Federal Direct Student Loans
Overview of the Federal Direct Loan Process
The University of Georgia participates in the William D. Ford Federal Direct Loan Program which enables students who are enrolled half-time or more to borrow low interest money for educational expenses directly from the U.S. Department of Education. To be considered for a Federal Direct Loan, students must complete the appropriate year Free Application for Federal Student Aid (FAFSA) process.
with the 2011-12 FAFSA, the U.S. Department of Education removed the
loan question from the FAFSA; therefore, we are automatically offering
Loans to all eligible students beginning with the 2011-12 Award Year.
If you decline a loan offer and subsequently wish to add the
loan back to your Award, you can request it by completing the Change In Aid Request.
Your Financial Aid Award on OASIS will reflect the loan funds you have been offered and you will be instructed how to confirm your acceptance of the loan amount.
Once you have accepted the Direct Loan(s) and if you have not previously borrowed a Federal Direct Loan while enrolled at UGA, Student Accounts in the Bursar's Office will mail or e-mail you information instructing you to complete and electronically sign the Web-based Master Promissory Note (MPN). Student Accounts will also direct you to complete the Web-based federally mandated Loan Entrance Counseling.
If you have previously completed a Federal Direct Loan Master Promissory Note and received a Federal Direct Loan at UGA, you generally will not be required to sign another promissory note or to complete loan entrance counseling. The Student Accounts Department (not OSFA) will disburse your loan funds to you. Please refer to their Web page at http://www.bursar.uga.edu/fin_aid_disbursement.html for additional disbursement information.
The National Student Loan Data System
As a consumer you need to be aware that the U.S. Department of Education will post your Federal Direct Loan data on the National Student Loan Data System (NSLDS) which is accessible by federal student loan guarantee agencies, lenders and institutions which the Department of Education has authorized access to this data system.
Information on Loans and State Grant Assistance
See www.studentloans.gov for additional information about student loans and other student aid programs including grant assistance from your state of legal residence.
The Two Types of Federal Direct Stafford Student Loans
The Federal Direct Subsidized Loan
- The U.S. Department of Education pays the interest on the Subsidized Loan amount borrowed while you remain in school
at least half time and continues to be paid through the six month grace period.
IMPORTANT NOTE: Public Law 112-74 amended HEA section 428(a)(3)(A)(i)(I) to temporarily eliminate the interest subsidy on Direct Subsidized Loans during the six month grace period provided to students no longer enrolled on at least a half-time basis. This change will be effective for new Direct Loans disbursed on or after July 1, 2012 and before July 1, 2014.
- The maximum amount of annual Subsidized Loan for which you are eligible is the lesser of the Statutory Annual Maximum for your Grade Level or your Estimated Financial Need (EFN) minus all other aid awarded from all sources.
- The U.S. Department of Education pays the interest on the Subsidized Loan amount borrowed while you remain in school at least half time and continues to be paid through the six month grace period.
The Federal Direct Unsubsidized Loan
- You are responsible for paying the interest on the Unsubsidized Loan from the time the loan is disbursed until it is fully re-paid. You can pay the interest while in school or allow the interest to accrue. Any accrued interest will be added to the principal balance of loan at the end of your loan grace, or deferment period (capitalized). See Origination Fee and Interest Rates below.
- The maximum amount of annual Unsubsidized Loan for which you are eligible is the lesser of the Statutory Annual Maximum for your Grade Level or your Cost of Attendance (COA) minus all other aid awarded from all sources.
Undergraduate Loan Grade Level
The Loan Grade Level for undergraduates is determined by the total number of semester hours earned at UGA plus any hours accepted in transfer.
Statutory Annual Loan Limits for Subsidized and Unsubsidized Loans for Undergraduates
|Annual Maximum (Effective 7-1-08)|
|Level||Dependent Student||Independent Student|
|1||$5,500 (only $3,500 can be subsidized)||$9,500 (only $3,500 can be subsidized)|
|2||$6,500 (only $4,500 can be subsidized)||$10,500 (only $4,500 can be subsidized)|
|*3-4||$7,500 (only $5,500 can be subsidized)||$12,500 (only $5,500 can be subsidized)|
|**5||$5,500||$12,500 (only $5,500 can be subsidized)|
For a single semester, your loan eligibility is no more than half the annual amount.
Note: * Post-Baccalaureate students enrolled in an eligible second undergraduate degree are subject to the same annual maximum loan amounts as level 3-4 students.
** Post-Baccalaureate students pursuing preparatory coursework for enrollment in a graduate or professional program are subject to the level 5 annual maximum loan limit.
Post-Baccalaureate students enrolled in preparatory coursework for enrollment in an undergraduate program cannot exceed $4,625 for dependent students and $8,625 for independent students.
Statutory Annual Loan Limits for Subsidized and Unsubsidized Loans for Graduate and Professional Students for the 2011-2012 Academic Year
|Grad. School & Law||$20,500 (only $8,500 can be subsidized)|
|Vet Med||$40,500 Fall & Spring (only $8,500 can be subsidized)
$47,167 Fall, Spring & Summer (only $8,500 can be subsidized)
|PharmD||$33,000 Fall & Spring (only $8,500 can be subsidized)
$37,167 Fall, Spring & Summer (only $8,500 can be subsidized)
IMPORTANT NOTE: Due to the Budget Control Act (BCA) of 2011, beginning with the 2012-2013 academic year graduate students will no longer be eligible for the subsidized Federal Direct Loan.
