Studying in college nowadays can often be difficult. The increasing cost of schooling is making quite a few Americans struggle to deal with their finances. The U.S. government seeks to address this particular need of lots of American households to provide education and learning for their children following high school graduation through a program that provides direct loans to students to cover their college education.
Under this program, the government acts as the sole lender through the U.S. Department of Education. The program is called the Direct Loan Program and has been in effect since 1993.
This program was designed to provide low-interest financial loans for parents and students and directly provided by the education department instead of banks and other financial institutions.
Since it is offered directly by the federal government, borrowers would simply have a single contact for all those transactions associated with the payment of these loans – the Direct Loan Servicing Center – whether or not they obtained the loans at several colleges.
It provides a number of types of loans and repayment options in which students and parents can easily pick from depending on the requirements of each borrower.
Students may avail themselves of the direct unsubsidized as well as direct subsidized loans while parents and graduate students may submit an application for the direct PLUS loans. This program also offers direct loan consolidations for borrowers who would like to refinance their multiple loans with low fixed interest rates.
A number of the readily available payment plans include the standard reimbursement, which is intended for borrowers who are able to afford to pay for an increased amount of money each month and want to pay off their loans of up to ten years quicker, while the extended repayment allows for a much lengthier repayment period of up to 25 years.
With regards to rates, unsubsidized and subsidized loans which were first disbursed on or after July 1, 2010 normally have a fixed interest rate. Interest for subsidized undergrad loans on the other hand might have varying rates dependant upon the date it was initially disbursed.
The main difference between unsubsidized and subsidized loans basically depends on the financial capacity of the borrower. For subsidized loans, the government gives help to low-income college students by paying the interest of their loans within an allotted grace period, while unsubsidized loans usually are for consumers who can afford paying their loans without subsidy from the government.
In some instances, the government may opt to discharge or perhaps forgive some loans. This is particularly common for employees working in the public service sector. And, people who are seriously handicapped may benefit from the government’s loan forgiveness packages.
Federal direct loans are being offered by the government to provide students various choices in financing their college education. They ought to investigate the various aid packages available to them in accordance with what matches their needs.
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