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How to Apply for a Student Loan from the Federal Direct Loan Program

College is expensive, so don’t just make an educated guess when it comes to securing a student loan; follow these guidelines.


  • TIP: You have the right to decline any loan or to request a lower loan amount.
  • Step 1: If this is your first direct loan, complete the required entrance counseling. Some schools allow you to do this online. First-time direct loan recipients must also complete a Master Promissory Note -- a legal document spelling out your promise to repay the loan with interest. The MPN may be filled out online at "":
  • Step 2: If you can start paying the interest on your unsubsidized loans while you’re still in school, do so. Any amount you repay now will reduce the total unpaid principal amount of your loan after you graduate. Good luck!
  • FACT: In the 2008-2009 school year, parents and students took out more than $95 billion in student loans.
  • Step 3: Make an informed decision about what loans to accept by calculating 2 things: Your approximate college expenses, and how much your monthly loan repayments will be after you graduate. "": has an online budget calculator and a repayment calculator that makes this easy.
  • TIP: Parents who are not eligible for a PLUS loan because of a poor credit history may secure one with a cosigner who is not the student benefiting from the loan.
  • TIP: Get an overview of the Direct Loan Program at "":
  • Step 4: Understand the advantages: You have a single contact -- the Direct Loan Servicing Center -- for everything related to the repayment of your loans, even if you used the loans at different schools; you have online access to your account information 24/7; you may choose from several repayment plans; and you may switch to a different one if your needs change.
  • Step 5: Apply for a federal loan by filling out the Free Application for Federal Student Aid at "": The financial information you provide on the FAFSA determines your student aid eligibility.
  • Step 6: Review the awards package you receive, which explains the loans and financial aid you’re being offered. The direct loans you may have qualified for include a subsidized loan, where no interest is charged while you’re in school at least half-time and during the grace period and deferment periods; an unsubsidized loan, which charges interest immediately, even while you’re in school; and a PLUS loan -- an unsubsidized loan for parents that charges interest right away.
  • Step 7: Know what a Federal Direct Loan is -- a low-interest loan to help students and parents pay for college. The lender is the U.S. government rather than a bank or other financial institution. Check with your school to see if it participates in the Direct Loan Program.

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