In this article, we are going to provide you with all the detailed information about the William D Ford Act for the Federal Direct Loan Program. We will guide you on how to apply, who is eligible, what types of opportunities you can benefit, etc. If you need any other supportive service or individual consultation related to the Act of Federal Direct Loan Program, you may contact Student Loan Resolved Helpline.
William D Ford Act was issued by the US Department of Education and only loan program backed- by the government. The program offers different types of loans such as PLUS loans, Direct Consolidation Loan, Subsidized Direct Loans and Unsubsidized Direct Loans. Due to all the loans are guaranteed by the Act, anyone who meets the essential eligibility requirement could apply for the Federal Direct Loan Program.
Who is eligible for the William D. Ford Federal Direct Loan Program?
While applying for this program, neither your credit history or income is taken into consideration as an eligibility requirement. If you meet general requirements, you could qualify for the Federal Direct Loan Program. Basic requirements are that if you don’t owe a repayment for a federal grant if you have not reached the maximum loan limit, or if you don’t have defaulted loans previously, you qualify for William D. Ford Federal Direct Loan Program.
William D Ford Act directly helps the students, so the schools which participate in this program receive loan funds directly from the US Department of Education, and delivers to the eligible students. By the way, it worth to note that not all the schools participate in the Federal Direct Loan Program. That is why, before applying, make sure the school you have chosen to participate or not through that program.
First of all, it should be said that the main difference between the Federal Direct Loan Program and FFEL is a source of funding. So, FDLP is funded by the US Department of Education, while FFEL gets its funds from private banks or other types of lenders. On the other hand, the Federal Direct Loan Program has a range of advantages that you can benefit.
Easy access to other sources of funds – William D. Ford Federal Direct Loan Program is fully funded by the Federal Government. That is why it is not challenging to get access to other funds such as banks, financial institutions or different types of lenders.
Lower rates for Parents- Federal Direct Loan program includes particular direction such as Federal Parent Loan for Undergraduate students. This direction allows us to get access to Federal Direct loans (Federal PLUS) with a 7% interest rate.
Additional Repayment Plan options – one of the most beneficial sides of this program is that Federal Direct Loan allows the borrowers to take additional repayment plan. Especially, for those who find it difficult to make a monthly payment, the program provides an income contingent repayment plan. Through this plan, you can make monthly payment with up to 10%, and after 25 years of payment, the left amount of loan is forgiven.
Single Lender – The borrowers could be able to track their loan procedures and transactions with only one lender and in one location.
Consolidation opportunity – William D. Ford Federal Direct Loan Program allows you to make your student loans consolidate. It means that you could combine different types of your loans under the Federal Direct Loan program or FFEL program.
As we mentioned earlier, this program works in several directions. So, the William D. Ford Direct Loan Program offers several types of loans which they have specific eligibility requirements and payment plans. Before submitting your application, it would be better you take a look at these various options and determine which one reflects your financial situation in the best way.
Direct Subsidized Loans – this type of loan offered by the Direct Loan Program allow you to borrow money and do not accrue interest during the time you have been enrolled in school. This loan deferred after you graduate. To be eligible for Direct Subsidized Loans, you are not required to have a credit score or any level of income. It is because the Federal Government determines the interest rates on Direct Subsidized Loans and these rates are fixed. On the other hand, you should keep in mind that the amount of credit you can take out is limited. All you are going to need is to complete the free application for Student Aid (FAFSA).
While you are enrolled in school, you are not required to pay interest on Direct loan, because the Government covers your interest. For example, if you borrow $1000 at the beginning of your education, at the end of your education period, you still owe $1000, because the Government pays your interest. Direct Subsidized Loan is intended for low-income undergraduate students, and only your school could determine what amount of credit you can be eligible.
Direct Unsubsidized Loans – When we come to Unsubsidized Direct Loans, things are different a little bit. The main difference between Direct Subsidized Loans is that Uncle Sam does not act so generously. So when you take the credit through the Unsubsidized Direct Loans, you are responsible for making repayment on interest from the date you borrowed. For example, let us say you borrowed $1000 for your education, after four years, at the end of your school you are responsible for $1300 thanks to the accrued interests. Direct Unsubsidized Loans are considered the general type of Federal Direct Loan, that is why the Government does not pay any interest on them. The borrower is entirely responsible for paying all amount of the debt including interests and principle. Likely to Direct Subsidized Loans, Unsubsidized Direct Loans also has pros and cons.
PLUS Loan – Another type of Federal Direct Loan under the William D Ford Act is PLUS (Parent Loan for Undergraduate Students) loan. This loan program is intended for assisting undergraduate students and parents of dependent students in covering their educational expenses. PLUS loan works in a simple way so parents of dependent students could borrow money on behalf of the students. There are no strict requirements to be eligible for the PLUS loan program. Thus, all you are going to need is to be enrolled at least half-time, and your parent has to pass a regular credit check. If you have already graduated or you are a professional degree student who is enrolled at least half-time at available school, you can apply for PLUS loan in the purpose of your academic study.
