Direct Lending and PLUS Loans

Subsidized Loans

Federal subsidized loans are based on financial need. The Federal government pays the interest during in-school, grace, and deferment periods. Need for subsidized Stafford loans is determined by the Expected Family Contribution (EFC) as determined by the FAFSA data.

Unsubsidized Loans

Federal Unsubsidized Loans are not based on financial need. The federal government does NOT pay the interest for Federal Unsubsidized Loans. Students may choose to defer interest payments until repayment begins; however, the student is responsible for all interest that has accrued. The accrued interest automatically capitalizes to the loan principal.

Federal PLUS Loans are not based on financial need. The federal government does not pay the interest on the Federal PLUS loans. Interest on the PLUS loans begins to accumulate at the time the first disbursement is made.

Direct Lending Loan Eligibility

The following factors affect Federal (Direct Lending) Loan eligibility:

• Full-time or part-time student status (number of credit hours enrolled)
• Dependent or independent student status (reliance upon parents financial resources)
• Citizen or permanent resident
• Enrollment in a degree-granting program
• Graduate students enrolled on a provisional admission status*

* Graduate students with provisional admission status may receive loans for one 12 month period before being granted full admission.

PLUS Loan Eligibility

A parent may borrow on behalf of a dependent undergraduate student who is enrolled full-time or half-time. The parent borrower will be required to pass a credit check. The PLUS Loan program is limited to U.S. citizens and permanent residents. The student must be enrolled in a degree-granting program.

Yearly Borrowing Limits

Note: the amounts listed are the maximum yearly limits, however a student may not borrow more than the cost of education minus any other financial aid received.  Like all credit, student loans should be used responsibility; failure to repay loans will have a negative impact on your credit score.

Graduate Students – may borrow up to the total cost of attendance or a maximum of $20,500 each academic year (of which all will be in unsubsidized loans).

Dependent Undergraduate Students

• $5,500 – Freshman year*
• $6,500 – Sophomore year*
• $7,500 – Junior, Senior, and 5th year undergraduate*

*of which at least $2,000 will be an unsubsidized loan

Independent Undergraduate Students (or dependent undergraduate students whose parent is unable to borrow a PLUS Loan)

• $9,500 – Freshman*
• $10,500 – Sophomore*
• $12,500 – Junior, Senior, or 5th year undergraduate**

* of which at least $6,000 will be an unsubsidized loan

** of which at least $7,000 will be an unsubsidized loan.

Parents (PLUS Loans) – The yearly limit on a PLUS Loan is the student’s cost of attendance minus any other financial aid received. For example, if the student’s cost of attendance is $12,000 and the student is receiving financial aid in the amount of $7,000, the parent could borrow up to $5,000 to apply towards the student’s education.

Students seeking a second bachelor’s degree – Students in a second bachelor’s degree program may borrow at undergraduate maximum loan limits (shown above).

* Enrolled in a program of study that is at least a full academic year. For periods of undergraduate study less than a full academic year, the loan amount a student may borrow will be less than the amounts listed above.

Cumulative Borrowing Caps

The total cumulative subsidized and unsubsidized loans amounts are:

• $31,000 as a dependent undergraduate student (with a maximum of $23,000 in subsidized loans)
• $57,500 as a independent undergraduate student (with a maximum of $23,000 in subsidized loans)
• $138,500 as a graduate or professional student. Note: graduate debt limit includes outstanding loans from undergraduate programs.

Interest Rates

Direct Loans – loans for undergraduates with a first disbursement date after July 1, 2022 and before July 1, 2023 are as follows:

• Undergraduate subsidized & unsubsidized = 4.99%
• Graduate unsubsidized = 6.54%
• PLUS loans = 7.54%

Please visit www.studentloans.gov for more information on educational loan interest rates.

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Fees and Charges for Federal Loans

The student Federal loan program deducts a default fee from each disbursement of up to 1.069% for subsidized & unsubsidized loans and up to 4.276% for Parent PLUS loans. This fee goes to the Federal government to help offset the cost of these loans.

Loan Disbursal

Federal loans are disbursed at the beginning of each term for Campus students. Campus students attending only one semester per academic year will have their loans disbursed in one disbursement.

WOL students will have one disbursement after the add/drop period. WOL students will have one disbursement after the add/drop period for each semester

Graduate students will have one disbursement after the add/drop period. Graduate students will have one disbursement after the add/drop period for each semester

Before loans can be disbursed, borrowers to the Direct Lending program are required to complete Entrance Counseling and a Master Promissory Note (MPN).  Additionally, parents are required to complete and Application and MPN each academic year (and in some cases Entrance Credit Counseling).  These tasks can be completed by visiting: studentaid.gov.

Stipends/ Loan disbursed to the student: Any overage amount (funds exceeding the cost of attendance) will be credited to the students account. This credit will be refunded to the student within 7 – 10 days after the credit balance was created.  The refund will be sent via check to the address on file with the Registrar’s office.  Students must contact the Business Office in writing if they want to pick up their stipend check instead of mailing.

Repayment Options/Plans and Consolidation

For more information regarding the several options for repayment plans and loan consolidation please visit studentaid.gov.

Payment Deferment

Payments may be deferred if the borrower enters into a deferrable situation and request deferment of payment by submitting appropriate documentation to the loan servicer.

Deferrable situations include, but are not limited to:

• Active duty in the U.S. armed forces*
• Study in an approved graduate fellowship program or in an approved rehabilitation training program for the disabled.
• Unable to find full-time employment (only on pre-July 1, 1993 loans)
• Economic hardship**
• Pursuing half-time study at postsecondary school

*Contact lender for specific information. **Many Peace Corps volunteers will qualify for deferment based upon economic hardship.