The Federal Direct Loan is available through the Federal Direct Loan Program to help both undergraduate and graduate students pay for their education.
There are two types of Federal Direct Loans - -subsidized and unsubsidized.
Eligibility for subsidized loans is based on financial need as determined by federal guidelines. A loan is called "subsidized" because the government pays interest for the student during:
This loan is available to students regardless of income or need. With an unsubsidized loan, you are responsible for all interest that accrues during in-school, grace and deferment periods. You may choose to pay the interest portion only while in school, which would keep your loan balance at principal. If you choose to defer such payments, the interest will be capitalized, resulting in an increase in both total debt and the amount of monthly payments.
Loans are usually issued for a single academic year, and both eligibility and amount are redetermined annually throughout your academic career.
Your Direct Loan eligibility is determined by the Financial Aid Office and is based on information you provided in the Free Application for Federal Student Aid (FAFSA).
Federal criteria include:
Borrowing limits are based on your dependency status and year in school. You are considered independent if you will be working on a degree beyond a bachelor's degree during the school year.
You can never borrow more than the cost of education, less other financial aid received (special rules apply for recipients of Montgomery Chapter 30 VA benefits and Americorps benefits). Below are the maximum amounts you may borrow.
As a graduate student, your subsidized and unsubsidized Direct Loan annual eligibility is as follows:
Graduate/Professional Students can borrow a maximum total of $138,500 (of which no more than $65,500 can be subsidized loans). Medical and Dental students may borrow a maximum of $224,000 (of which no more than $65,500 can be subsidized). These loan limits include all loans borrowed as an undergraduate.
Sample loan repayment disclosure information
The interest rate is fixed at 6.8% for unsubsidized and 4.5% for subsidized Direct loans.
For all Direct Subsidized Loans and Direct Unsubsidized Loans made between July 1, 2011, and June 30, 2012, the origination fee will be 1.00% of the principal loan amount. However, there is an automatic rebate amount equal to 0.50% of the principal loan amount. Therefore, the actual total up-front fee is only equal to 0.50% of the principal loan amount. The 0.50% fee is deducted from the principal at each disbursement. Example:
To retain the up-front interest rebate of 0.50%, a borrower must make the first 12 monthly payments on time. If all of the 12 monthly payments are not made on time, the rebate amount is added to the borrower's principal loan balance, which will increase the loan amount that must be repaid.
Here's a step-by-step guide to the Stafford application process:
An Electronic Funds Transfer (EFT) will be sent directly to our school. The amount of the proceeds will be the loan amount less the fees. Funds will credit first to your tuition bill and any excess funds will be mailed to your permanent address or directly deposited to your personal account.