William D. Ford Federal Direct Loan Program

William D. Ford Federal Direct Loan Program is the Federal Loan Program of the United States Education Department. The methods of application, imbursement and repayment are explained in detail in this article.

Updated by Theres Ann on 1st March 2019

What is the William D. Ford Federal Direct Loan Program?

The program is shortly called the Direct Loans Program. It is a financial aid service provided by the Government of the United States. The loan funds for the programs are directly received from the United States Department of Education and is imbursed among the eligible students.

Only a few schools and universities take part in the Direct Loan program. Before you apply to any institution make sure that you know about their financial aid policy.

The interest rates of the programs are variable and are adjusted on July 1st of each year. For Direct Subsidized and Unsubsidized loans, the maximum interest rate is 8.25%. For Direct PLUS Loans, the maximum interest rate is 9%.

Education Loanssource - India Today

Loans available under the William D Ford Federal Direct Loan Program

Four kinds of loans are available under this program. They are given below.

Federal Direct Stafford/ Ford Loans

  • This loan is also called Direct Subsidized Loans.

  • The interest of the loan is brought by the federal government.

  • The student needs to demonstrate financial need to receive this loan.

Federal Direct Unsubsidized Stafford/ Ford Loans

  • This loan is also called Direct Unsubsidized loans.

  • The student needs to bear all the interest charges.

  • The student can receive a loan even if he/she is not in financial need.


[Also Read: Scholarships available for college students


Federal Direct PLUS Loans

  • This loan is imbursed to students who are dependent on their parents.

  • Parents are responsible for all the interest charges.

Federal Direct Consolidation Loans 

  • Here one or more federal education loans are converted to one new Direct Loan.

  • It is enough to make one monthly payment to the US Department of Education.

  • Students with loans under FEFL Program may consolidate them into Direct Loans.


Source: Jokideo

Advantages of William D. Ford Federal Direct Loan Program

Direct Student Loans are the simplest and the fastest ways to obtain loans. The education funds of these loans are directly transferred to the schools within days of application.

  • The only lender in all the cases of federal loans is the United States Department of Education.

  • The education department’s Direct Loan Servicing Center is the sole authority to respond to any queries on the loan affairs.

  • Students and parents are free to choose any repayment options for the loan. They are also given freedom to change repayment plans whenever necessary.

Loans for Studentssource -twocircles.net

How to apply for the William D. Ford Federal Direct Loan Program?

The steps taken to apply for the William D Ford Federal Direct Loan Program are given below.

  • A single application for federal aid is applied for federal student aid.

  • The Expected Family Contribution (EFC) is analyzed from the student’s FAFSA Application. This is done by the Department of Education.

  • The financial need of each student is analyzed for the granting of Direct Subsidized Loans.

  • To apply to the Federal Direct Plus Loan, the Federal Direct Plus Loan Application from the school is filled.

How Much Can Be Borrowed for Scholarships?

Maximum amounts that can be borrowed for Direct Subsidized and Direct Unsubsidized loans are as given below.

Year of Study Dependent Student Independent Student
1st Year Undergraduate $2,625 $6,625
2nd Year Undergraduate $3,500 $7,500
3rd and 4th Year Undergraduate $5,500 $10,500
Graduate/ Professional N/A $18,500

Maximum amounts for subsidized and unsubsidized loans

  • Dependent Undergraduate student - $23,000

  • Independent Undergraduate student - $46,000

  • Graduate and Professional student - $1,38,500

source - Funny

Repayment modes for William D. Ford Federal Direct Loan Program

There are four repayment methods for Direct Subsidized and Direct Unsubsidized loans. They are as given below.

Repayment Modes Rules
Standard Repayment Loan Fixed Monthly Payments (at least $50)

A fixed period of time (up to 10 years)

Period of repayment depends on the money borrowed

Lowest Interest paid
Extended Repayment Loan Fixed Monthly Payments (at least $50)

Extended repayment period from 12 to 30 years

Higher interest paid due to longer repayment time
Graduated Repayment Plan Starts low but increases every two months

Especially useful for borrowers whose incomes are low at the beginning but increases gradually

An extended repayment plan for 12 to 30 years
Income Contingent Repayment Plan Monthly payments based on the adjusted gross income of the borrower

Monthly payments don’t exceed 20% of the discretionary income of the borrower.

The Contact-authority for Financial Aid Queries

The Applicant Services Section of the Direct Loan Servicing Center will respond to all your queries on financial aid. The details are given below.

U.S. Department of Education Borrower Services Department Direct Loan Servicing Center P.O. Box 4609 Utica, NY 13504-4609 TDD: (800) 848-0983


  Is Sallie Mae loan a Federal Loan?

Sallie Mae or the SLM Corporation is a public corporation and a private sector lender. So, the loan provided by it is not considered as a federal loan.

  Can you default on a student loan?

If you default on your student loan then it affects your credit, which would eventually affect your purchasing power which involved down payment and use of credit cards. Also, after this, you will lose your eligibility for deferment, forbearance and loan forgiveness, as well as other benefits, like choosing your own repayment plan and eligibility for additional federal aid. 

  How long does it take for a student loan to go into default?

Default in terms of the loan is the failure to repay it according to the terms of the promissory note. In case of most federal loans, you will default if you have not made a payment in more than 270 days

  How can a loan be repaid?

There are four ways of repayment of the federal loan:

  • The Standard Repayment Plan

  • The Extended Repayment Plan

  • The Graduated Repayment Plan

  • The Income Contingent Repayment Plan

  Are the interest rates of loans revised?

Yes, the interest rates of loans are revised on the 1st of July, every year. 

  Can students change the repayment plans in between?

Yes, students are free to change their repayment plans at any time of their repayment period.

  What is the maximum scholarship amount granted to a graduate student?

The maximum scholarship amount granted to a graduate student is $1,38,500.