The Direct student loan program started approximately 15 years ago and was intended to cut out the middle man so that, instead of involving banks, credit unions and other private lenders, the Federal government loans the money directly to students and parents.
Direct loan programs overlap the alternative which is called the FFELP, or Federal Family Education Loan Program, which is a program designed to work through a network of private lenders. Since direct loan programs duplicate in many ways the FFEL programs, it is important to decide which program you want. Both programs offer both Stafford and PLUS loans.
The criteria for eligibility on both programs is the same and they follow identical need based guidelines, or have identical credit check requirements as those for non need based programs. Since both programs essentially provide the same loan funding this raises the natural question of how to choose between them.
To some degree the decision involves choosing which of two providers you will have to deal with. For example, although both will provide customer service personnel to answer any questions, in some cases you may find that private lenders will be more helpful and flexible while the government will be indifferent or more […]

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