completed your first year of study and the remainder of your program is at least a full academic year. (At least $6,000 of this amount must be in unsubsidized loans).
After you graduate, leave school, or drop below half-time enrollment, you have six months before you must begin repayment of this type of student loan. This is called a grace period. During your grace period, you'll receive information about repayment and will be notified of the date repayment begins. However, you are responsible for beginning repayment on time, even if you don't receive this information. Payments are usually due monthly.
Federal Direct PLUS Loans
Parents who do not have a bad credit history can borrow a PLUS Loan to pay the education expenses of a child who is dependent student enrolled at least half time in an eligible program at an eligible school.
To be eligible for a PLUS loan, your parents will be required to pass a credit check. A parent can not be turned down for having no credit history, only for having an adverse one. If your parents don't pass the credit check, they might still be able to receive a loan if someone, such as a relative or friend who is able to pass the credit check, agrees to co-sign the loan. A co-signer promises to repay the loan if your parents fail to do so. Your parents might also qualify for a loan even if they don't pass the credit check as long as they can demonstrate that extenuating circumstances exist.
The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other student financial aid you get.
The first payment is due within 60 days after the final loan disbursement for the year. There is no grace period for these student loans. Interest begins to accumulate at the time the first disbursement is made, and your parents will begin repaying both principal and interest while you are in school. Your parent may contact the lender regarding annual deferment options that may be available while you are enrolled in a post-secondary institution.