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Direct Student Loans

7 Tips to Getting What You Want in Direct Student Loans.  And 9 Direct Student Loans Secrets, we've encountered during our process with 1 undergraduate student and the other in graduate school getting her master's degree.

Direct Student Loans

1.  Direct student loans do not come from private banks, savings and loans or financial institutions.  These student loans come directly from the U.S. Department of Education.  

2.  Your direct student loans money will not come directly to you, it is placed in your account at the college you are attending.  The school will immediately take out their portion for tuition, lab fees and you will then send you a check for the remainder of your direct student loan and you can use it to pay for other expenses including room and board, books, class fees and computers.

3.  Direct student loans have a single access point (Direct Loan Servicing Center) and you can keep track of everything including accruing interest, how much you own, information on repayment options of your student loan and various other things related to your loan.  That means if you go to several different colleges before you graduate, you simply login to your account (online 24/7) and look up any account information you need.

4.  You have many different repayment options and you don't have to start payments on your direct student loans until 6 months after graduation.

5.  Many different types of student loans are considered "direct student loans" and you can see a complete list including up to date information at:  Types of Student Loans .  The 3 most popular are Subsidized Stafford Loans, Unsubsidized Stafford Loans, and PLUS Loans.

6.  You must be a half time or full time student in order to receive these funds.  Also the college you are attending must participate in the Direct Loan Program.

Bonus Section:

***9 Direct Student Loans Secrets***

1.  Be prepared to sign a MPN or promissory report. It will explain the terms and conditions of your loan and agreement to repay your loan.  In other words, it's to government that is involved and they create more paper trails than flies on honey. They need to cover their A**es and want to make sure you completely understand that YOU HAVE TO PAY THIS MONEY BACK, regardless if you graduate or not.

2.  Be prepared to pay a "fee" for your loan.  Usually it runs about 2% of the loan and they will take this fee out, before your college receives this money.

3.  You will be required to take a "Entrance" and "Exit" counseling.  What the heck is this?  Basically more paperwork, but they want you to understand what the loan is all about, explain more terms and conditions and prepare you for paying them back. Once you complete this online, then you will be required to take a quiz to make sure you understand what is going on.  The same can be said for the Exit counseling.  Except this time they want you to learn about their repayment options which are:

4.  Standard Plan -this is a direct student loans repayment option of making monthly payments for up to 10 years.

5.  Extended Plan - depending on the total amount of your loans, you can get a plan that gives you up to 25 years to pay back.

6. Graduated Plan - lower payments to begin with, they increase with time and gives you the flexibility to pay off your loan in full within 10 years.

7. Income Contingent Plan - adjusted yearly, your repayment plan is based on your annual income, your family size and total amount of your loan. Don't forget if you are married they will take your spouses income and throw it into the mixing pot. After 25 years any unpaid monies will be forgiven.

This is a BIGGY

8.  If you chose to have automatic withdrawal from either your checking account or savings account, they will give you a .25% decrease in your interest rate. It might not sound like much, but over time this is a really nice feature.

9.  If you find repayment is becoming a burden, you can request help in changing your loan payments and you should do it.  However, if you default on your loan, you better be prepared to have a heck of a time purchasing anything on credit. It probably will never happen because your credit rating will plummet dramatically.


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