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In this video, we discuss the 8 Reasons Why You Should Take Out The Federal Direct Student Loans Fafsa Student loans. A federal Direct Loan is a federal student loan made directly by the U.S. Department of Education. Generally, if you took out a federal student loan or consolidated your loans on or after July 1, 2010, you have a federal Direct Loan.We also go into detail about the Parent Plus Loan. All to help you understand the process and help pay for the college cost. To make sure to maximize your college grants, student loans and workstudy make sure to avoid these common Fafsa mistakes.

If you decide to take out a loan, make sure you understand who is making the loan and the terms and conditions of the loan. Student loans can come from the federal government, from private sources such as a bank or financial institution, or from other organizations. Loans made by the federal government, called federal student loans, usually have more benefits than loans from banks or other private sources. Learn more about the differences between federal and private student loans.

What types of federal student loans are available?
The U.S. Department of Education’s federal student loan program is the William D. Ford Federal Direct Loan (Direct Loan) Program. Under this program, the U.S. Department of Education is your lender. There are four types of Direct Loans available:

Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.

Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.

Direct Consolidation Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.

How much money can I borrow in federal student loans?
It depends on whether you’re an undergraduate student, a graduate or professional student, or a parent.

If you are an undergraduate student, the maximum amount you can borrow each year in Direct Subsidized Loans and Direct Unsubsidized Loans ranges from $5,500 to $12,500 per year, depending on what year you are in school and your dependency status.

If you are a graduate or professional student, you can borrow up to $20,500 each year in Direct Unsubsidized Loans. Direct PLUS Loans can also be used for the remainder of your college costs, as determined by your school, not covered by other financial aid.

If you are a parent of a dependent undergraduate student, you can receive a Direct PLUS Loan for the remainder of your child’s college costs, as determined by his or her school, not covered by other financial aid.

FAFSA (Free Application for Federal Student Aid). Before each year of college, apply for federal grants, workstudy, and loans with the Free Application for Federal Student Aid (FAFSA®) form. Your college uses your FAFSA data to determine your federal aid eligibility. Many states and colleges use FAFSA data to award their own aid. After submission, you’ll receive your Student Aid Report. Subsidized and unsubsidized loans are federal student loans for eligible students to help cover the cost of higher education at a fouryear college or university, community college, or trade, career, or technical school. The U.S. Department of Education offers eligible students at participating schools Direct Subsidized Loans and Direct Unsubsidized Loans. (Some people refer to these loans as Stafford Loans or Direct Stafford Loans.)

Fees for Federal Student Loans
Most federal student loans have loan fees. These fees are a percentage of the total loan amount.

A loan fee comes out of the amount of money that is disbursed (paid out) to you while you’re in school. This means the money you receive will be less than the amount you actually borrow.

You’re responsible for repaying the entire amount you borrowed and not just the amount you received.

The chart below shows the loan fees for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after Oct. 1, 2019.

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