Direct loans are issued by the Department of Education to fund undergraduate or graduate study. Currently, all new federal student loans are issued under the Direct loan program, however, some older types of federal loans still exist.
There are several types of Direct loans:
- Direct Subsidized Loans are issued for undergraduate study and are based on financial need. The Department of Education will pay the interest on a subsidized loan while you’re in school (at least half-time), in your grace period after graduating, or in periods of deferment.
- Direct Unsubsidized Loans are issued for undergraduate or graduate study and are not based on financial need. The borrower is always responsible for the interest on these loans.
- Direct PLUS Loans are issued to graduate students and parents of dependent undergraduate students. They have higher interest rates than the types above.
- Direct Consolidation Loans: Several federal loans (including loans of other types) can be combined into one consolidation loan. Read more about consolidation here.
If you’re not sure what type of federal student loans you have, you can use Summer to sync and track your loan information. You can also log in to Federal Student Aid’s National Student Loan Data System or check your servicer’s website.