What Is the Federal Direct Loan Program?

The Federal Direct Loan Program provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct Loan Program is issued and managed by the U.S. Department of Education and is the only government-backed student loan program in the United States.

How the Federal Direct Loan Program Works

The program offers several types of loans, including subsidized direct loans, unsubsidized direct loans, direct PLUS loans and direct consolidation loans. All loans that are granted through the Federal Direct Loan Program have maximum amounts set each year, with each successive year allowing for an increase in the total maximum yearly amount, with set aggregate amounts. Students who wish to apply for funding must first submit the Free Application for Federal Student Aid (FAFSA).

Private lenders also provide student loans to use instead of—or in addition to—federal loans, but the federal program often has more favorable interest rates and other provisions, such as loan consolidation and forgiveness programs. Those seeking student loans should carefully investigate all available options.

The Federal Direct Loan Program provides low-interest loans to postsecondary students and their parents.