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Direct Loans The Direct Loan (formerly the Federal Stafford program) is a low-interest student loan offered to both undergraduate and graduate students alike. The loan comes 'directly' from the Department of Education. More information regarding Direct loans can be found at: www.direct.ed.gov Eligibility When applying for a Direct student loan, students must complete the Free Application for Federal Student Aid (FAFSA), be enrolled at least half-time, be a U.S. citizen or permanent resident and may not be in default on Federal education loan. Interest Rate Undergraduate Direct loans have a 3.40% fixed interest rate for all ubsidized Stafford Loans first disbursed after July 1st, 2011. All unsubsidized Stafford Loans and Graduate Stafford Loans have a 6.80% fixed interest rate for all loans disbursed after July 1st, 2011. Subsidized vs Unsubsidized Direct Loans There are 2 different types of Dierct loans. Which type you qualify for will be determined by your FAFSA. Subsidized Federal Direct Loans - the federal government pays the interest while you are in-school, grace, and/or in deferment. Unsubsidized Federal Direct Loans - you, the borrower, are responsible to pay the interest but can postpone payment while they are in-school, grace and/or deferment. Interest accrues during these periods and is capitalized (added to the principle balance) upon entering repayment. Direct Stafford Loans allow you to receive a six-month grace period which begins the date you graduate or drop below half-time. During these six months you may begin repayment but are not required to do so. Disbursements Once you have completed your application, your financial aid office will determine your scheduled loan disbursements for the academic year. The Department of Education will disburse your check to the school on the dates requested. The school will then advise you that the check has been received and the process for picking up the check or having the check deposited directly into your bank account or school account. Borrower Benefits The Department of Education currently offers a 0.25% interest rate reduction for signing up for automatic payments from your checking or savings account. |
