BORROW RESPONSIBLY

 

                                              

What are Federal Direct Loans?

 

Federal Direct Loans (Direct Loans) are self-help government loans that must be repaid with interest.  The U.S. Department of Education is the lender.  Students are required to be enrolled at least half-time.  Half-time enrollment for undergraduate students is 6 hours and for graduate students is 5 hours.  Students must complete the Free Application for Federal Student Aid to qualify.  For more information, please visit www.studentaid.gov/loans.

 

For repayment information visit our Loan Repayment webpage.

 

Is there a separate application?

 

No.  The FAFSA is the application for Federal Direct Loans.

 

Are any additional steps required?

 

Only for first-time borrowers.  First-time borrowers must complete Entrance Counseling and sign a Master Promissory Note (MPN) by visiting www.studentloans.gov.  This will require the student’s FSA ID.  If these steps cannot be confirmed by the UAFS Financial Aid Office, loan funds will not be disbursed to the student account.

 

What Federal Direct Loans are available to students?

 

There are two types of Federal Direct Loans: Federal Direct Subsidized and Federal Direct Unsubsidized.

 

What are Federal Direct Subsidized Loans?

 

The Federal Direct Subsidized Loan (Sub Loan) is a need-based loan, based on the Expected Family Contribution (EFC) and Cost of Attendance (COA).  Interest begins accruing with the first disbursement to the student account; however, the U.S. Department of Education will pay the interest that accrues while the student is enrolled at least half-time and during the student’s grace period.

 

NOTE: If a Sub Loan was disbursed to you from July 1, 2012 through June 30, 2014, the borrower is responsible for any interest that accrues for any grace period on that Sub Loan.

 

What are Federal Direct Unsubsidized Loans?

 

The Federal Direct Unsubsidized Loan (Unsub Loan) is not need-based; however, it is a loan that must be repaid with interest.  Interest begins accruing with the first disbursement to the student account and the student is responsible for any interest that accrues.

 

What is the interest rate?

 

The interest rate for any undergraduate Direct Loan disbursed from July 1, 2015 through June 30, 2016 is fixed at 4.29% and accrues as simple interest.

 

The interest rate for a graduate Unsub Loan disbursed from July 1, 2015 through June 30, 2016 is fixed at 5.84% and accrues as simple interest.

 

For more information about how interest accrues, please visit: https://studentaid.ed.gov/sa/types/loans/interest-rates.

 

Are there any fees for borrowing a Federal Direct Loan?

 

There is an origination fee for any federal loan that is disbursed.  For any Direct Loan that is disbursed from October 1, 2014 through September 30, 2015, the origination fee is 1.073%.  For any Direct Loan that is disbursed from October 1, 2015 through September 30, 2016, the origination fee is 1.068%.  This fee is not expected from the student; however, will be taken from the loan disbursement.

 

Are there limits for how much can be borrowed?

 

Yes; however, the limits depend on the student’s grade level and dependency status, as determined by the FAFSA.

 

For a dependent undergraduate student, the annual limits are:

 

  • Freshman: $5,500 in Direct Loans.  May be up to $3,500 in Sub Loan funds and the difference would be Unsub Loan funds.
  • Sophomore: $6,500 in Direct Loans.  May be up to $4,500 in Sub Loan funds, the difference would be Unsub Loan funds.
  • Junior/Senior: $7,500 in Direct Loans.  May be up to $5,500 in Sub Loan funds, the difference would be Unsub Loan funds.

 

NOTE: The combined aggregate limit that a dependent student may have outstanding is $31,000.  The student may only have up to $23,000 in Sub Loan funds.

 

For an independent undergraduate student, the annual limits are:

 

  • Freshman: $9,500 in Direct Loans.  May be up to $3,500 in Sub Loan funds and the difference would be Unsub Loan funds.
  • Sophomore: $10,500 in Direct Loans.  May be up to $4,500 in Sub Loan funds, the difference would be Unsub Loan funds.
  • Junior/Senior: $12,500 in Direct Loans.  May be up to $5,500 in Sub Loan funds, the difference would be Unsub Loan funds.

 

NOTE: The combined aggregate limit that a dependent student may have outstanding is $57,500.  The student may only have up to $23,000 in Sub Loan funds.

 

For graduate students, the annual limit is $20,500 in Unsubsidized Loan funds.  Graduate students no longer qualify for Sub Loans as of July 1, 2012.  A graduate student may only have $138,500 outstanding in Direct Loans. A graduate student is only allowed to have up to $65,500 outstanding in Sub Loans that may have been borrowed prior to July 1, 2012.  The combined aggregate limit for graduate students includes any Direct Loans borrowed as an undergraduate student.