	Introduction

The William D. Ford Federal Direct Loan (DL) program—authorized under Title IV, Part D of the Higher Education Act of 1965 (HEA), as amended, and administered by the U.S. Department of Education (ED)—is the primary source of federal student loans. Several types of loans are offered through the DL program: Subsidized Stafford Loans for undergraduate students; Unsubsidized Stafford Loans for undergraduate and graduate students; PLUS Loans for graduate students and parents of dependent undergraduate students; and Consolidation Loans through which borrowers may combine their loans into a single loan payable over a longer term, which varies according to the combined loan balance. While no new loans are being made through the FFEL program, outstanding FFEL program loans are due to be repaid over the coming years. In FY2016, ED estimates that 20.4 million new DL program Stafford Loans and PLUS Loans, averaging $5,342 each and totaling $109.2 billion, will be made to undergraduate and graduate students, and the parents of undergraduate dependent students; and it estimates that 503,000 Consolidation loans, averaging $55,244 and totaling $27.8 billion, will also be made. This report discusses major provisions of federal student loans made available through the DL program and previously made through the FFEL program. The primary emphasis is placed on discussing provisions related to borrower eligibility, loan terms and conditions, borrower repayment relief, and loan default and its consequences for borrowers. These topics are principally discussed with regard to loans currently being made through the DL program, or made in the recent past through either program. Another common feature shared by these loans is that, for each type of loan, maximum interest rates and fees that may be charged to borrowers are established by statute. PLUS Loans

These loans are non-need-based loans and are available to parents of dependent undergraduate students and to graduate and professional students. Treatment of Interest Before Entering Repayment

For borrowers of Subsidized Stafford Loans, with certain exceptions, the federal government pays the interest that accrues while the borrower is enrolled in school on at least a half-time basis, during a six-month grace period thereafter, and during periods of authorized deferment (discussed below). In contrast to Subsidized Stafford Loans, with Unsubsidized Stafford Loans and PLUS Loans, borrowers are responsible for paying all of the interest that accrues on their loans. The repayment plans available to borrowers of FFEL and DL program loans are discussed below. Detailed Tables on Selected Characteristics of FFEL and DL Program Loans
The William D. Ford Federal Direct Loan (DL) program, authorized under Title IV, Part D of the Higher Education Act of 1965 (HEA), as amended, is the primary federal student loan program administered by the U.S. Department of Education (ED). The program makes available loans to undergraduate and graduate students and the parents of dependent undergraduate students to help them finance their postsecondary education expenses. Four types of loans are offered: Subsidized Stafford Loans for undergraduate students; Unsubsidized Stafford Loans for undergraduate and graduate students; PLUS Loans for graduate students and the parents of dependent undergraduate students; and Consolidation Loans through which borrowers may combine multiple loans into a single loan. For FY2016, ED estimates that 20.4 million loans (not including Consolidation Loans) totaling $109.2 billion will be made to students and their parents through the DL program. Federal Family Education Loan (FFEL) program loans are no longer being made; however, outstanding FFEL program loans are due to continue being repaid over the coming years.
FFEL and DL program loans are low-interest loans, with maximum interest rates for each type of loan established by statute. Subsidized Stafford Loans are unique in that they are only available to undergraduate students demonstrating financial need. With certain exceptions, the federal government pays the interest that accrues on Subsidized Stafford Loans while the borrower is enrolled in school on at least a half-time basis, during a six-month grace period thereafter, and during periods of authorized deferment. Unsubsidized Stafford Loans and PLUS Loans are available to borrowers irrespective of their financial need; and borrowers are responsible for paying all the interest that accrues on these loans. FFEL and DL program loans have terms and conditions that may be more favorable to borrowers than private and other nonfederal loans. These beneficial terms and conditions include interest rates that are often lower than rates that might be obtained from other lenders, opportunities for repayment relief through deferment and forbearance, loan consolidation, and several loan forgiveness programs.
This report discusses major provisions of federal student loans made available through the DL program and previously made through the FFEL program. It focuses on provisions related to borrower eligibility, loan terms and conditions, borrower repayment relief, and loan default and its consequences for borrowers. These topics are principally discussed with regard to loans currently being made through the DL program, or made in the recent past through either program. The report also provides detailed historical information on annual and aggregate borrowing limits, loan fees, and student loan interest rates.