Federal Direct Loans

 

Federal Direct Student Loans are long-term, low-interest loans from the U.S. Department of Education.  This is the largest federal aid program and it consists of two types of Federal Direct Student Loans: subsidized and unsubsidized. 

The primary difference is the point at which interest begins to accrue. No interest will accrue on a subsidized loan and no principal will be due until the end of the six-month grace period that will begin when you graduate, leave the University, or drop below half-time enrollment (6 credits). Your offer may include a subsidized loan if you have financial need.

Interest on an unsubsidized loan begins to accrue on the day that the loan is disbursed and continues until the day that you repay the loan in full. You can pay the accumulating interest while you are in school, during the grace period, or during deferment; or you have the option of capitalizing the interest (adding unpaid, accumulated interest to the total unsubsidized amount borrowed when you begin repayment). This may give you a way to postpone making interest payments, but it also increases the total cost of your unsubsidized loan.

As an Undergraduate your offer may include a combination of subsidized and unsubsidized loans.  For example, a freshman with a subsidized loan of $500 may also receive an offer of an unsubsidized loan for $3,000 to meet the annual loan limit for a freshman. Graduate students are only eligible for unsubsidized loans beginning July 1, 2012.

Entrance Loan Counseling

When you are a new borrower of a Federal Direct Student Loan at Bowie State University, you must complete an entrance loan counseling session so that you will know your rights and responsibilities as a borrower.  The online session will take you about 20 minutes to complete.

Promissory Note

Borrowing from the Direct Loan program requires the completion of an Electronic Master Promissory Note (e-MPN).  You can use the e-MPN for one or more loans for one or more academic years while attending Bowie State University. 

In order to electronically sign the Master Promissory Note (e-MPN), you must obtain and Personal Identification Number (PIN).

Annual and Aggregate Loan Maximums

The amount you can borrow annually depends on your dependency status, grade level as determined by your earned units, and eligibility:

 

Direct Loan Annual Limits

Grade Level

Earned Units

 Annual Subsidized Loan Limit

Unsubsidized  Loan Limit

Freshman

0-29

  $3,500

$2,000

Sophomore

30-59

  $4,500

$2,000

Junior

60-89

  $5,500

$2,000

Senior

90+

  $5,500

$2,000

Graduate

N/A

  N/A

$8,500

You may receive an additional amount of unsubsidized loan if you meet the Federal Title IV definition of an independent student.  Independent freshmen and sophomores may be eligible for up to $6,000 in additional loan funds; juniors or seniors $7,000; and graduate students $12,000. 

You are independent if you meet at least one of the following conditions: 

  • you will be 24 years of age on or before Dec. 31 of the academic year during which you receive the student financial aid
  • you are a veteran of the U.S. armed forces
  • you are an orphan or were a ward of the court until the age of 18
  • you are a graduate student or were married at the time of application for aid
  • you have children who receive more than half of their support from you, or you have other dependents who live with you and receive more than half of their support from you, now and through June 30 of the year in which you receive the student financial aid

The Federal Direct Student Loan Program also has limits on the total amount you can borrow:

Direct Student Loan Maximums

Students

Undergraduate

Graduate

Dependent

$31,000 (maximum $23,000 Subsidized)

N/A

Independent

$57,500 (maximum $23,000 Subsidized)

$138,500* (maximum $65,500 Subsidized)

*Includes all borrowing on the undergraduate level

Cost of Borrowing

There is a loan fee on all Direct Subsidized Loans and Direct Unsubsidized Loans. The loan fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement. The percentage varies depending on when the loan is first disbursed. 

Read more about loan fees.

Interest Rate

The interest rate varies depending on the loan type and (for most types of federal student loans) the first disbursement date of the loan. The table provides interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2019, and before July 1, 2020.

Read more about interest rates. 

 

Repayment

You will begin to repay your loan at the end of a six-month grace that begins when you graduate, leave school, or drop below half-time enrollment (6 credits). During this period, you'll receive repayment information from your loan servicer, and you'll be notified of your first payment due date. Payments are usually due monthly. There are several repayment options available that are designed to meet the individual needs of borrowers. Your loan servicer can help you understand which repayment options are available to you. Generally, you’ll have 10 to 25 years to repay your loan, depending on the repayment plan that you choose.

Repayment Options

Borrowers have four repayment options:

  1. The Standard Repayment Plan allows you to repay your loan with a fixed monthly payment of no less than $50 over a period of no more than 10 years.
  2. The Extended Repayment Plan also has minimum payments of $50 per month, but allows you to take from 12 to 30 years to repay your loans.
  3. The Graduated Repayment Plan allows your payments to start out at one level, and then gradually increase every two years.
  4. The Income Contingent Repayment Plan gives you the flexibility to tie your payments to your adjusted gross income.

You can estimate your monthly payments with various repayment plans by using the repayment calculators available online from the U.S. Department of Education's Direct Loan Website.

Consolidation

You may consider a Federal Direct Consolidation Loan to simplify repayment by combining loans from the Federal Direct Student Loan Program, the Federal Stafford Loan Program, and the Federal Perkins Loan Program. 

Read more about loan consolidation. 

Deferments and Forebearance

If you have questions about repayment or a problem making a payment on your loan, the Direct Loan Servicing Center (1-800-848-0979) will work with you to help you avoid the costs and adverse consequences of delinquency.  Deferment and forbearance are options that can help you manage the repayment of your loan.