Under the Federal Direct Loan Program (FDLP, also known as Direct), the US Department of Education makes a loan through the student’s school to help a student or parent pay the costs of the student’s education beyond high school.
The FDLP offers several types of student loans: Direct Subsidized, Direct Unsubsidized, Direct PLUS (for parents of dependent undergraduate students, and graduate and professional students), and Direct Consolidation.
- Interest rates are low
- Application and approval processes are uncomplicated
- Loans are available to both students and parents
- Direct Subsidized and Direct Unsubsidized loans aren’t contingent upon a credit check
- A student is not required to make payments on a Direct Subsidized, Direct Unsubsidized, or Direct Student PLUS loan while enrolled in school on at least a half-time basis; in addition:
- For Direct Subsidized or Direct Unsubsidized loans, borrowers aren’t required to make payments for the six-month period after they drop below half-time enrollment
- For Direct PLUS loans first disbursed on or after , student borrowers can defer payments for the six-month period after they drop below half-time enrollment
- The federal government pays the interest on certain loans while the student is in school on at least a half-time basis, in a grace period, or in a period of deferment
- For the six-month period after the parent drops below half-time enrollment
- While the student for whom the parent borrowed is enrolled at least half time, and for the six-month period after the student drops below half-time enrollment
Each school that participates in the Federal Perkins Loan Program has a very limited amount of funds with which to make Perkins Loans, so it’s important for a student to submit his or her Free Application for Federal Student Aid (FAFSA) early to be considered for one. A student awarded a Perkins Loan must sign a Master Promissory Note (MPN).
The chart below shows the maximum Perkins Loan funds a student can receive. The amount a student is awarded may be less than the maximum, and will depend on the student’s financial need, the student’s other estimated financial assistance, and the availability of funds at the school.
How the Funds are Delivered
A student’s school is the Perkins Loan lender and disburses the loan funds directly to the student or credits the student’s school account. Generally, the school disburses the loan in at least two payments during the academic year.
Paying Back the Loan
A student begins repayment on a Perkins Loan after ceasing to be enrolled at least half time and after a nine-month grace period. Borrowers have as long as 10 years to repay the loan. Perkins Loans do not have repayment plan options. Borrowers must repay the school that loaned the money, or its loan servicing agent. The minimum payment is $40 per month.
Perkins Loans have deferments and forbearances, and loan cancellation options are available under certain circumstances. The MPN provides information on these options. A student must apply for them through the school or its loan servicing agent, and approval is not automatic.
Perkins Loans may be included in a Direct Consolidation loan; however, a student who takes advantage of this option will lose cancellation benefits that are available only under the Federal Perkins Loan Program.
The Texas College Access Loan Program
When a student applies for financial aid using the Free Application for Federal Student Aid (FAFSA), the US Department of Education estimates how much the student and his or her family can afford to spend for the upcoming year online payday loans South Carolina of education. The student’s school then subtracts this expected family contribution (EFC) from the school’s cost of attendance (COA). This difference is the student’s financial need.