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<<< DIRECT AND FEDERAL STAFFORD LOANS

Federal Direct Stafford Loans

Federal Direct Loans are a result of the new direct lending program started by the Department of Education in 1995. The processes of applying for a loan and the methods of repayment differ somewhat for Direct Stafford Loans than those of Federal Stafford Loans.

How do you apply for a Federal Direct Loan?
First, you must complete the Free Application for Federal Student Aid (FAFSA) or Renewal FAFSA. After your FAFSA is processed, your school will review the results and will inform you of your loan eligibility.

You must then complete the promissory note provided by your school.

How do you pay back your Federal Direct Loan?
The Direct Loan Program offers four repayment plans that are available to borrowers of Federal Direct Loans. The repayment plans will be explained in more detail during entrance and exit counseling sessions at your school.

You may choose one of the following repayment plans:
  • The Standard Repayment Plan requires you to pay a fixed amount each month — at least $50 — for up to 10 years. The length of your actual repayment period will depend on your loan amount.
  • The Extended Repayment Plan allows you to extend loan repayment over a period that is generally 12 to 30 years, depending on your loan amount. Your monthly payment will be lower than it would be if you repaid the same total loan amount under the Standard Repayment Plan, but you will repay a higher total amount of interest over the life of your loan because the repayment period will be longer. The minimum monthly payment is $50.
  • Under the Graduated Repayment Plan, your payments will be lower at first and then increase generally every two years. The length of your repayment period will generally range from 12 to 30 years, depending on your loan amount. Your monthly payment may range from 50% to 150% of what it would be if you were repaying the same total loan amount under the Standard Repayment Plan. However, you'll repay a higher total amount of interest because the repayment period is longer than it is under the Standard Repayment Plan.
  • The Income Contingent Repayment Plan bases your monthly payment on your yearly income, family size, and loan amount. As your income rises or falls, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven.
Where do you send your payments?
Loan payments are made to the U.S. Department of Education. For more information on repayment options, you can access the Direct Loans Repayment Book.
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