It is safe to say that the economy has scared anyone trying to get a loan for school. How will you pay it back if the economy gets worse? How will you get a job once school is over? These are all great questions to ask yourself in the process of college. One great way to make sure your education gets funded is to stick to government programs and lending. have you heard about Stafford Loans and PLUS loans? They are government funded loans for your education. (Stafford for you, and PLUS for parents). The federal direct loan program or FDLP is another great way to get loans that is less common. The FDLP is more often called “direct loans”.
Thank the Department of Education
Direct Loans are the same as Stafford and PLUS loans except they are funded by the department of education or offered through the Federal Family Education Loan Program. (mouthful, so FFELP for short). Your school will choose which program best fits the needs of their students, The FDSLP or the FFELP. Confused yet? All you should know is that there was $509 million dollars budgeted for 2008 and that amount is expected to be higher with Barack Obama as president.
How to get these Student Direct Loans
In the FFELP, Private organizations market and service federally guaranteed loans. These institutions include non-profits and some commercial organizations. Why do they do this? To make money off the interest. In order to qualify for these loans you need to fill out the FAFSA. I have said this in most of my articles, but filling out the FAFSA and filling it out early can make all the difference when it comes to getting the money you need for college. There will be a section on the FAFSA where you can request FFELP or FDSLP. You will only be able to choose one depending on your college and the Student Direct loan they offer.
Consolidating you Direct Loan
Once you graduate you can consolidate Stafford Loans, PLUS loans and Perkins loans into one single debt. This is the definition of consolidation and its smart to do this once you graduate because it reduces monthly repayments and lengthens the term of your loan. Consolidated loans have a fixed interest rate for the entire life of the loan. So your payment won’t change. When I graduate I am definitely signing up for this option. Multiple bills from separate loans can cause headaches. This makes it easy to lower your payment and pay it off gradually.
Where to Consolidate your Direct Loan
There are some great companies out there to consolidate your loan. First place is where you received your direct loan, and that is the FDSLP. The department of education will consolidate your loan with a fixed interest rate and one monthly payment. Other companies that are leaders in consolidation are Sallie Mae, CitiBank and NextStudent. Make sure you do your research when deciding which to consolidate with. Options may very with each company or program.
There you have it. All the Direct Loan information you need. When you decide to get a student direct loan, make sure you know what you are getting into and read the fine print. My education is really important to me, but after college I want to make sure I am not paying huge monthly payments and getting myself into even bigger holes.
