Direct Loans are low-interest loans for students and parents to help pay for the cost of your college education. The lender is the U.S. Department of Education (DOE) rather than a bank or other financial institution.
Federal Direct Subsidized Loans
Federal Direct Subsidized Loans are for students with demonstrated financial need, as determined by federal regulations. No interest is charged while a student is in school at least half-time nor is repayment required while the borrower is enrolled at least half-time.
NEW REGULATION- 150% Direct Subsidized Loan Limits
First-time borrowers taking out federal Direct subsidized loans (Federal Government subsidy pays the interest on your loan) on or after July 1, 2013 are subject to the 150% Direct Subsidized Loan Limit, which limits the amount of time a student is eligible to borrow subsidized loans to 150% of their published program length.
Those effected will be:
First-time borrowers in an undergraduate program who take out a new loan are subject to the 150% subsidy limit. A first-time borrower is defined as a borrower with no outstanding balance of principal or interest on a federal Direct loan or Federal Family Education Loan Program (FFELP) loan on July 1, 2013 or on the date they first borrow a Direct loan after July 1, 2013.
First-time borrowers are defined as:
– A new student starting college for the first time on or after July 1, 2013.
– A third-year student who did not borrow any Direct loans for the first two years, taking out their first loan on or after July 1, 2013.
– A student who returns to school on or after July 1, 2013, and paid off their Direct loans in full before the start date of their new program.
For additional detailed information please visit the website at: https://studentloans.gov/myDirectLoan/directSubsidizedLoanTimeLimitation.action
Federal Direct Unsubsidized Loans
Federal Direct Unsubsidized Loans are not based on financial need and are available to students who do not qualify for a Direct Subsidized Loan or qualify for only a partial Direct Subsidized Loan. Under this program the borrower is responsible for the interest which accrues while the student is in school. The borrower may choose to pay the interest charged on the loan or allow the interest to be capitalized (added to the loan principal) when the loan enters repayment.
Federal Direct Parent PLUS Loans
Parents can borrow a Federal Direct Parent PLUS Loan to help pay your education expenses if you are a dependent, undergraduate student. The school will determine the actual amount you may borrow. You must file a FAFSA and be enrolled at least half-time in an eligible program at an eligible school. Parents must be creditworthy to receive the loan.
The Facts Regarding Parent PLUS loans:
- The annual borrowing limit on a Parent PLUS Loan is equal to your Estimated Cost of Attendance minus any other financial aid you receive.
- Parent PLUS loans are the financial responsibility of the parents, not the student.
- The Parent Plus Loan interest rate is fixed. Interest is charged on a Parent Plus Loan from the date of the first disbursement until the loan is paid in full. For current interest rates please visit www.studentloans.gov
- The Parent PLUS Loan requires an origination fee. For current rates please visit www.studentloans.gov
- There are two repayment options available for the Parent PLUS loan: either 60 days after the loan is fully disbursed or to begin repayment six months after you graduate or cease to be enrolled on at least a half-time basis.
- To apply for the Parent PLUS loan, your parent must complete a Master Promissory Note (MPN) and a loan application by visiting the Direct loan website.
Important: Because the credit check performed during the Parent PLUS loan application process is only valid for 90 days, we recommend that families do not complete a Parent PLUS loan MPN until after July 1.