Federal Direct Stafford Loans
Federal Direct Loans are available to students who apply for financial aid using the FAFSA. The interest rates are determined each June for new loans being made for the upcoming award year. Each loan will have a fixed interest rate for the life of the loan. These loans are guaranteed by the federal government.The FAFSA is the only application necessary to receive Federal Direct Loans but you must accept your loans on MaineStreet in order to receive them.
Repayment on Direct Loans is not required until 6 months after the student leaves school, as long as the student remains enrolled at least half-time. Interest accrual while the student is in school is dependent on the type of Direct Loan received (subsidized or unsubsidized). Direct Unsubsidized Loans will accrue interest while the student is in school.
Do I Need to Borrow?
Think twice before borrowing any loan; don’t borrow just because you may be eligible. Take into consideration any other financial aid you are receiving before you borrow. Look into how much you may have available from your own resources before you borrow. Carefully evaluate your costs to see if you can reduce your expenses before you borrow. Taking out a loan should be your last resort, not your first option.
Types of Direct Loans
Direct Subsidized Loans are need-based loans. The government pays the interest on the loan while the student is enrolled at least half-time and during other authorized periods called deferments. The amount of loan offered is based on academic grade-level. Students borrowing Federal Direct loans on or after July 1, 2012 but before July 1, 2014 do not receive this subsidy during the 6-month grace period due to sequestration. Loans disbursing on or after July 1, 2014 will receive the subsidy during the 6-month grace period. Once the grace period has been used, generally interest begins accruing on the principle as soon as the student is no longer enrolled or has dropped below half-time enrollment.
Direct Unsubsidized Loans are available to students in addition to Direct Subsidized Loans and are not need-based. Also, all students are offered $2,000 in Direct Unsubsidized Loans for the academic year. The government does not pay the interest; the student can choose to either pay the interest while in school or have the interest added to the loan principal to be repaid later.
Additional Direct Loan Eligibility
(for undergraduate dependent students only)
If a parent is denied a Parent Direct PLUS Loan, the dependent undergraduate student can be treated as an independent student and may be eligible for additional Direct Unsubsidized Loans. The student must contact our office if they would like to explore this funding option.
Interest Rates & Fees
Direct Loans with a first disbursement date on or after July 1, 2016, and before July 1, 2017 are:
- 3.76% on Subsidized & Unsubsidized Undergraduate Direct Loans
- 5.31% on Unsubsidized Graduate Direct Loan
The origination fee for loans originated after October 1, 2015 is 1.068%.
Direct Loan Entrance and Exit Counseling
If you are borrowing a Direct Loan for the first time, you will need to complete Entrance Counseling.
When you stop attending school or if you drop below half time, you will need to complete exit counseling if you have borrowed a Direct Loan.
Master Promissory Note
All students borrowing a Direct Loan for the first time need to complete a new MPN.
Annual and Lifetime Direct Loan Borrowing Limits
For charts on annual grade-level and lifetime borrowing limits, please click here.
Loan Repayment and Consolidation
For an in-depth loan repayment calculator, click here.
Some students may want to consider consolidating their federal student loans into a Consolidation Loan. This is an option that has both pros and cons, so be sure you investigate this option carefully. For more information on Consolidation Loans, click here.