Direct Loan Program – What Does That Mean?


Direct Loan is true to its name and self explanatory. It is a program in which the government loans money directly to students rather than using a third party bank or other lending institution to process and make the loan. The direct loan program has been in affect for about 15 years now.The opposite of a direct loan is a Federal Family Education Loan (FEEL). Both direct loan programs and FEEL programs make PLUS and Stafford loans available. There are other similarities between what each program offers. The borrower has to decide which type of program he wants.Since both offer the same types of loans the same requirements must be met. If it a loan offered based on a person’s credit scores then both direct and FEEL programs will have the same requirements. The same is true if the loan is based on a family’s income. Both programs will have to follow the same requirement guidelines in offering the loan. With so many similarities how does one choose?Well there are some differences to consider. One is in customer service. When you involve a third party that is in business to make money normally you get more of a personal touch. Also, because the lender will make no money if they are not able to extend you credit they will work harder to get you approved for the loan. Government agencies are normally not as personal or as accommodating.Go to if you want to hear what others think about the two different programs.Many things posted are solely personal opinion and not so much on the actual variables or requirements of each program. Reading through it may help you get a good idea of where you stand between the two options.One important factor to keep in mind is that whenever you are dealing with a private lender your loan is subject to be sold to another lending institution.The opposite is the case with direct loans which are always directly with the federal government. It if is important to you that throughout the life of your loan you are able to deal with the same person or group of people if you have questions or concerns you might want to consider going with a direct loan program.