Process

The student loans come directly from the Department of Education. There is no outside lender involved in the transaction, which helps to make the process simple. In addition, most outside lenders are more costly than obtaining a low cost loans through the federal direct loan program. This is one of the best reasons for all students to consider obtaining their loan through this means. These loans are given by the government, but they cannot be discharged in bankruptcy or other situations. You must repay the loans, but not until after you stop going to school, in most cases.

The process of obtaining student loans directly from the federal government starts with completing the FAFSA form. This is an application process that takes you through the qualifications of the loan. It will request information on where you are going to school, why you are going to school, your income, your credit and various other factors. This one, complete form asks virtually all information that is needed to determine if you qualify for a student loan through the federal government. Usually, it takes less than an hour to apply for this loan through the FAFSA application and it can be complete at home right on the web.

When the FAFSA application is complete, the process starts. The programs will determine if you qualify for a subsidized or an unsubsidized loan. Those that are subsidized do not accrue any interest costs on the loan until the loan repayment terms begin, usually after you graduate from college or leave school. Unsubsidized loans, on the other hand, will begin to build interest when the loan is first disbursed, or sent from the government to your school for payment of your education. The difference here in cost can be quite considerably, since interest building over the entire loan balance can be quite costly