{"id":81214,"date":"2025-08-05T12:14:00","date_gmt":"2025-08-05T16:14:00","guid":{"rendered":"https:\/\/www.tun.com\/blog\/?p=81214"},"modified":"2025-08-05T12:14:02","modified_gmt":"2025-08-05T16:14:02","slug":"what-are-direct-loans-all-you-need-to-know","status":"publish","type":"post","link":"https:\/\/www.tun.com\/blog\/what-are-direct-loans-all-you-need-to-know\/","title":{"rendered":"What Are Direct Loans? All You Need to Know"},"content":{"rendered":"\n

Direct loans are federal loans made by the U.S. Department of Education under the William D. Ford Federal Direct Loan Program (Direct Loans)<\/a> program.<\/p>\n\n\n\n

If you\u2019re considering Direct Loans, here\u2019s what you need to know.<\/p>\n\n\n\n

1. What types of Directs Loans are available?<\/h2>\n\n\n\n

There are four types of Direct Loans:<\/p>\n\n\n\n

1. <\/a>Direct Subsidized Loans<\/strong><\/a><\/strong>: These loans are available only to undergraduate<\/em> students with financial need. The Department of Education pays the interest<\/em> while: (a) you\u2019re in school at least half-time; (b) you\u2019re in grace period (first 6 months after graduation); and you\u2019re in deferment (you have chosen to postpone your loan repayment). For this reason, it is in your interest to tap out \u201csubsidized\u201d loans, if you\u2019re eligible, before taking out other loans.<\/p>\n\n\n\n

2. <\/a>Direct Unsubsidized Loans<\/strong><\/a><\/strong>: These loans are available to undergraduate, graduate and professional<\/em> students, and there is no need<\/em> to demonstrate financial need. Unlike \u201csubsidized\u201d loans, you have to pay the interest on unsubsidized loans even when you\u2019re in school, in grace period, or in deferment. Since interest accrues, you should pay the interest if you can afford it during those periods. If you can\u2019t, accrued interest will be added to your principal and you will have a larger overall amount to pay back.<\/p>\n\n\n\n

3. Direct Plus Loans<\/a><\/strong>: These are available to\u00a0parents of dependent undergraduate<\/em>\u00a0students (Parent PLUS<\/a>) and\u00a0graduate or professional<\/em>\u00a0students (Grad PLUS<\/a>). While there is no need to demonstrate financial need, borrowers have to undergo a credit check and must not have an adverse credit history. But, if you have an adverse credit history, don\u2019t lose heart. You may still qualify under certain circumstances (explained below).<\/p>\n\n\n\n

4. Direct Consolidation Loans<\/a><\/strong>: These loans combine your eligible federal student loans into a single loan, so you have one payment to make and one single loan servicer to deal with. The loans to be consolidated must be in repayment or in grace period.<\/p>\n\n\n\n

2. Who is your lender?<\/h2>\n\n\n\n

The Department of Education is the lender, but Direct Loans are serviced by loan servicing organizations or companies assigned to help the government manage the billing and other services for your loan. You could have more than one servicer if you have multiple federal student loans.<\/p>\n\n\n\n

3. Are you eligible for Direct Loans?<\/h2>\n\n\n\n

To qualify for Direct Subsidized Loans<\/em>,<\/strong> you must meet ALL<\/em> of the following requirements<\/a>:<\/p>\n\n\n\n

First<\/strong>, you have to show financial need<\/em>, which will be assessed based on the data you provide on your Free Application for Federal Student Aid (FAFSA)<\/a>.<\/p>\n\n\n\n

Second,<\/strong> you must be a U.S. citizen or U.S. national<\/em>, or fall under one of the following categories of eligible noncitizens who have:<\/p>\n\n\n\n