The Four Types of Direct Student Loans

The primary system in place for getting federal student loans is the William D. Ford Direct Loan Program. When you receive a student loan in this manner, it is the U.S. Department of Education that is loaning the money to you. The program consists of four loan types. Here is some more information on each type:

  • Subsidized Loans – In order to qualify for one of these loans, you must be an undergraduate and be able to demonstrate that you have a financial need. You can use the funds for either college or a career school.
  • Unsubsidized Loans – For this type of loan, both of the restrictions for subsidized loans are lifted. You can be an undergraduate, but graduate and professional students can also apply. You are not required to demonstrate any type of financial need.
  • PLUS Loans – Sometimes, even after you have received all available financial aid, there is still more tuition cost left over. PLUS loans bridge the gap and can be applied for by either the student or the parents of the student.
  • Consolidation Loans – If you had to take out multiple federal loans to cover your education, this service allows you to combine all of the federal loans into one. Only receiving one bill per month may help you to avoid missed payments. Since PLUS loans have a higher interest rate, it may also help you to decrease your monthly interest payments.

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College Planning Source will be happy to help you plan for the cost of your education. Contact us today at 858.676.0700 to get a complimentary planning assessment, or you can schedule one online.

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