Over the years, I’ve worked with many families who are shocked to hear that their children cannot borrow the full amount that they need to cover all college expenses not covered with financial aid. Undergraduates are actually quite limited in the amount they can borrow in their name alone: $5,500 for their first year, $6,500 for sophomore year, and $7,500 for junior and senior years. That’s only $27,000 in Federal Direct Loans for a student who is enrolled for four years. With high college expenses, these limited amounts may not go far in terms of covering that tuition bill.
High school seniors are starting to receive their financial aid notifications from colleges, and most of these notifications will include one or more versions of a Federal Direct Loan—be it a Direct Subsidized Loan, Direct Unsubsidized Loan, and/or a Direct PLUS Loan. If you have been awarded a Direct Loan, you may be wondering what is it, exactly, and what are the differences between the various Direct Loan programs? Former Boston University and Tufts University financial aid officer Shannon Vasconcelos answers, “What is a Federal Direct Loan?,” in this installment of the College Coach video series, Ask the College Finance Expert.