A Direct Federal student loan offer students in the U.S. the largest source of need-based loans. Direct student loans allow students to obtain a loan with simple interest and a government guarantee. In applying for such loans, students do not need to have any type of collateral. A student who gets Direct student loans are using the government as its lender for the loan.
A Direct Federal student loan can be given to citizens or to permanent residents. A Direct federal student loan, guarantees an in-school interest subsidy. That means that the federal government pays the interest on the loan while the student is still in school. The government also pays that interest during the first six months after the loan recipient is out of school.
Some students who have benefited from these loans have had the opportunity to get an interest reduction. That reduction is given to loan recipients who have chosen to use a direct debit to make payments on the loan. The extent of that reduction depends on the level of education attained by the student.
Direct student loans for undergraduates typically offer a 1% interest rate reduction for agreement to direct debit and for graduate students they usually provide a 1.5% rate reduction to any such loan recipient who is willing to make payments by direct debit.
Provided by Martin Haworth
