Overview of Direct Lending

The William D. Ford Federal Direct Loan program was established to provide long-term academic loans to qualified students who are enrolled in facilities of higher education, vocational, technical, business and trade schools. The Federal Government provides the funds for direct loans directly to the student, bypassing an outside lender. Students who receive federal direct loan funds cannot receive FFELP (federal family education loan) funds during the same enrollment period.

The three types of direct loans are:

Direct Loan Type	Loan Characteristics
Direct Subsidized Stafford Loan	A student's eligibility for a Direct Subsidized Stafford loan is determined entirely on the student's ability to demonstrate financial need. The U.S. Department of Education subsidizes the interest; therefore, the borrower is not charged interest while they are enrolled in school at least half time, and during grace and deferment periods.
Direct Unsubsidized Stafford Loan	A student is eligible for a Direct Unsubsidized Stafford loan regardless of their financial situation. Borrowers are responsible for paying the interest on these loans.
Direct PLUS Loan	Direct PLUS loans enable parents to borrow on behalf of their dependent students who are enrolled at least half time. Borrowers are responsible for paying the interest on these loans. Direct Graduate/Professional PLUS loans, or Grad PLUS loans, are intended for graduate or professional students who borrow money for themselves. The award amount equals the COA less any financial aid for FAFSA applicants.

Direct Loan Type

Loan Characteristics

Direct Subsidized Stafford Loan

A student's eligibility for a Direct Subsidized Stafford loan is determined entirely on the student's ability to demonstrate financial need. The U.S. Department of Education subsidizes the interest; therefore, the borrower is not charged interest while they are enrolled in school at least half time, and during grace and deferment periods.

Direct Unsubsidized Stafford Loan

A student is eligible for a Direct Unsubsidized Stafford loan regardless of their financial situation. Borrowers are responsible for paying the interest on these loans.

Direct PLUS Loan

Direct PLUS loans enable parents to borrow on behalf of their dependent students who are enrolled at least half time. Borrowers are responsible for paying the interest on these loans.

Direct Graduate/Professional PLUS loans, or Grad PLUS loans, are intended for graduate or professional students who borrow money for themselves. The award amount equals the COA less any financial aid for FAFSA applicants.

The direct lending portion of the Financial Aid package is designed to help you process the Subsidized Stafford, Unsubsidized Stafford, and PLUS loans awarded to students attending your institution.