What are Direct Student Loan?

The so called ‘Direct Loans’ are directly issued by the Department of Education to students satisfying the needs of grant provided they are in line with the terms under which the educational institution of their choice is listed with them . The terms of loan are extremely beneficial to students looking forward for low cost loans.

These direct loans are often need based loans offered to students. You must be aware of both subsidized and unsubsidized loans offered to students by government agencies. While subsidized loans are those where the interest cost of the loan is borne by the government, unsubsidized loans are otherwise called guaranteed loans also offered by private lenders under the pretext that these loans are guaranteed by government agencies on behalf of the students.

The credit score or credit rating of the student is of no relevance to direct loan programs as the issue of loans are no way related to credibility of the student, instead subject to the information disclosed in the FAFSA application form, the financial condition of the student is clearly recognized and accordingly the loan is granted.

Choice of Direct Student Loan Program

Federal loans are offered to students to meet their educational expenses. They are either directly issued to students from the Department of Education and through all other government and private agencies. It is the US Department of Education that provides the funding for all federal loan programs.

The amount of funding offered are same in terms of the amount offered both for direct Stafford and PLUS loans and those Stafford and PLUS student loan programs offered through FFELP (Federal Family Education Loan Program)

Both origination and consolidation are offered under the Federal Direct Loan Program (FDLP). Educational institutions are open to participate in either FDLP or FFELP. Again, it is important to note here that while students are directly offered the loan, they are not allowed to choose FDLP where the school of their education chooses FFELP. In other words, they are allowed to choose a program in line with their school’s choice. The same condition does not hold good for consolidation loan option under FDLP or FFELP.

Under the new Obama Government, origination loans are being brought under the complete control of direct loan programs, highly benefitting the government’s treasury.
Have you been granted any student loan under the direct loan program, if yes please discuss the procedure and your experience.

Student Loan Rates

The best of deals come with very low interest rates. It is the rate of interest which decides the cost of borrowing; the lower it is the lesser will be your liability. Hence students normally tend to go for those loan options which offer the least of interest rate cost.

Student Loan Rates Will Drop to All Time Low

It is the happiest of news to all those who have student loan liabilities. Kindly note, that on the first of July, interest rates on Federal Stafford Loans and Federal PLUS loans are going to drop to an all time low. Are you eager to know what the new rates are going to look like well, have look below.

• The rate is at 2% for all Stafford Loans in the status of in-school and grace period.
• For those Stafford Loans in repayment the rate is expected to be fixed at 2.50%
• Federal PLUS loans offered to the parents of the students taking up the course of study will be at 3%

The situation is some what similar to the rates say some 5 years back when the consolidation rates where around 2.77%. Hence for all those who failed to consolidate few years back it is great news.

These Federal Direct Loans can be consolidated with interest rates on borrowing locked in. A lock in facility helps you fix the interest rate at a particular percentage and which does not change with the change in market condition as far as your deal is concerned. Please to remember that you benefit the maximum only if have Student Loan which was borrowed much before July 1, 2006. In order to be clear about the benefits you are bound to get due to the newly revised interest rates it is important that you read through the entire notification once it is issued. Other wise you are sure to end up in misconceptions about the new rates.

Cap on Students Loan

Friends! Also be aware of the fact that on the 1st of July this year the College Cost Reduction and Access Act (CCRAA) initiates a change, according to which the law will cap the student loans at 15% of the adjusted gross income of the individuals intending to borrow money. As far as the loan forgiveness is concerned, the student loan liabilities of those individuals who are in public service for a period of 10 years are completely dropped. These interesting changes are to come up on the 1st of July this year. What we have mentioned in this article is just a highlight of the possibilities, please read through the final version of it once it is passed.

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Who can use PLUS Loan:

Out of the many loan options available to students to fund their college education, PLUS Loans are offered to both students and parents of students pursuing their graduation is one of the most sought after option. These PLUS loan options are guaranteed by the government and fall under the direct supervision of the US Department of Education. They are also called Federal PLUS Loans.

These loans normally cover books, tuition and other fees, books, supplies and transportation. The maximum amount of loan is the amount of loan required less financial aid if any required.

Benefits of opting for PLUS Loan:

PLUS loans come with a number of benefits. One can apply for a PLUS at any time during a year, you can apply for this loan irrespective of your level of income, and this loan comes with no collateral security requirement. Credit check is a basic requirement for this loan. You can repay the loan earlier without any penalty clause and discount on interest rates offered for on time payments.

PLUS Loan borrower benefits in 2009:

For a parent borrower under the Parent PLUS loans, the first payment of a PLUS loan installment is generally due within 60 days from the date of final loan disbursement. But a parent can defer payments on a PLUS loan while enrolled in school on a half-time basis. The relief in year 2009 is that, for a PLUS loan first disbursed on or after July 1, 2008, a parent, upon his or her request, can defer payments on a PLUS loan for the 6-month period after the parent drops below half time and while the student on behalf of whom the parent has borrowed is enrolled at least for half the time and for the 6-month period after the student drops below half the time as required. A graduate or a professional student borrower can defer payments on Grad PLUS loans while enrolled in school for at least on a half-time basis. The relief is that, the student can for a Grad PLUS loan first disbursed on or after July 1, 2008, defers payments on Grad PLUS loans for the first 6 months after the student drops below half the time.

