Direct Loans

    
The Direct Loan Program is one of the Federal Student Aid (FSA) programs open by the Department of Education. It provides students with a easy, inexpensive way to borrow money to pay for learning after high school.

About Direct Loans in particular -

As noted above, the Direct Loan Program offers a few types of loans: Stafford loans for student, PLUS loans for parents as well as graduate/professional students, and consolidation loans for together students and parents.

Direct Loans are not sold. Since borrowing is directly through the federal government, borrowers make loan payments to the Department of Education for the life of their loans. It's "one-stop-shopping" from loan application through repayment.

Borrowers have flexible repayment options. There are four repayment plans in the Direct Loan Program: standard, extended, graduated, and income contingent. Students can change options when they need to without a fee at any time during the life of the loan.

To qualify for Direct Consolidation Loans, borrowers must have at least one Direct or Federal Family Education Loan (FFEL) Program loan that is in grace, repayment, deferment or default status. Loans that are in an in-school status cannot be included in a Direct Consolidation Loan.

Direct Consolidation Loans allow borrowers to combine one or more of their Federal education loans into a new loan that offers several advantages. When repaying a Direct Consolidation Loan, borrowers may choose from four repayment plans.

1. Standard Repayment Plan- Fixed monthly payments for a maximum of 10 years.

2. Extended Repayment Plan- Fixed monthly payments that are less than payments under the Standard Plan with the repayment period ranging from 12 to 30 years, depending on the total amount borrowed.

3. Graduated Repayment Plan- Monthly payments that increase every two years with the repayment period varying from 12 to 30 years depending on the total amount borrowed.

4. Income Contingent Repayment Plan (ICR) - Monthly payments that are based on a borrower's annual income (AGI), family size, and total Direct Loan debt, and are spread over a term of up to 25 year.

Advantages & Disadvantages-

Advantages-

1. Fixed interest rate—rate is lower for student in an in-school, grace or deferment status.

2. One lender and one monthly payment

3. No fees or min. /max. Amounts to be eligible (this only applies to Direct Lending)

4. Retention of subsidy

5. Additional deferment options

6. Flexible repayment options

Disadvantages-

1. Fixed interest rate-You cannot later take advantage of a lower interest rate; you are locked in.

2. May lose benefits associated with individual loans-incentives or discharges

3. May lose deferment and forbearance provisions associated with individual loans .

If you looking for cash to grow your business manage cash flow or finance new equipment .....Read More			Taking the necessary steps to prepare for a small business loan can minimize the difficulty. To get a personal.... Read More