Today, many people know about the federal direct student loan program. This direct student loan service has allowed so many people to go to college who would otherwise would not be able to go to college and get the education that they need. However, some people might not know a lot about the federal direct student loan program. They know it exists, but they do not know what it consists of. Here is some information to help you better understand how this program works to send young adults to college.
History Behind The Federal Direct Student Loan Program
You might be surprised to know that the federal direct student loan program did not even exist until the early 1990’s. In 1993, President Bill Clinton passed the direct loan program into law. In the beginning, the federal direct student loan program had a large funding. However, today the funding has decreased from over seven billion dollars in 2006 to just 509 million dollars budgeted for the program in 2008. However, President Obama has vowed to increase the budget for direct student loans and by July 2010 have all new student loans be through federal direct student loans.
With the United States as an example, other countries have started implementing federal direct student loan programs. For example, New Zealand offers loans at zero percent interest for students who have lived there for 183 or more consecutive days. This is even retroactive to all former students who had government loans before this federal direct student loan program was passed.
How Does Federal Direct Student Loan Program Work?
The federal direct student loan program is essential for so many people. This program allows students to get low interest loans that they do not need to pay off while they are in school. The federal direct loans have a minimal interest rate while students are in school and even during repayment keep a low interest rate. Students can take their time to pay off these loans and know that they will not be paying tens of thousands of dollars in interest because they could not pay it off right away. However, the federal direct student loan program is a need based program. Not everyone qualifies for this program, and even if you qualify the government will set how much you can take out in a loan through this program. However, even if you do not qualify for the federal direct student loan program, you can still find student loans through private lenders to help you go to college.