Who Is William D. Ford?

William D. Ford was a U.S. Representative who spent three decades on Capitol Hill and dedicated himself to expanding educational opportunities for children. He served as Chairman of the House Committee on Education and Labor and as Chairman of the House Committee on Post Office and Civil Service.

He believed that the government has an obligation to give its citizens a chance at success and he worked every day of his life to be the champion of the working poor and the middle class, per Representative John Dingell, D-Dearborn.

He authored the Middle Income Student Assistance Act and orchestrated the passage of the Family Medical Leave Act. In 1994 The Federal Direct Student Loan Program was named for him.

Please Explain the Program

The William D. Ford Federal Direct Loan Program (FDSLP), often referred to as “Direct Loans,” is a United States Department of Education program that provides loans to help students pay for education after high school.

The Department of Education acts as a lender, providing funds for Stafford loans and PLUS loans in the same amounts as the Stafford and PLUS loans offered through the Federal Family Education Loan Program (FFELP). The Department of Education allows schools to choose which program; FDSLP or FFELP, best suits the needs of its students.

Direct Loans are low-interest loans for students and parents to help pay for the cost of your education after high school. The lender is the U.S. Department of Education rather than a bank or other financial institutions. Direct Loans are:

Simple: You borrow directly from the federal government and have a single contact-the Direct Loan Servicing Center-for everything related to the repayment of your loans, even if you receive Direct Loans at different schools.
Convenient: You’ll have online access to your Direct Loan account information 24 hours a day, 7 days a week.

Flexible: You can choose from several repayment plans that are designed to meet the needs of almost any borrower, and you can switch repayment plans if your needs change.

What Kinds Of Direct Loans Are Available?

Subsidized Stafford Loans are for students with financial need as determined by federal regulations. No interest is charged while you are in school at least half time, during your grace period, and during deferment periods.

PLUS Loans are low-interest loans for graduate/professional students and for parents to help their children who are dependent students meet college costs.

Unsubsidized Stafford Loans are for students and are not based on financial need. Interest is charged during all periods.

Consolidation Loans allow students or parents to combine different eligible federal student loans into one loan.

To be eligible for these types of loans you must be enrolled at least half time at a school that participates in the Direct Loan Program, and you must meet general eligibility requirements for the Federal Student Aid (FSA) programs.

Also, to find out more information about these requirements, contact your school’s financial counselor or by reading “Funding Education Beyond High School: The Guide to Federal Student Aid.”

There are two different kinds of Stafford Loans and both are administered by the U.S. Department of Education. The first is called the Federal Family Education Loan (FFEL) Program and the other one is called the William D. Ford Federal Direct Loan (Direct Loan) Program.

For either type of loan the terms and conditions are very similar. And the amount that you choose to borrow can be the same from the Direct Loan or the FFEL lender.

For either type of Stafford Loan application, you fill out a Federal Student Aid Application (FAFSA). Then you present it to your school for a review. After it is processed they will inform you about your results and loan eligibility.

If you are accepted for one of the loans you will be asked to sign a promissory note that lists the conditions under which you are borrowing the money and the terms under which you agree to repay the money.

For both of the Stafford Loans you will be paid through your school in two installments. No installment will exceed one-half of your loan amount. The money first must be applied for tuition and fees, (room and board in some cases) and other mandatory school charges.

If any money is left over, you will receive the money, usually by check, to do as you wish unless you have given the school written authorization to hold the extra money until later in the enrollment period or next enrollment.

Here is where the two loans start to differ. First, if you choose a Direct Stafford Loan, the money will be coming from the federal government. And repayment will be made to the U.S. Department of Education.

If you go with FFEL Stafford Loan you will need to choose a lender. Your school will have a list of borrowers that you can choose from or you may have your own source such as your personal bank or credit union.

Also, there can be a difference between the loans when it comes to repayment. You have a choice of repayment plans for either loan. Your monthly payment will depend on the size of your debt and the length of your repayment period.

Before considering any loan it would be best to purchase the booklet or ask your loan provider for a copy of: Funding Education Beyond High School: The Guide to Federal Student Aid.

This guide explains repayment options, examples of monthly payment for different loan amounts and combining Stafford Loans with other available loans. It covers many areas you need to know when trying to manage your coming expenses.

Once you have graduated or leave school or drop your enrollment below half-time you will be given a six-month grace period before you have to start repayment on your loans. During this time you will receive information regarding your first payment due date.

You will receive all the information you need regarding repayment plans during your initial session when you apply for you loan. This can be either through your school counselor, bank representative or institution you go through to obtain your loan.

Many students fear that they won’t get a student loan or a good rate with a student loan because they have little or no credit and it is a valid question. I am going to take a look at a few different types of loans and some things you can do to improve your credit.

Stafford Loans

There are no credit checks done for a Stafford Loan when subsidized or not. You are limited in how much they can give you based on your age and circumstance. If you are a freshman you can get $3,500, Sophomores $4,500, any other year $5,500. If you are over 24, or married, serving for the military, or if your parents are struggling with their own finances and credit then an additional $4,000 could be offered.

Perkins Loans

This is where the worse your situation is the better you are. They will look at your credit, your financial income, your parents financial situation, and anything else that can give them a good idea if you are struggling or not. I suggest that you go to your financial aid office to find out information on what they can offer you, but it could be up to $4,000 to help you to get going.

PLUS Loans (Parent loans for Undergraduate Students)

This is something that your parents are going to be checked and not you. This could very well cover the remaining portion of your tuition or other school funds to help you move through your education without having that responsibility on your shoulder.

School Certified Private Loans

This is an example of where your credit will matter. You are going to need to have a minimum of a 620 FICO score to get the student loan for the entire process. Otherwise I would look for a parent or a trust friend or family member that is willing to trust you with their credit.

Direct to Consumer Private Loans

So many people look for loans like this because not only is tuition taken care of but funds are sent directly to the student so you decide how the funds are spent on room and board, food, school supplies, dates, etc. Many schools also give direct loans to students, but whether it is private or federal student loans, you are probably going to want to make sure you are in the 700′s when it comes to your credit. This shows you are responsible, so don’t screw it up. This also may be a good example where you should be extra kind to mom and dad to get some co-signing help.

How To Improve Your Credit

Some of you may have some time before you have to worry about this or there may be some parents out there that want to help their kids out by making sure their credit is good enough that they don’t have to co-sign. One of the best things that you can do is get a credit card and use it wisely. Make normal purchases on it that you can easily pay off with your own funds. Make sure you never miss a payment. Set up an automatic payment system.

The next thing you can do is make sure that you get a checking account and start paying some bills like a cell phone bill or rent or whatever. This may take a few months or maybe a year, but it is worth it and you are going to buy stuff anyways. It might as well be noticed by national credit bureaus. If you can make sure to make even multiple monthly payments to help your credit score improve. You would be surprised what it does if you make weekly and bi-weekly payments.