Limitations Of Federal Direct Loan

Limitations Of Federal Direct Loan

Before applying for these loans it is always a good idea to know about few limitations that the Federal Direct Loans have despite all the various advantages they have. If the students come under the graduate students, they are not qualified for subsidized Federal Direct Loan. The federal government will pay the interest on the loan taken by undergraduates who meet the criteria for income qualification and qualify for Direct Subsidized Loan, they will not give the option to graduate students. In this case, they are eligible for only unsubsidized loans. In this case, graduates can do trading to get extra cash through the automated trading robot.

The rate of interest is high for graduated applicants. The charges applied for graduates is quite high than the undergraduates. The charges for the year of 2015-2016 for grad students was 5.84% and for undergraduates, it was 4.29%. The rates for these loans is fixed to 10-year Treasury note, but still, the graduates need to pay high charges for interest rate than undergraduates.

The loans that are given are limited. The limits of dollar for Federal Direct Loans are different and depend upon a lot of criteria, applicants whose needs cannot be covered by these limits will have to look for other option to support them. Along with Federal Direct Loan, they will have to depend on other sources like private loans that have interest charges that are considerably high.

Loan limits for people who are dependent are low as well. Suppose the student is undergraduates and applies for Direct Unsubsidized Loans and says that they are depending on the tax returns of their parents and guardian are allowed to borrow lesser amount than students who are independent and file their tax returns on their own.

Comparison of what dependent students and independent students can borrow from Direct Unsubsidized Loan.

  1. The loan is offered annually and for the first year which is known as freshman year, the dependents can get $5,500 from the Federal Direct Loan whereas the independent students can get $9,500.
  2. For the second year which is known as the sophomore year, the dependents will be rewarded $6,500 whereas the independents will get $10,500
  3. For the third-year and any other years that follow which is also known as a junior year and senior year, the dependents will get $7,500 and independents will get $12,500.
  4. During cumulative dependents will get $31,000 and on the other hand, independent students will get $57,500.