WILLIAM D. FORD FEDERAL DIRECT STAFFORD LOAN PROGRAM
By completing a financial aid application, you will be considered for the William D. Ford Federal Direct Stafford Loan Program. This loan is commonly referred to as the Federal Direct Loan Program.
There are two types of Federal Direct Stafford Loans for students:
Federal Subsidized Direct Loan: Your eligibility is based on your financial need and your academic level (see charts below). You don’t have to make any payments until six months after you graduate or cease to be enrolled at least half time. The government pays the interest while you are in school and during your six-month grace period.
Federal Unsubsidized Direct Loan: Your eligibility is not based on financial need. You may borrow the cost of education minus all other financial aid you receive, up to the amount allowed for your academic level (see charts below). You have two choices for paying interest: you may pay it while you are enrolled full time, or it can accrue and become part of the principal that you will owe. You begin making payments six months after you graduate or cease to be enrolled at least half time.
Interest Rate and Origination Fee
The interest rate on both the Federal Subsidized and Unsubsidized Direct Loan is currently fixed at 6.8%.
There is also an origination fee based on the amount of the total loan; this amount is deducted from your loan before you receive the funds. Currently, this fee can be up to 1.5%.
Loan Requirements
If you are a first-time Federal Direct Stafford Loan borrower, you must complete an Electronic Master Promissory Note (EMPN) and complete electronic Pre-Loan Entrance Counseling before you can receive funds.
Loan Maximums
The Federal Government sets the loan maximums. The yearly subsidized loan limits plus the unsubsidized loan limits cannot exceed $20,500. In addition, there are lifetime loan limits. Please review the chart below.
| Subsidized Direct Loan Annual Maximum | Total Direct Loan Annual Maximum |
Maximum Lifetime Loan limit |
|---|---|---|
| $8,500 | $20,500 | $138,500 |
FEDERAL DIRECT GRAD PLUS LOAN
An additional resource for graduate and professional students is the Federal Direct Grad Plus Loan Program. The Grad Plus Loan allows credit-worthy graduate students to borrow up to the full cost of attendance, minus any other financial aid. This program may be of interest if you need additional assistance to cover educational costs after other forms of aid have been awarded. The Federal Direct Grad Plus Loan shares its terms and conditions with the Federal Parent Loan (PLUS) program.
Borrower Eligibility
- You must be a graduate or professional student enrolled at least half time in a degree-seeking program to qualify for the Federal Grad Plus Loan.
- You must complete a Free Application for Federal Student Aid (FAFSA) and meet all federal eligibility requirements, including:
- You need to be a U.S. citizen or eligible non-citizen.
- You need to be in good academic standing and make continuous academic progress in your course of study.
- You must not be in default on any federal loan or owe a repayment on any federal grant.
- You will need to be in compliance with all federal regulations governing selective service registration and the use of federal funds for educational purposes.
- You must first apply for your maximum loan eligibility through the Direct Subsidized and Direct Unsubsidized loan before the Grad Plus Loan can be awarded.
- Your loan will need to be approved by the Federal Direct Loan Servicer (the loan service for the US Department of Education). Part of the loan approval will require a basic credit check.
Loan Terms
You may borrow up to the amount of the cost of education minus other financial aid received, including any other educational loans. The interest rate is currently 7.9%. An origination fee of 4% will be deducted from the loan proceeds prior to disbursement. Interest will accrue on the loan while you are in school and until the loan is paid in full.
An Important Consideration
The Federal Direct Grad Plus Loan program is one of many credit-based educational loan choices for graduate study. You are encouraged to compare the interest rates, credit check requirements, conditions, terms, and repayment of Grad Plus Loans with those of private/alternative loans.
The credit check for the Grad PLUS Loan will not be as stringent as that of most private/alternative loans, which often look at debt-to income ratio. Grad Plus Loans can be consolidated with other Federal Direct Loans (subsidized/unsubsidized), which allows students to have only one payment after graduation (private/alternative loans cannot be consolidated with federal loans). Interest rates tend to be lower than many private/alternative loans. The Grad Plus Loan has different requirements regarding deferment during regular and summer terms.
If you wish to apply for the Federal Direct Grad Plus Loan, please complete the following steps:
- Complete a FAFSA application online and meet all federal eligibility requirements;
- Complete the Grad Plus Loan Supplement Form and return to it our office.
- Complete an electronic Federal Direct Grad Plus Loan Master Promissory Note (EMPN). The Grad Plus Loan EMPN is a specific promissory note for the Federal Grad Plus Loan program.
- NEW REQUIREMENT: 1st time Grad Plus Loan borrowers must also complete the online Entrance Counseling Session. Select "Combination - Stafford and Plus Loans" and you will complete both the Grad Plus and Stafford Direct Loan requirements for Entrance Counseling.
Useful publication: Department of Education's Grad Plus Loan FAQ
RECEIVING FEDERAL LOAN FUNDS
Your federal student loan funds will be disbursed directly to your university student account. Funds are first used to pay tuition and other university expenses, but any leftover money can be used for other educational expenses. In general, you will receive an equal amount for each term for which your loan was approved. If you are enrolled less than half time in any term, you cannot receive federal loan funds for that term.
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