You must also demonstrate financial need for the loan. Financial
need is demonstrated when your EFC, plus the loan amount,
plus any other financial aid you are receiving adds up to
less than your cost of attendance. If you have questions about
what it means to demonstrate financial need, please review
the section of Financial
Aid 101 on determining eligibility.
Note: If you are not eligible to borrow the full amount you
request in Direct Subsidized Loan funds, or you believe you need additional loan funds, you may be able to
request some or all the balance as a Direct
Unsubsidized Loan. Unsubsidized loan limits were recently increased. If you are a dependent student,
your parents may be able to take out a Direct
PLUS Loan for you.
Using your federal PIN, you may access your previous borrowing
history from the National
Student Loan Data System (NSLDS) and monitor how close
you may be approaching your undergraduate aggregate maximum.
If your period of enrollment is less than a full academic
year, the amount of loan assistance you are entitled to may
be less than the maximum amounts listed above. Furthermore,
the Federal Government may restrict how frequently you may
request or receive the maximum loan amount. Finally, the Office
of Financial Aid may refuse to process your loan request or
may otherwise reduce the amount of your loan, if it provides
you with a written explanation for its decision.
The Bursar will be notified about your request-in-progress
within 3 to 5 business days. When settling your bill, you
must mention that you have submitted a direct loan request.
First time borrowers must sign an Electronic Master Promissory
Note (e-MPN) online using the Dept of Education PIN (the one
you used to sign your FAFSA). The e-MPN is a legal document
that lists the terms and conditions under which you are borrowing
and agreeing to pay back the money.
If you don't sign the e-MPN, a paper MPN will be mailed to
you about two weeks after your loan request is processed.
Sign and return the paper MPN in the envelope provided. Be
aware that utilizing the paper method may delay receipt of
your loan funds.
All borrowers also receive a Loan Disclosure Statement.
The loan disclosure statement contains information about the
type of loan, the approved loan amount and anticipated dates
of disbursement.
Your disbursement will be either in the form of a check or
as a direct deposit. If you have elected the direct deposit
option for receiving financial aid disbursements, your disbursement
will be credited to your direct deposit account on the scheduled
disbursement date. You will notified by mail when your funds
are available.
Before crediting any loan funds toward your tuition or releasing
any funds to you, the college will verify that you enrolled
on at least a half-time basis.
The Bursar's Office will calculate unpaid tuition and fee
balances at the time your loan is disbursed. Deductions from
your loan proceeds will be credited to your unpaid charges
before you receive the balance of your funds.
Do I get my money
all at once?
No. You will receive your loan money in at least two installments,
neither of which will be more than one-half of the loan total.
For loans covering the full academic year, the second disbursement
will be approximately 30 days after the start of the spring
semester. For loans covering one semester only, the second
disbursement will occur about midway through the semester.
Can I cancel all
or part of my loan(s) after it has been disbursed?
You have up to 14 days after the date you are notified the
Bursar has credited loan funds toward your unpaid charges
to ask the Financial Aid Office to cancel all or part of the
loan return it to the U.S. Department of Education. Notify
us if you want to cancel your loan by submitting an online
Direct Loan Cancellation Request
to indicate that you want to cancel your loan.
You may cancel all or part of your loan by returning the
funds yourself to the U.S. Department of Education within
120 days of the loan disbursement date. Contact the Direct
Loan Servicing Center for guidance on how and where to return
your loan money.
You do not have to pay interest or the loan fee on the part
of your loan(s) that you return within these timeframes.
What is the interest
rate charged on this loan?
It varies. The interest rate for your loan is adjusted each
year on July 1 and is calculated according to a federal formula.
However, it will never exceed 8.25%. You will be notified
as the interest changes throughout the life of the loan.
You may check current education loan interest rates at: www.finaid.org/loans/scripts/interest.cgi.
Am I charged interest
while going to school?
No. This loan is called a "subsidized loan" because
the Federal Government supports or subsidizes the interest
payments while you are in school and during any grace or deferment
periods. You do not pay interest on a subsidized loan until
your loan enters repayment.
