Direct Student Government
Loans Are Still Available!
Given the current economic challenges facing many families,
it's good to know that direct student government loans are still
available. You still need to follow all the requirements, which
are outlined in the application, which is available online now.
It's much easier to get student loans direct from the government
The basic requirements are you have to be enrolled at least half-time at a Direct Loan Program participating school, and you need to meet general eligibility requirements for the Federal Student Aid (FSA) programs.
You should check with your school of choice for more information
from their Financial Aid office on student loans direct from the
government. Most will be happy to help you in
any way they can with the application and your specific details.
Government Student Loans
Always check with your school's Financial Aid Office first. These
people know the government and private direct student loans requirements and can be
very helpful in dealing with all the paper work involved with
Government Student Loans. Like all
government programs, direct student loans paper work is the key to success and
it's important to fill them out correctly.
There are three basic types of loans available directly from
- For students with financial need that are determined by federal
subsidized Stafford Loans are your best choice. There is no interest charged as long as you are at least a half-time student.
- Stafford Loans that are not subsidized nor based on financial need are also available. The drawback is interest is charged from the loan start date.
- For graduate and professional students, there is a PLUS Loans program
with low interest rates. Parents are also eligible for this
Government Student Loans program to help dependents who are students.
If you are applying for a Direct Stafford or Plus Loan, you need to complete the Free Application for Federal Student Aid (known as
FAFSA). Once again the best source of information on how to fill
out this form is your school's Financial Aid Office.
Loan amounts are determined by the cost of your school's costs,
the year of school (like first, second, graduate, etc.) and there
is a maximum annual amount for each type of loan. Here are the
minimum and maximum amounts by school year, loan, and
$3,500 / $2,000
$3,500 / $6,000
$4,500 / $2,000
$4,500 / $6,000
3rd- and 4th-year undergraduate
$5,500 / $2,000
$5,500 / $7,000
$8,500 / $12,000
The first amount is the base and the second is the amount of
additional unsubsidized funds. The Independent student is one who
is not a dependent or does not qualify under the guidelines of the
dependent status. The interest as of July 1, 2008 on the Stafford
Loans is set at 6.00%, Plus Loans at 7.9%. There is also a 2-4%
fee for each loan.
There are limits set on total amount borrowed on student loans
direct from the government over the entire
period. Each student loan method has a ceiling amount as follows:
- $31,000 for a dependent undergraduate student with limit
of $23,000 subsidized.
- $57,500 for an independent undergraduate student with limit
of $23,000 subsidized.
- $138,500 for a graduate or professional student with limit
of $65,000 subsidized that includes undergraduate loans.
The amount of money is also limited by the school costs, which
probably won't impact the amount due to the high costs of
education. Private 4 year colleges average about $9000 for
tuition, books, and fees (no living costs). Public and state 4
year schools average about $6000 per year. Two year and Technical
2 year or less programs can be all over the map based on the
subject matter and certification.
Student Loans Without Cosigner
Once you have been approved for any of these loans you will
have to sign a MPN, Master Promissory Note. Your school will
receive the funds and apply them to your costs although depending
on your situation they may issue funds directly to you. And these
student loans without cosigner are the best choice for many low or
no income students. There are no credit checks or credit analysis
for direct student loans and you don't need a cosigner.
Stafford Loans repayment start 6 months after your graduation
date, leave school, or drop below the half time requirement.
Depending on which payment plan you choose, you will have between
10 and 25 years to pay back your loans.
You have four methods to pay back your loans:
- Standard Repayment Plan - Fixed monthly payments for up to 10 years.
- Extended Repayment Plan - Monthly payments for up to 25 years,
there are fixed and graduated payment options.
- Graduated Repayment Plan - Payments that start off low and increase, usually every two
years or what ever period you choose.
- Income Contingent Repayment Plan - Your payment is adjusted
according to income (this may include spouse's income too),
family size, and total amount of loans.
The only catch 22 right now is the interest rates have fallen
dramatically in the financial meltdown, the government is still
charging a fixed rate. This is not way
out of line but as of January 2011 the prime interest rate was
around 3.75%. But these are often the best deal you can get for
student loans without cosigner and no credit check.
The only real problem with direct student loans is
you need to stay on top of your application. Don't just fill out
the paperwork and forget it. You need to make sure you stay in
touch with the college you file through and check to see if there
are any problems. It doesn't take much to slow down or even get
denied if all the paperwork is not correctly filled out and filed.
I've seen where students failed to follow up and did not get
approved in time to receive any benefits for the current semester.
Student Loans Direct From The Government Are Not Your Only Option
You may be able to find private sources for your student loan
that have lower interest rates. The common interest rate for
private loans was 11-12% before the financial crisis. Although
direct student loans from the government should cost less, it is well
advised to investigate all sources. Even if they are not easy
student loans to qualify for in many cases you still check any
available student loan program. Student loans direct
from the government are usually the path of least resistance and
But you should check to see if your employer (or your parent's
employer if you are under 25) has any direct student loans. Quite
a few companies have scholarships, student loans at reduced rates,
or some kind of financial assistance for college. Local community
and professional associations often have some type of financial
aid for members too. It never hurts to check out any local or
national source to see what they have to offer.
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