For all loans disbursed between July 2008 and June 2009 the interest rate is fixed at 6% and all loans issued between July 2009 and June 2010 the rate is fixed at 5.6%. Any PLUS loan taken at this point in time is highly beneficial.

So friends what are your waiting for…, this maybe your right time to take the ultimate decision on Student Loan.

Good Luck & Happy Learning ]]> http://www.studentloaninfo.org/blog/borrowers-benefits-plus-loan-2009/feed 12 http://www.studentloaninfo.org/blog/postpone-repayment-of-a-plus-loan http://www.studentloaninfo.org/blog/postpone-repayment-of-a-plus-loan#comments Thu, 18 Sep 2008 09:10:11 +0000 Sally Croft http://www.studentloaninfo.org/blog/?p=65 ... ]]>

Roughly 80% of all students in colleges and universities have to take out some form of financial aid; the vast majority of students have to take out Student Loans. Some parents even have to take loans to assist in paying for their child’s education. Loans issued to parents to cover the expenses incurred by the student for such things as housing, food, books and transportation. The PLUS (Parent Loans for Undergraduate Students) program loans are available to the parents of students who are enrolled at least half time.

About PLUS Loans

PLUS Loans are issued to the parents of students to cover the costs of their education that are not covered by the student’s regular financial aid (scholarships, grants, loans) to be sure all fees are paid. The loans are low interest and easy to get as they have no required credit check and are readily available. These loans used to be available to undergraduate students only, but in 2006 the Federal Loan Program began issuing them to the parents of students in graduate and post-graduate programs.

PLUS Loan Repayment

Normally, you have to start making payments 60 days after the disbursement of the loan. The Promissory note has all the details you need to know to pay the loan properly. The payments are pretty straightforward and easy to follow. There are seldom any hidden fees that surface after you have already begun paying but you should be sure to read all the information before you sign the promissory note.

Postponing Repayment

There are times when repaying your loans can be difficult due to various financial issues that can come up. At these times you may want to postpone the payments on your PLUS Loan. Previously it was completely impossible to postpone payments on a PLUS Loan but as of July 1, 2008 you can do just that.

• For postponement you need to contact you lender and inquire about the application process for postponing your payments.
• In most cases it consists of filling out the application, including vital information and proof of your hardship or need for postponing repayment of your PLUS Loan.
• In the end, you get to postpone your loan payments for up to six months after the student has graduated or dropped below half time status.
• You should keep in mind that interest on your loan will continue to gather (monthly or quarterly).
• Once you have cleared the date of postponement, you have to start repayment according to your Promissory note.

About 80% of all higher education students receive some form of financial aid, the majority end up with some amount of Student Loan. There are so many different type of loans to choose from (Federal, Private, Subsidized, Unsubsidized, Student, Parent, etc) that you need to know which is right for your situation. In the case of parent loans, you can look at the Direct PLUS program. This is a great program for parents who want to assist in paying for their child’s education but do not have the available funding.

Federal PLUS Loans

On the federal level, PLUS loans were originally made for the parents of undergraduate students (hence the name Parent Loans for Undergraduate Students) but in 2006 they became available for the parents of Graduate and Post-Graduate Programs. These loans benefit the student and the parent as they pay for whatever is lacking in funding for the student’s education and enable the parents to begin repayment of them immediately. There is no grace period for repayment which means you can consolidate them immediately if you so desire. The loans are low interest and have flexible payment plans which are appealing to any borrower.

What They Handle

Direct PLUS loans are intended to cover the costs of education that are not covered by all the other financial aid the student receives. Once you have exhausted all your Grants, Scholarships and Federal Loan opportunities and you know how much more you will need for your education, you can start filling out a PLUS loan application.

How Parents Get PLUS Loans

To be eligible for these Federal Loans you have to be a US citizen, permanent resident or eligible non-citizen. You also have to pass a credit check and, of course, have the student enrolled in a qualifying program. There are no income requirements or prepayment penalties. The PLUS loan will be made to cover the cost of education less all other financial aid that the student has received. If the student has not received any aid or is ineligible, you can borrow up to the full cost of the education. This loan can be of virtually any size and can be renewed annually.

Important Facts

There are a number of important facts that need to be remembered with the Direct PLUS loan program:

• This is a loan that is required to be paid back. Not repaying your Student Loan can result in legal action, credit report changes and inability to take out another loan.
• There are options for postponing payments in times of financial hardship with the Direct PLUS loan program as long as the student is enrolled at least half time.
• Just about all of these loans are manageable online. Sallie Mae guarantees servicing for the life of the loan.
• The interest can be tax deductible when you make payments on the loan during the course of the tax year.
• Repayment begins 60 days after disbursement but you can start payments immediately.