Is there a charge
for this loan?
Yes. You'll pay an origination fee of 3% and a federal default fee of 1%. These will be deducted proportionately
from each disbursement. Some of this fee will go to the Federal
Government to help offset the administrative costs of the
loan.
When do I pay back
my loan?
You have a six month grace
period after you graduate, leave school, or drop below
half-time before you begin repaying your loan. During the
grace period, you do not have to make payments on the principal
and you are not charged any interest. You can, of course,
prepay any portion of your loan at any time without penalty.
How do I pay back
my loan?
The Federal Direct Loan Program offers a choice of four different
repayment plans that differ in a number of ways to meet the
needs of individual borrowers. You may choose any one of the
four plans and, in most cases, can change from one plan to
another during your repayment period. There is no limit to
the number of times you may switch from one plan to another.
Each plan has certain features and conditions that you must
carefully consider before deciding which plan to use. You
will be able to receive information about these plans as well
as other repayment options (such as loan consolidation) at
your exit interview.
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The Standard Repayment
Plan requires you to pay a fixed amount each month.
Under this plan you will make no more than 120 monthly
payments (10 years). For small loan amounts, the number
of monthly payments will be fewer than 120. Each monthly
payment will be at least $50.00 but may be more, if necessary,
to repay the loan within 10 years. If you do not select
one of the other three payment plans, you will automatically
be assigned the Standard Repayment Plan. Use this Loan
Calculator to estimate what your monthly payments
under the Standard Repayment Plan will be. |
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The Income Sensitive Repayment
Plan bases your monthly payment on a percentage
of your annual income. As your income rises or falls,
so do your payments. If your monthly repayment is calculated
to be $15.00 or less, no payment will be required. You
may take up to 25 years to repay your loan. After 25
years, any remaining loan balance will be forgiven --
although you will have to pay income tax on any amount
forgiven. (Not available to PLUS loan borrowers.) Use
this Loan
Calculator to estimate what your monthly payments
under the Income Sensitive Repayment Plan will be.
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The Extended Repayment
Plan allows you to extend your loan repayment over
a period of 12 to 30 years, depending on the amount of
your original loan. The minimum monthly payment is $50.00
but may be more, if necessary, to repay the loan within
the maximum number of repayment months. With this plan,
your monthly payment may be lower than it would be under
the Standard Repayment Plan, but you will pay more interest
because your repayment period is longer. Use this Loan
Calculator to estimate what your monthly payments
under the Extended Repayment Plan will be. |
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The Graduated Repayment Plan
allows you to begin repaying your loan with lower monthly
amounts. Your payments then increase every two years
over a time ranging from 12 to 30 years, depending on
the amount of the original loan. The amount you pay
each month will vary from 50% to 150% of what you would
be paying on the same loan using the Standard Repayment
Plan. You will repay a higher total amount of interest
than you would under the Standard Repayment Plan because
the repayment period is longer. Use this Loan
Calculator to estimate what your monthly payments
under the Graduated Repayment Plan will be.
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If you can demonstrate that the above four repayment plans
cannot accommodate your particular economic circumstances,
the US Department of Education may provide you with an alternate
repayment plan. You may want to read the U.S. Dept of Education's
Repaying
Your Student Loans for more detailed information about
repayment options.
You may use the US Department of Education's Interactive
Calculator to compare the estimated amount of your monthly
payments under the various Direct Loan repayment plans by
clicking here: Loan
Repayment Chart Generator.
Who manages my loan
account?
The US Department of Education's Direct
Loan Servicing Center will manage your loan accounts until
your loans are paid in full. Its toll-free telephone number
is 1-800-848-0979.
For general correspondence, the address is:
Borrower Services Department
Direct Loan Servicing Center
PO Box 5609
Greenville, TX 75403-5609
Using your PIN,
you can obtain complete information about your Direct Loan
account and even make online payments at Direct
Loan Servicing Online.
Where do I send my
loan payments?
You repay the US Department of Education by sending your loan
payments to:
US Department of
Education
Direct Loan Payment Center
PO Box 530260
Atlanta, GA 30353-0260
What if I have trouble
making my direct loan payments?
