What you need to know about federal direct student loans

Sometimes, savings and income aren't enough to fully cover the cost of attendance. That's when federal loans can help. Find out how you and your child can use federal direct student loans to help cover the gap.

What are federal Direct student loans?

Federal Direct student loans are loans issued by the U.S. Department of Education to pay for higher education expenses. Direct loans are part of the William D. Ford Federal Direct Loan program. If you obtained or consolidated federal student loans on or after July 1, 2010, you have a federal Direct loan.

There are four types of federal Direct student loan options:

• Direct Subsidized loans: These loans are available to undergraduate college students who demonstrate financial need. The government subsidizes the interest payments while the student is attending school at least half-time, during the grace period and during any period of deferment.
• Direct Unsubsidized loans: These loans are available to undergraduate, graduate, and professional students. Borrowers don't need to demonstrate financial need to be eligible for these loans, and they are fully responsible for paying all interest charges.
• Direct PLUS loans: Graduate and professional students, as well as parents of dependent undergraduate students, can use parent PLUS loans to help pay for education costs that aren't covered by other financial aid. These types of loans require a credit check, but don't use financial need as criteria. If the borrower has an adverse credit history, they may still qualify by meeting additional requirements.
• Direct Consolidation loans: Borrowers have the ability to combine two or more federal student loans into one loan with a single monthly payment. Aside from the convenience, consolidating is often required to be eligible for certain federal repayment options and forgiveness programs.

How to apply for federal aid

To apply for federal Direct student loans, you and your child should first complete the Free Application for Federal Student Aid (FAFSA^®). Once the FAFSA is processed, you’ll find out which loans you or the student qualify for and how much you may borrow. You need to fill out the FAFSA for every school year for which you'll need financial assistance.

Eligibility for Direct student loans through the federal government

In order to qualify for federal student aid, including Direct loans, students need to meet some basic criteria, such as:

• Demonstrate financial need for programs that require it
• Be a U.S. citizen or an eligible noncitizen
• Have a valid Social Security number, with a few exceptions
• Men ages 18 to 25 must have registered with Selective Service
• Be enrolled or accepted for enrollment at least half time as a regular student in an eligible degree or certificate program
• Maintain satisfactory academic progress
• Sign the certification statement on the FAFSA that states the borrower isn't in default, doesn't owe money on a federal student grant, and will use the funds to pay for qualifying education expenses only
• Have a high school diploma or a recognized equivalent such as a GED certificate, have completed a high school education in a state-law-approved homeschool setting, or have enrolled in an eligible career pathway program and met one of the ability to benefit (ATB) alternatives

Made ready for college

If you have questions or are interested in learning about other ways to pay for college, please call 1-888-411-0266, visit us online, or visit your nearest Citizens branch.