Federal Direct Loans

 

The Federal Direct Loan Program

The William D. Ford Federal Direct Loan Program (also called FLDP, FDSLP, and Direct Loan Program) provides "low-interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the U.S. Department of Education ... rather than a bank or other financial institution."

Direct Loan Advantages

With Direct Loans, you:

  • Borrow directly from the federal government and have a single contact-the Direct Loan Servicing Center—for everything related to the repayment of your loans, even if you receive Direct Loans at different schools.
  • Have online access to your Direct Loan account information 24 hours a day, 7 days a week at Direct Loans on the Web at www.dl.ed.gov.
  • Can choose from several repayment plans that are designed to meet the needs of almost any borrower, and you can switch repayment plans if your needs change.

Loan Types
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 (6 credit hours), during the grace period and during deferment periods. The student must submit their acceptance of the loan offered via their award letter or by signing a Direct Loan Request Form.

Direct Unsubsidized Loans

  • Are not based on financial need; interest is charged during all periods, even during the time a student is in school and during grace and deferment periods. The student must be enrolled at least part time (6 credit hours) and submit their acceptance of the loan offered via their award letter or by signing a Direct Loan Request Form.

Direct PLUS Loans

  • Are unsubsidized loans for the parents of dependent students and for graduate/professional students. PLUS loans help pay for education expenses up to the cost of attendance minus all other financial assistance. Interest is charged during all periods.

How to Apply

To apply for a Federal Direct Loan, you must complete the FAFSA. To be eligible, you must be enrolled at least half-time (6 credit hours) and meet other general federal student aid eligibility requirements. If you qualify for a Federal Direct Loan, it will be included in your Financial Aid Award Letter. The application process also includes completing Entrance Counseling and signing the Federal Direct Loan Master Promissory Note

Federal Direct Loan Entrance Counseling

The federal government requires a student to participate in loan counseling prior to receiving a Federal Direct Loan. Entrance Counseling will explain various aspects of student loans, such as repayment and interest, and your rights and responsibility. It concludes with a quiz requiring you to get all answers correct to successfully complete Entrance Counseling.

Entrance Counseling can be completed at www.studentloans.gov  You will need your U.S. Department of Education PIN to successfully complete Entrance Counseling. After you complete Entrance Counseling, the results will be sent electronically to the University of Rio Grande/Rio Grande Community College, although you may wish to print a copy of the rights and responsibilities page for personal records.

E-sign the Federal Direct Loan Master Promissory Note (MPN)

Students borrowing a Federal Direct Loan must complete a Federal Direct Loan Electronic Master Promissory Note (MPN) before loan money can be disbursed. Once a Federal Direct Loan MPN is completed and the loan is disbursed to you by the University of Rio Grande/Rio Grande Community College, you do not have to sign Federal Loan MPN again (it is valid for 10 years).

To complete the MPN, you must go to www.studentloans.gov  You will need your U.S. Department of Education PIN to sign your MPN electronically.  After you sign your MPN, electronic notification will be sent to URG/RGCC. We will not disburse your Federal Direct Loan unless you have completed your MPN and you have completed Entrance Counseling.

Receiving Federal Direct Loan Funds

When the University of Rio Grande/Rio Grande Community College is notified by the Federal Direct Loan Processor that they have a valid MPN on file for you and you have completed Entrance Counseling, your Federal Direct Loan will automatically be credited to your student account as long as all other federal student aid eligibility requirements are met.

Request Reduction or Cancellation of Federal Direct Loans

You have the right to cancel all or part of my federal loan disbursement for each semester. You may do so by completing a Federal Direct Loan Cancellation/Reduction Form and submitting it to the Financial Aid Office. Or, you may send an email, including your full name and student I.D. number, to the Financial Aid Office at finaid@rio.edu. The email/form must be submitted to the Financial Aid Office within 14 days from the date you receive official notification that loan funds have been credited to your student account, or before the first day of classes, whichever occurs last.

Federal Direct Loan Limits

The federal government sets limits on the amount of money a student can borrow the University of Rio Grande/Rio Grande Community College awards students that have filed the FAFSA the maximum amount eligible under such limits. The annual limit applies to the most a student can borrow in one academic year, while the aggregate limit applies to the maximum a student can borrow in a lifetime. Independent students and dependent students whose parents are unable to borrow a PLUS loan are eligible for additional Federal Direct Unsubsidized Loan.