Statutory Annual Limits for Unsubsidized Loans for Graduate and Professional Students for the 2012-2013 Academic Year
|Grad. School & Law||$20,500|
|Vet Med||$40,500 Fall & Spring
$47,167 Fall, Spring & Summer
|PharmD||$33,000 Fall & Spring
$37,167 Fall, Spring & Summer
Required Proration of Statutory Annual Loan Limits For Graduating Seniors
When students pursuing an undergraduate degree are awarded Subsidized and/or Unsubsidized Loans for one semester because they are graduating at the end of the awarded semester and they ultimately enroll in fewer than 15 hours, their one term Loan(s) must be prorated. The U. S. Department of Education regulations do not require proration when the graduating seniors are enrolled in at least 15 hours their graduating term.
The prorated Loan amount(s) is determined as follows:
|(number of hours in which the student is enrolled) x (the statutory annual loan limit)|
For a single semester, your loan eligibility is no more than half the annual amount.
Undergraduate, Graduate and Professional students should carefully note the annual loan amounts apply to the entire Award Year i.e. the Fall, Spring and Summer semesters. If you request or receive less than your annual loan maximum over Fall and Spring, you can subsequently request we award the balance of your annual loan maximum for the Summer Semester, if you are otherwise eligible. For example:
|Dependent 3rd Year Student
12 Month Maximum $7,500
Aggregate Loan Limits for Subsidized and Unsubsidized Loans
The total outstanding loan debt you can accrue from the federal student loan program is:
- $31,000 as a dependent undergraduate student. (Only $23,000 of this can be subsidized)
- $57,500 as an independent undergraduate student (only $23,000 of this amount can be subsidized).
- $138,500 as a graduate or professional student (only $65,500 of this amount can be subsidized). This debt limit includes any federal student loans received for undergraduate study.
- $224,000 as a VETMED or PHARMD student (only $65,500 of this amount can be subsidized). This debt limit includes any federal student loans received for undergraduate study.
The Origination Fee for Federal Direct Subsidized and Unsubsidized Loans is 1.0 percent for loans in which the first disbursement of principal is made on or after July 1, 2010 but before March 1, 2013. The Origination Fee is retained by the federal government to reduce the cost of supporting these low interest loans.
The Origination Fee for Federal Direct Parent PLUS Loans and Graduate/Professional Student PLUS Loans is 4 percent.
Changes in Origination Fees for Federal Direct Loans effective March 1, 2013:
For Direct Subsidized and Direct Unsubsidized Loans where the first disbursement of the loan is after March 1, 2013, the current loan fee of 1 percent of the principal amount of a loan will increase. We presently anticipate that the rate will increase to approximately 1.05 percent.
For Direct PLUS Loans for both parent and graduate and professional student borrowers where the first disbursement of the loan is after March 1, 2013, the current loan fee of 4 percent will increase. We presently anticipate that the rate will increase to approximately 4.20 percent.
The interest rate is fixed at 3.4 percent for Federal Direct Subsidized Loans for Undergraduates which are disbursed between July 1, 2011 and June 30, 2012. As a result of Public Law 112-141, the interest rate will remain fixed at 3.4 percent for Federal Direct Subsidized Loans for Undergraduates which are disbursed on or after July 1, 2012 and before July 1, 2013.
Additionally, as a result of legislation Public Law 112-141 eligibility for the Direct Loan interest subsidy will be limited for new borrowers on or after July 1, 2013. The law restricts the period of time for which a borrower may receive subsidized loans, in the aggregate, to 150 percent of the published length of the student's current educational program. Once the student reaches that limit, he or she may borrow only unsubsidized loans, and interest begins to accrue on the student's outstanding subsidized loan.
The interest rate is fixed at 6.8 percent for Federal Direct Subsidized Loans for Undergraduates which are disbursed July 1, 2013 and beyond.
The interest rate for Undergraduate Unsubsidized Loans and for Graduate/Professional student Unsubsidized Loans disbursed on or after July 1, 2008 is fixed at 6.8 percent.
The Interest Rate is fixed at 7.9 percent for Federal Direct Parent PLUS Loans and Graduate/Professional Student PLUS Loans disbursed on or after July 1, 2006.
Update on Direct Loan Interest Rates Effective July 1, 2013
President Obama recently signed the Bipartisan Student Loan Certainty Act of 2013. Thus, Federal Direct Student Loan interest rates for loans with a first disbursement on or after July 1, 2013 are now as follows:
- Undergraduate Direct Subsidized & Unsubsidized Loans: 3.86%
- Graduate Direct Unsubsidized Loans: 5.41%
- Parent PLUS & Grad PLUS Loans: 6.41%
Details of the Bipartisan Student Loan Certainty Act
Per the Bipartisan Student Loan Certainty Act, interest rates will be established each year for Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans for which the first disbursement is on or after July 1 through the following June 30. The rate will be the sum of a uniform "index rate" plus an "add-on" that varies depending on the type of loan (Subsidized/Unsubsidized or PLUS) and the borrower's grade level (undergraduate or graduate/professional). Thus, interest rates will be the same for Direct Subsidized Loans and Direct Unsubsidized Loans taken out by an undergraduate student, with a different rate for Direct Unsubsidized Loans taken out by a graduate/professional student and for PLUS Loans taken out by parent borrowers or graduate/professional student borrowers.
Under the law, the index rate is determined each year as the "high yield of the 10-year Treasury note" auctioned at the final auction held prior to the June 1 preceding the July 1 of the year for which the rate will be effective, plus a statutorily defined "add-on". As noted the add-on will differ depending on the type of loan and the student's grade level. Each loan type also has a maximum interest rate (or cap).
The interest rate for a loan, once established, will apply for the life of the loan - that is, the loan will be a fixed-rate loan. As a result, it is likely that many borrowers will have a set of fixed-rate loans, each with a different interest rate, including the 3.4% and/or 6.8% Direct Subsidized and Direct Unsubsidized loans made prior to July 1, 2013