Federal Direct Loans (FDSLP)

With the exponential costs associated with obtaining a higher education it’s no wonder why many students rely on federal government loans to pay their way through college.

Government loans have a host of advantages over their private lenders, like lower interest rates and the borrower does not require a credit check or collateral, which is a major plus for students just entering college. Government student loans also present a variety of deferment options and extended repayment terms.

Federal Direct Student Loan Program (FDSLP) loans, administered by "Direct Lending Schools", are two such loans provided by the US government directly to students and their parents.

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Most students or parents are eligible for federal Stafford student loan through the Federal Direct Student Loan Program (FDSLP) loans Program.

As with all federal aid, the student is required to complete a FAFSA application.

Information provided in the FAFSA application will determine whether students are eligible for a subsidized or unsubsidized loan. Subsidized loans do not accrue interest until loan repayment begins, whereas unsubsidized loans accrue interest from when the loan is disbursed. With all Direct Student Loans, repayment begins six (6) months after the student ceases half-time status.

In order to be awarded a Direct Student Loan, the student must complete and file their FAFSA application. After the student has submitted their FAFSA application to the Department of Education and any additional federal requirements, students may also be asked to complete the College Board's CSS PROFILE form, the Office of Financial Aid will automatically award the student the maximum amount of student loans eligible.

The federal government requires first time student applicants wanting to borrow from the Federal Direct Student Loan Program (FDSLP) to complete loan counseling prior to Federal Direct Loan disbursement. Students will also be required to complete a Federal Direct Loan Master Promissory Note (MPN) before loan money can be disbursed.

Both the undergraduate and graduate students (and in some cases their parents) can apply for the FAFSA or Free Application for Federal Student Aid.

Federal Direct Student Loans for the 2008-2009 calendar years have a fixed interest rate based on the status of the student and the type of Federal Direct Loan.

2008-2009 Direct Student Loan Program (FDSLP) rates:

6.0% Direct Subsidized Loan for Undergraduate Students
6.8% Direct Subsidized Loan for Graduate Students
6.8% Direct Unsubsidized Loans to all eligible students

Subsidized federal loans do not accrue interest until loan repayment begins, whereas unsubsidized federal loans accrue interest from when the loan is disbursed.

Student Loan Program (FDSLP) Program Origination Fee

In addition to interest, all federal direct student loans have a 2.0% origination fee. Students repaying their first 12 monthly payments on time will receive a 1.5% rebate at the time of origination, so the assessed fee is only 0.5%.

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