Below is the annual aggregated loan limits for Federal Direct Loans:

Federal Direct Loan Annual Limits

Dependent Students
Freshman $5,500
Sophomore $6,500
Junior& Senior $7,500

Independent & Dependent with PLUS Denial Students

Freshman $9,500
Sophomore $10,500
Junior & Senior $12,500

Graduate Students $20,500

Federal Direct Loan Life Time Limit

Undergraduate Dependent $31, 500
Undergraduate Independent $57,500
Graduate $138,500

Federal Direct Loan interest rates:

Recent regulation changes have created interest rate reductions on Federal Direct Subsidized Loans made to undergraduate students over a four-year period beginning July 1, 2008. The applicable interest rates for loans made to undergraduate students during this period are as follows:

Direct Subsidized Loan Interest Rates for Undergraduates

First disbursement of loan
on or after… but prior to

Interest rate on
the unpaid balance

July 1, 2008 - July 1, 2009 6.0%
July 1, 2009 - July 1, 2010 5.6%
July 1, 2010 - July 1, 2011 4.5%
July 1, 2011 - July 1, 2012 3.4%



Direct Subsidized Loan Interest Rates for Graduate & Professional Students

 Loans disbursed July 1, 2006 or later = 6.8%

Direct Unsubsidized Loan Interest Rates for All Students

 Loans disbursed July 1, 2006 or later = 6.8%

The interest rate for Federal Direct Subsidized Loans for graduate and professional students and all Unsubsidized Loans is fixed at 6.8% for loans first disbursed on or after July 1, 2006. Borrowers will be charged an origination fee of 1.5%, minus a rebate of approximately 1.0%, which will be deducted from the loan before disbursement is made.

For Unsubsidized Loans (Unsub), interest must be paid while the student is in school at least half-time. However, if the student chooses not to pay the interest while attending, it will accrue and be capitalized (added on to the principal at the time of repayment).
Repayment of the principal balance begins six months after graduation, withdrawal, or less-than-half-time enrollment. Students may be allowed up to thirty years for repayment in certain circumstances; however, repayment is usually based upon a ten-year plan.

Federal Direct Loan Exit Counseling

The federal government requires that students participate in Exit counseling prior to leaving or graduating from college, or if you become enrolled for less than half time (6 hours). To complete Exit Counseling, go to www.nslds.ed.gov  You will need your U.S. Department of Education PIN to successfully complete Exit Counseling.

During Exit Counseling you will learn about additional deferment and forbearance and how to get the necessary forms. Even though you have a six month grace period, the Exit Counseling process will help you set up a repayment plan, a direct withdrawal and a payment date. The Direct Loan Servicing Center, who handles all Federal Direct Loan repayments, hosts Exit Counseling.

Federal Direct Loan Repayment

Repayment  of the Federal Direct Loan begins 6 months after the student graduates or ceases to be enrolled at least half time. For information on Direct Loan Consolidation visit http://loanconsolidation.ed.gov/help/faq.html.

Additional Federal Direct Loan Information

Contact Federal Direct Loan Servicing Center at www.dl.ed.gov or call them at (800) 848-0979, TTY (800) 848-0983.

Students with FFELP student loans (Great Lakes)

Students who to complete the Master Promissory Note because their previous lender is no longer participating click below to sign a new Master Promissory Note:
FASTChoice, the quick and easy way to sign your Master Promissory Note (MPN) for a Federal Stafford Loan.

Students graduating (undergrad and grad students), planning to enroll for less than half time, or leaving the University of Rio Grande who have ever borrowed in the FFELP student loan program will need to click below to complete exit loan counseling:
FASTFacts, a requirement of accepting Federal Stafford Loans, exit counseling should be completed for all students who will no longer be enrolled for at least half time.

For information on the total loan amount that you have borrowed while in the FFELP student loan program go to www.nslds.ed.gov.

Visit www.mygreatlakes.org for more information on repayment, loan consolidation, and loans that may have been sold to the Department of Education.