Direct Loan
Ever heard of a direct loan before? Maybe, and maybe not. If you’re not involved with schooling of any kind then perhaps not, as most other kinds of loans aren’t direct in nature. Rather they rely on at least one third party through which the money must travel. As such the loan lacks a certain amount of discretion.
The direct loan allows for more privacy between the two parties involved and allows for more freedom on the distribution of the loan. Typically direct loaners fall under, as hinted at before, educational institutions. In the United States this is the U.S. Department of Education.
A direct loan may vary both in how long you have to repay it and in how it’s carried out. There are a few different kinds:
• Federal Direct Subsidized Loan: these loans charge interest over the course of the loan. In these cases, because of the extra interest, the student involved probably isn’t in dire financial need.
• Federal Direct Subsidized: As the last kind was with interest, this one was without. So long as the student is actively in school at at least a part time level they will not be charged interest on their advance. The moment they graduate or drop out of the school the interest kicks in.
• Federal PLUS: These loans are to the parents of the student rather than to the student themselves. They are meant to allow parents to borrow cash for their dependent student. Beware if applying for one that the following stipulations must be met: first, the student may not be older than 24. Second, the student may not be either a graduate or a professional student. And third, the student may not have any legal dependants relying on their income.
• Consolidation: These loans take other federal loans and combine them into one lump loan. These loans are particularly useful for students with multiple sources of money who want to pay less interest on the whole.
These loans are great because it’s easy to contact the source. You need not travel through any third party.