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William D. Ford Act Federal Direct Loan Program

William D. Ford Federal Direct Loan program (just called the Federal Direct Loan program) is created and operated by the US Education Department, and this is only loan program which entirely backed by the US Government. William D. Ford Federal Direct Loan program offers long term student loans with low-interest rates which are intended for postsecondary students and their parents. All the student loans that Federal Direct Loan (which is based on the William D Ford Act) program provides is completely guaranteed which means that eligibility doesn’t depend on your income and credit score. Although President George Bush started the William D Ford Act as a pilot project in 1965, President Barack Obama organized all the student loans under William D. Ford Federal Direct Loan Program through the Act.

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.

How does William D. Ford Federal Direct Loan Program work?

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.

What are the benefits of the Federal Direct Loan 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.

Loans cannot be sold – Unlike the FFEL program, Federal Direct Loans could never be sold to other parties.

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.

What types of loans that the William D. Ford Direct Loan Program offer?

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.

However, there are positive and negative sides of Direct Subsidized Loans.

Advantages :

  • Your interest is paid by the US Government while you enrolled in school.
  • You are not required to make any payments for six months after your graduation.



  • If you have already graduated, you are not able to qualify for Direct Subsidized Loans.
  • For being eligible for Direct Subsidized Loans, you are required to demonstrate financial need. So if your parents earn more than the expected amount, you can not qualify for Direct Subsidized Loans.
  • Despite the suitable conditions and requirements, Direct Subsidized Loans could not provide a significant amount of borrowing. In comparison with Unsubsidized Direct Loans, they offer less amount of credit which is up to $23000.


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.


  • Any student both graduates and undergraduates could be eligible for Unsubsidized Direct Loans.
  • The borrower is not going to need to demonstrate financial need or hardship for being qualify.
  • Direct Unsubsidized Loans could provide more amount of credit in comparison with Direct Subsidized Loans, so the upper limit of loan cap could be up to $31000.


  • Direct Unsubsidized Loans requires the borrowers to pay all the debt amount not depending on you are in the grace period. Regardless that you graduate or your loans are forbearance or deferment, you are required to pay both interest and principal.


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.

The significant benefits of PLUS loans are that you can take the required amount of credit which cover your all education costs entirely, this includes tuition fee, accommodation cost, books or other types of related expenses. Another advantage of this program is that you are not going to need to demonstrated financial need or hardship to be eligible.

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.

Advantages of Loan Consolidation Program

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.


  • Loan Consolidation Program provides you with a comprehensive list of repayment plan options. Among these repayment alternatives, you choose your repayment plan which reflects your financial situation at the most convenient way. This program allows you to have a choice to make $0 monthly payment if your income is very low and you have a financial hardship. So, with offering flexible repayment plan option, Loan Consolidation Program works for your interests.
  • Loan Consolidation program offers access to the use of different options for loan forgiveness. This program has the following forgiveness aspects:
  • When you complete 20 or 25 years regular payments on your loan, your remaining debt amount is forgiven. In most cases, this option saves you a considerable amount of money.
  • Even if you have consolidated your loan, you can be eligible for Public Service Loan Forgiveness Program.
  • If you have defaulted loan, you could get a second chance by the William D Ford Act through Loan Consolidation Program. So, you can consolidate your defaulted loan, and the program brings them to good standing. Via requiring the fixed and lower amount of monthly payment, you can get out your defaulted loan and get back your credit score on positive figures.
  • The interest rate is calculated as the weight-average rate for your consolidated loan. And in most cases, it considerably decreases your monthly payments.

Disadvantages of Loan Consolidation Program.

  • Even though Loan Consolidation offers a range of opportunities, still it is better to be realistic. By depending on some reasons and conditions, consolidation of your loans may not be a convenient choice for your financial interests. Here are some of the drawbacks of Loan Consolidation Program under the Act.
  • Loan Consolidation expands the overall lifespan of your loans. Although it decreases your monthly payments, considerably, in the long run, the overall interest rate on your entire loan comes to existence. Of course, if you would like to get out of your loan debts as fast as possible, then this program is not a good choice for you.
  • When you consolidate your loans, they are automatically transformed into Federal Direct Loans. As a result, you are going to lose access to the benefits of your previous loans.


How long does it take to consolidate loans?


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.

What kinds of loans could be consolidated?

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:

Plus Loans

Direct Subsidized

Stafford Subsidized

Supplemental Loans for Students(SLS)

Direct Unsubsidized

Stafford Unsubsidized

Federal Perkins Loans

FFEL 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.

Student Loan Forgiveness through Federal Direct Loan

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.

As it stands out from the lists of Federal Student Loan Forgiveness Programs, there a wide range of choices. All of these forgiveness programs that are available under the William D Ford Act has specific requirements and conditions. That is why it takes a long time and searches to make the right choice about which forgiveness program is the convenient one for your financial situation.

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.