federal direct student loan program

Student Loans - How to Shop for a Student Loan - Federal Backing ...

Unlike some other financial aid programs, student loans must be paid back. There are several types of student loans available in the United States. The first is the Federal Student Loans made to the students directly (1). There are no payments until after graduation, but amounts are quite limited. The second is the Federal Student Loans made to the parents (2). They have a much higher limit, but payments start immediately. The third type is the Private Student Loans made to students or parents (3). These have higher limits and no payments until after graduation. Usually the interest will start to accrue immediately though.

The first type of student loan is made directly to the students and is used to supplement personal and family resources, scholarships, grants and work-study. These loans can be subsidized by the Federal government or may not be, depending on the students needs.

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New bill to cut aid, increase student loan interest rates

The Deficit Reduction Act, going into effect July 1, will cut direct spending to federally subsidized programs, including a $12.7 billion cut to student aid, and raise interest on student loans used to finance college tuition. The act, signed by President Bush earlier this year, aims to reduce the nation's deficit. The act will also cut spending to other areas, including medicare, transportation, agriculture, and medicaid. One potential benefit is that students will be able to borrow more money at one time; another is that graduate and professional students will be able to apply for a Parent PLUS loan that in the past has been exclusive to parents of dependent undergraduate students. In anticipation of the interest rate increase, UCLA's financial aid office sent e-mails to students recommending that they consolidate their loans and lock their interest rates in to a lower rate, said Ronald Johnson, UCLA director of financial aid.

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