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The Federal Direct Student Loan Program

The FDSLP, or Federal Direct Student Loan Program, is a program that offers financial aid to college students and is funded by the US government via the US Department of Education. This program gives potential college students a simple, flexible way to borrow money to cover the cost of their higher education.The funds distributed through the FDSLP do not come from a traditional bank, which is how the interest rates are considerably lower than those of regular loans. Loans offered through this program are funded with federal capital, controlled by the federal government and also repaid to the same entity as well. Money is repaid to the Department of Education for the entire life of the loan which allows for a one-stop shopping experience from start to finish.The process of obtaining a loan through the FDSLP is a relatively simple one. First, the borrower must complete a FAFSA, which is the Free Application for Federal Student Aid. This important form must be completed in its entirety for any student loan to be processed and produces what is called a SAR or Student Aid Report. The SAR will outline the amount of money the student or family is expected to contribute toward their tuition costs. It also determines the amount of money the borrower is eligible to receive.There are two types of Federal Direct Student Loans that one may qualify for, either subsidized or unsubsidized loan. The Direct Stafford Subsidized Loan is one that is based on the financial need of the student and is offered to those who are enrolled in at least a part-time basis. The government pays all of the interest on the loan while the student is in school, which can be a huge benefit to consider.The Direct Stafford Unsubsidized Loan isnt one that is based on a financial need so it is more readily available to potential students. While the student is still enrolled in college, the interest is capitalized, meaning it is added to the principal of the loan if the student chooses not to make interest payments or is unable to do so.Many students choose to begin paying on the interest as soon as they can to lower the overall cost of their loan. And there are others who choose to wait until after they graduate to begin repayment either for the convenience or out of necessity. If the student is considered a dependent of their parents, the parents may want to apply for a Federal Direct Parent Loan for Undergraduate Students, commonly referred to as PLUS.The PLUS loan isnt based on financial need so these loans may be given to borrowers regardless of their income level, although good credit is one of the deciding factors for approval. Another important thing to consider is that the interest rates for the PLUS loan will vary throughout the life of the loan.Another benefit to the FDSLP is that borrowers have a considerable amount of flexible repayment options. There are four basic repayment plans; Standard, Extended, Graduated or Income Contingent. Another plus is that students are able to switch between those options if they need to without being charged fees for the entire length of the loan.

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