The first thing to do is to contact the Direct Loan Servicing
Center. They will discuss with you the various options that
may make it easier for you to manage your monthly payment
schedule. You may be able to have your monthly payments lowered
by changing to a different payment plan.
Under some circumstances, such as returning to school, becoming
unemployed, or suffering economic hardship, you may qualify
for a deferment. If granted a deferment, you will be able
to suspend regular loan payments for a certain time. If your
loan was first disbursed after July 1, l993, and you are not
in default, refer to the Student
Loan Deferment and Cancellation Summary for a list of
available deferments. Being granted a deferment is not automatic.
You must submit your request for a deferment in writing and
continue to make your regular loan payments until the deferment
is granted.
If you don't qualify for a deferment, you may be able to
request a forbearance.
If granted forbearance, you may be permitted to reduce or
delay your regular payments for a time. Being granted forbearance
is not automatic. You must submit your request for forbearance
in writing and continue to make your regular loan payments
until forbearance is granted. If your loan debt burden equals
or exceeds 20% of your gross income, you have a right to forbearance,
renewable annually for up to three years.
Finally, if you have a number of educational loans and have
difficulty making payments on all of them, you may qualify
for a Federal Direct Consolidated
Loan. Loan consolidation allows you to combine multiple
loan debts into just one monthly payment.
What happens if I
don't make my loan payments on time?
If you don't make your loan payments on time and don't contact
the Direct Loan Servicing Center about it, you will be considered
delinquent in repaying the loan. If you fail to make payments
for six months, the loan will go into default.
If this happens, you can be asked by the federal government
to repay the entire loan immediately. You can be sued to collect
the amount of the original loan, plus interest, court costs
and other penalties. You will be reported to national credit
bureaus and have your credit rating adversely affected. Your
income tax refunds may be withheld and up to 15% of your wages
can be garnisheed to collect the debt. If you are receiving Social Security, the federal government may withhold a portion of your benefits to pay your loan debt. Finally, your school
records will be impounded and you will be prohibited from
receiving any federal student aid at any school you wish to
attend until the default is resolved.
What can I do if
I am notified I am in default?
Contact the Direct Loan Servicing Center. They will inform
you under what circumstances you may have the default status
rescinded and will discuss with you the possibilities for
regaining your eligibility for financial aid and rehabilitating
your loan. If you have a FFELP loan, you should contact your
lender or guaranty agency about similar options available
for restoring financial aid eligibility and rehabilitating
your loan.
You may regain eligibility for federal financial aid by making
satisfactory payment arrangements on your defaulted loan with
the loan servicer or guarantee agency handling your account.
A satisfactory repayment arrangement is defined as making
6 consecutive voluntary monthly payments of an amount determined
reasonable and affordable based on your financial circumstances.
If you make 9 consecutive, voluntary, and on-time monthly payments of
a reasonable and affordable amount under an agreement with
the loan servicer or guarantee agency, you will qualify for
loan rehabilitation. Loan rehabilitation provides you with
a "second chance" by removing your student loan
from default status, restoring financial aid eligibility and
reinstating deferment privileges.
Can I ever get out
of repaying my loan?
There are certain exceptional circumstances, such as the borrower's
death or permanent disability, which can result in the discharge
or cancellation of a student loan. A discharge releases the
borrower from all obligation to repay. A complete list of
discharge conditions can be found in the Student
Loan Deferment and Cancellation Summary.
Remember that your loan cannot be discharged because you
didn't complete your program of study, didn't like the school
or couldn't find a job after graduation.
Repayment assistance may be available if you serve in the
military. For more information about repayment assistance,
consult your recruiting officer.
For more information about discharge or repayment assistance,
contact the Direct Loan Servicing Center or the lender or
guarantee agency that holds your loan.
The
Federal Student Aid Ombudsman is a
Department of Education office that helps students resolve
disputes and solve other problems with federal student loans.
The US Department of Education's Direct Loan Web site provides
much useful information on avoiding default. You can access
this information at the following location: US
Dept of Education's "Avoid Default" Page.