But you have to be a dependent student from the parent ( it could be adoptive, biological, or stepparent in special cases). There is one more thing you should be aware of that not all school participate in the PLUS loan program. That is why before submitting your application, it would be better to determine whether your school participate in this loan program or not.
Direct Consolidation Loan – If we describe generally, Direct Consolidation Loan allows you to combine several different loans under unit loan with the fixed average interest rate. Direct Consolidation Loan could be advantageous and beneficial, especially for that it makes a couple of various loans combine and provide lower monthly payments.
This program is operated and controlled by the US Department of Education, and the good news is that it does not require an application fee. According to regulations, almost most types of federal loans could be consolidated, but the only private credit is the exception. There is one thing you have to keep in mind first before thinking about applying for the Direct Consolidation Loan.
If you consolidate your loans, you are going to lose your right to benefit from your original. Direct Consolidation Loan is considered another and utterly different loan program you are responsible. That is why you have to think better and take into consideration your future of financial situation before applying. Don’t worry; we will guide you on how to make a wise decision on applying for Direct Consolidation Loan.
Consolidation of your several loans allows you to track your debt balance on only one credit. You are free from struggling with many monthly payment bills or different lenders. It saves you time and makes you more comfortable to track your payments.
The length of time could vary by depending on specific reasons such as operativity of a servicer, or many applications. After you completed all the section of the application form and submitted it to the lender, it will take maximum 1-2 months to get feedback and start your repayment.It worth to note that by depending on historical background William D. Ford Direct Consolidation Loan program is sometimes called Obama Student Loan Forgiveness. It is because President George Bush started that program in 1992, but in 2010 President Barack Obama switched all student loans to the Direct Loan Program.
How Direct Consolidation Loan program work?
As a part of the Federal Direct Loan Program under the William D Ford Act, Direct Consolidation Loan gives the student or parent the opportunity to borrow directly from the US Department of Education. Before applying for the Direct Consolidation Loan, it is significant to evaluate and compare the benefit of the original loan. Mainly, you have to pay close attention to interest rates and rebates because they are the main parameters that show you which choice would be beneficial for you. Additionally, you should take into account that the Direct Consolidation Loan will increase the length of payment. That is why the interest rate on overall loan debt is rising even though monthly payments are lower than standard payments.
Consolidation process of federal loans is quite simple and free. After you complete your application, you notify the lender that you agree to make payments on the new consolidated loan. And then, you start to make monthly payments on only one loan instead of several different loans.
There is no doubt that William D. Ford loan consolidation program provides a range of benefits. However, to make the right decision about your choice, it is essential to evaluate both the advantages and disadvantages you can face.
As we mentioned earlier, only federal loans could be eligible for the Loan Consolidation Program. If you have private loans, unfortunately, you are not able to benefit Loan Consolidation. The list of federal loans that qualify for consolidation is the following way:
Supplemental Loans for Students(SLS)
Federal Perkins Loans
Health Education Assistance Loans
Federal Nursing Loans
To make the right choice among different types of loan programs offered under the William D Ford Act could seem confusing and complicated, and it is. If you still don’t know how to choose the most convenient loan program which reflects your situation in the best way, you can get support or help from Student Loan Resolved Helpline.
William D Ford Act allows Federal Direct loan to get access to some sorts of loan forgiveness programs. Through the opportunities that Act for Federal Direct Loan Program provides, you can take the benefit of a wide range of Federal Student Loan Forgiveness Programs.
Obama Loan Forgiveness Program – if you have borrowed after the date of 1 October 2017
Income-based Federal Student Loan Repayment Plan ( including Income-Contingent Repayment Plan, Income-based Repayment Plan or REPAYE)
Public Service Loan Forgiveness Program – if you work in public service or government institution, or if you are a volunteer in public work
Nurse Corps Loan Forgiveness Program – if you work as a professional nurse. Nurses also could be eligible for Public Service Loan Forgiveness and Perkins Loan Forgiveness for Licensed Medical Technicians Program.
NHSC Student to Service Loan Repayment Program – if you work as a Doctor or professional Dentist
Federal TEACH Grants, Perkins Loan Forgiveness or Stafford Loan Forgiveness- if you are a teacher
Government Employee Loan Forgiveness Program – if you work for any Governmental Organization
Non-Profit Student Loan Forgiveness Program – if you work at the non-for-profit organization.
Military Student Loan Forgiveness Program – if you work in the Military service
Public Service Loan Forgiveness Program – if you serve in the Peace Corps or AmeriCorps
Total and Permanent Disability Discharge Program – if you are permanently disabled
Closed School Discharge Program – if you had borrowed money for the school which closed down before you graduated
Borrower’s Defense Against Repayment Program – if you can prove that your school or lender has lied, scammed, defrauded or did something illegal against you.
If you are uncertain about your choice related to the programs offered under the William D Ford Act, you can utilize help or support service of Student Loan Resolved. If you have any question or if you need detailed information, please do not hesitate to call our helpline.