Direct student loans are federal government loans provided through the William D. Ford Federal Direct Loan Program. These types of loans are designed to help students who have graduated from the high school and are continuing their education in colleges, universities or trade schools. Direct student loans are part of the federal student aid programs administered by the US Department of Education. These loans are not offered through private lenders or companies. The loan agreement is between the student and the US Department of Education, without any agencies as a middle man.

Students that want to apply for direct student loans must complete a Free Application for Federal Student Aid (or FAFSA) over the internet and submit all required information and documentation. In addition each student will also have to complete a Master Promissory Note (or MPN). MPN is a legal document that explains the contract between the student and the Department of Education. It also outlines how the loan will be repaid and the specific terms and conditions of the loans. After awarded with one of the direct student loans, you should sign up and use the Service Center. It provides you all the information of your payments and allows you to view the records on the balance you owe. If you need one, you can also obtain a counselor service from a Direct Loan Servicing site.

For many years, graduate students were only given Stafford Loans as a federal loan option for funding their often costly education. The difference was made up through home equity, savings, salaries and private loans. However, the Graduate PLUS Loan is a new product that became available to graduate students in 2006. Graduate students with good credit can apply on their own signature for a loan up to the cost of education, minus any other aid received. The Graduate PLUS Loan can be applied to tuition, room and board, education supplies, lab and travel expenses. The interest rate is fixed and payments are not required while enrolled in school. Upon graduation, borrower benefits kick in to help students save money during repayment. Or a student may save even more by consolidating this loan using the federal loan consolidation program. The Graduate PLUS Loan truly provides graduate students with a great option to making their graduate education dreams a reality.

The two most common direct student loans are: (i) subsidized Stafford loan and (ii) unsubsidized Stafford loan. The subsidized loan has an interest subsidy and paid by the Government. Students who are awarded don’t need to worry about paying interest and hence can concentrate on his or her study in full.

Named for Senator Claiborne Pell, the Pell Grant was established to provide funds that don’t need to be repaid directly to the neediest students. This is because it is a grant and not a federal student loan. However, like the Stafford and Perkins Loan, eligibility is based on need, as determined by the cost of attendance and expected family contribution. Since 2003, the maximum Pell Grant award has been $4,050 per academic year. However, due to the rising cost of education, many question why the Pell Grant award has not also increased. The Pell Grant covers, on average, one-third of the yearly cost of education at a public four-year institution. However, twenty years ago, it covered close to 60%. On February 15, 2007, in an attempt to slowly combat this issue, President Bush signed legislation into law that would increase the Pell Grant to $4,310 for the 2007-08 academic year. The following year, the grant will increase to $4,600 and up to $5,400 by the year 2012. These advances are certainly helping students and families fund the cost of education, especially as tuition costs continue to rise

If in case a student can not get a student loan consolidation program then they can use the regular debt consolidation plans too consolidate their student loans but these general loans can cost them more than an average student loan consolidation program as these loans are meant to be sold with higher interest rates and low repayment period.

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