College is the final step in the educational process. Although college is very expensive, there are many different options available to assist you in affording the tuition. Most people apply for loans the most popular being a direct loan. Most colleges offer student loans and financial assistance, however a direct loan is offered by the Department of education.
You can obtain an application by either calling the Department of Education or going online. Doing a Google search will bring you to their website. You can apply for a direct loan in two different ways; subsidized and unsubsidized.
A subsidized direct loan means that the amount of credit you receive is based on the tuition you require. As long as you are in school, you will not be required to make a payment and you will not be charged interest. An unsubsidized direct loan means that there is a limit to the amount of money you can borrow. With an unsubsidized loan, the amount that you require is not taken into consideration. There is considerable interest charged to both these types of credits that you will be responsible for paying.
Loan Amount Restrictions The maximum amount for a subsidized loan varies depends on what year you are in college. An undergraduate can receive a maximum of $2,625, and the maximum you can receive on an unsubsidized loan is $4,000. For the second year of college the maximum increases to $3,500 for a subsidized direct loan and $5,000 for an unsubsidized loan.
For the remaining years that you are in college, a subsidized loan remains at $5,500. The limit for an unsubsidized direct loan does not increase for the remaining years. If you are a Graduate or professional student, the maximum you can borrow on a subsidized loan is $8,500 per academic year.
Graduate and professional students who apply for an unsubsidized direct loan can borrow up to $10,000 per year. Settlement Plans Repayment is made very simple, with four different payment options. A standard repayment plan entails making a payment every month for the life of the loan.
Although this is the most popular payment plan, it can take up to ten years to pay the direct loan in full. The payments of a Graduated repayment plan are very low in the beginning of the repayment process. The interest in this type of direct loan repayment process is slightly higher, and as years progress, your payments will increase considerably. However, you can take up to thirty years to repay the loan, The Income-Sensitive Repayment Plan is contingent upon your income.
Your family size and income are taken into consideration when your payment amount is figured out. Although it appears to have your best interests in mind, however in the long run, you will be paying substantially more than you originally borrowed. The final type of repayment plan for a direct loan is an extended repayment plan. This type of loan offers a thirty year repayment time. When you first graduate, it is understood that you need to get on your feet before you start repay your loans.
There may be circumstances that prevent you from paying your loans in a timely manner. There are payment options available until you are financially stable enough to start making your payments. One of these options is deferment.
This option allows you to take up to three years before you start to repay your direct loan. Other options such as forbearances and loan consolidation are also available. Loan consolidation is used quite often because it takes all of your student loans and consolidates them into one monthly payment. This payment is usually less than before the consolidation, saving you money. Forbearance is when your payments are suspended for a short amount of time. This option is usually used when you have suffered an illness or have lost your job.
Summary: Graduates and Undergraduates can benefit from a direct loan. It is a way for them to afford to continue their education. Whether you choose a subsidized or unsubsidized direct loan, you have your choice of repayment methods that will make it less stressful for you to repay your direct loan.
Brooke Hayles
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