Student Financial Aid

Loans - Changes to Federal Direct Loans

On July 6, 2012, President Obama signed Public Law 112-141  that included a one-year extension of the 3.4 percent interest rate on all undergraduate Subsidized Stafford loans with a first disbursement date between July 1, 2012 and June 30, 2013.

Students borrowing Direct Subsidized Stafford loans processed on or after July 1, 2012 will no longer have a subsidized 6-month grace period.  Loans processed after this date will still have a 6-month grace period, however interest will immediately begin accruing on the principle as soon as the student is no longer enrolled or has dropped below half-time enrollment.

Beginning July 1, 2012 the following changes will be made to the William D. Ford Direct Loan Program in accordance with the Budget Control Act of 2011.

Graduate Student Loan Borrowers:

• Effective for periods of enrollment (loan periods) beginning on or after July 1, 2012, graduate and professional students will no longer have the option to borrow Federal Direct Subsidized Stafford Loans.  Graduate and professional students will be eligible for Unsubsidized Stafford Loans ONLY.
• Direct Subsidized Loans received for loan periods prior to July 1, 2012, will NOT be affected by this change.
• Borrowers receiving Federal Direct Loans for preparatory course work for admission into a graduate/professional program or for course work required for teacher certification or recertification will NOT be affected by this change.
• Annual and aggregate limits will remain the same for Federal Direct Loans.  The maximum amount a graduate/professional student can borrow in a Federal Direct Loan will remain at $20,500 per academic year and at $138,500 for the aggregate (with no more than $65,500 having been borrowed in subsidized loans).

Undergraduate and Graduate Student Loan Borrowers:

• Borrowers will no longer receive an origination fee rebate for Federal Direct Loans (Stafford AND PLUS ) disbursed on or after July 1, 2012.  A 1% origination fee will be deducted proportionately from each Stafford Loan disbursement and a 4% origination fee from Plus Loans.

For more information on Subsidized versus Unsubsidized Loans, visit: www.direct.ed.gov

Click here to view the Budget Control Act of 2011. See Title V, Sections 502 and 503 for specific references to the Federal Direct Loan Program.

We also recommend that students monitor their Federal loan history online at: www.nslds.ed.gov

Click here for more information on your Capitalization of Interest and your Direct Loan interest payment options .

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