Federal Student Loans Made through the William D. Ford Federal Direct Loan Program: Terms and Conditions for Borrowers. CRS Report R45931, Version 7. Updated
Author: Hegji, Alexandra
Date: 2021-06-21
Type: Reports - Descriptive
Subjects: Student Loan Programs,Federal Legislation,Federal Aid,Postsecondary Education,Paying for College,Student Financial Aid,Eligibility,Fees,Loan Repayment,Higher Education,Credit (Finance),Debt (Financial),Loan Default,Federal Programs,COVID-19

The William D. Ford Federal Direct Loan (Direct Loan) program makes several types of federal student loans available to individuals to assist them with financing postsecondary education expenses. It represents the single largest source of federal financial assistance to support students' postsecondary educational pursuits. The U.S. Department of Education (ED) estimates that in FY2022, 13.8 million new loans, averaging $6,632 each and totaling $91.3 billion, will be made through the Direct Loan program to undergraduate and graduate students, and to the parents of undergraduate students. In addition, ED estimates that 636,000 Direct Consolidation Loans, averaging $62,063 each and totaling $39.5 billion, will be made to existing borrowers of federal student loans. As of the end of the fourth quarter of FY2020, $1.3 trillion in principal and interest on Direct Loan program loans, borrowed by or on behalf of 35.9 million individuals, remained outstanding. This report presents a comprehensive overview of the terms and conditions that apply to federal student loans made through the Direct Loan program. It begins by providing background information on the history of the Direct Loan program. This is followed by a brief description of the various types of loans that are offered through the program. The report then presents a thorough description of the terms and conditions for loans made through the Direct Loan program. In identifying and describing loan terms and conditions, it focuses on provisions applicable to loans that are currently being made or that have been made in recent years. Emphasis is placed on discussing Direct Loan program provisions that are related to borrower eligibility, amounts that may be borrowed, interest rates and fees, procedures for loan repayment, repayment relief, the availability of loan discharge and loan forgiveness benefits, and the consequences of defaulting. The final section of the report provides a summary of the methods that are used to ensure that borrowers are informed about the terms and conditions of the loans they obtain and their obligation to repay them. This report has been prepared as a resource for Members of Congress, congressional committees, and congressional staff to support them in their legislative, oversight, and representational roles related to federal student loan policy. It is intended to provide a thorough, but nonexhaustive, description of loan terms and conditions and borrower benefits. Appendix A to this report contains a directory of resources from which additional information may be obtained about loans made available through the Direct Loan program. Appendix B consists of a glossary of terms. Appendix C contains a set of tables that present historical information on borrowing limits, interest rates, and fees that have applied to loans made through the Direct Loan program.