Federal student aid programs such as Direct Loans are frequently included as part of a student’s financial aid package offered by a college. The interest rate is usually lower than any private loan and it remains at a fixed percentage rate. There are maximum annual and aggregate loan amounts which are based on the type of institution, undergraduate or graduate, and what year of school is being completed. In order to have a loan application accepted a Master Promissory Note must be done which denotes the individual’s promise to repay and afterwards a disclosure statement will be generated detailing loan amounts, interest rates and any other specific information.

Students are encouraged to not take out more loans than they can reasonably expect to repay after graduation. Direct Loans can be either subsidized or unsubsidized meaning that interest may or may not be accruing during the time a student is attending school. It is important to understand what type of loan you have given that a loan accruing interest will result in a larger balance upon graduation. The program allows for a six-month grace period following graduation, withdrawal or when a student is no longer enrolled at least half-time at school. After this grace period the government expects repayment of the entire amount borrowed and imposes stringent rules in regards to default, or nonpayment, of the loan.

Although there are conditions under which the student loan may be partially or fully discharged, in the majority of cases this is not the case. For those who are not able to find adequate employment or are experiencing financial hardship and cannot make the regular payment there are alternative options. It is essential to immediately contact the loan servicer for your loan to request a Direct Loans Forbearance form. A forbearance allows for flexibility in regards to length of repayment period, the amount of payment, or temporarily ceasing payments for the loan.