Direct Student Loan Types

What are Direct Student Loans?
By Student Loans Net

Direct loans are loans that are funded by the federal government. The Department of Education acts as the lender for direct loans and provides direct loans to students or their parents so that they can pay for education once the student graduates from high school. Direct loans come in many different forms and serve many different purposes for students. This type of loans helps students pay for college who have financial need and might not otherwise be able to afford the cost of tuition, room and board, books and other associated expenses.

One of the forms direct loans are Stafford loans. These types of direct loans provide money to students to help pay for tuition and the costs associated with their pursuit of a higher education. With student direct loans, repayment on the direct loans does not begin until six months after the student graduates. In order to keep receive direct loans the student must be enrolled in an accredited college or university. Direct loans also require that a student be enrolled at least half time. Once a student moves down to below half time, the student has six months to start paying back their direct loans.

Direct loans are also available to parents of students who are attending a college or university. These direct loans are called PLUS loans and help to fill the gap between how much a student can borrow and the cost for their child to attend a college or university. Parent direct student loans differ from student direct loans because repayment on the loan begins immediately. However, parents are able to borrow more money with direct loans than students can, as is the case with private direct student loans. Direct loans also tend to have a fixed interest rate, which means both parents and students will save money in the long run.

The program for direct loans began back in 1993 when Bill Clinton was in the White House. Direct loans are funded by the federal government and the United States Department of Education acts as a lender for these direct loans. Funding for direct loans started in the billions, however the direct loans program has been scaled back. For 2008, $509 million dollars is budgeted for direct loans, as compared to $7 billion for direct loans in 2006. There is no telling where the loan program will go in the future, however this government funded program is helping thousands of students each year attend a college, university or institution of higher education.