Federal Direct Loan Program

Office of Financial Aid
(440) 826-2108
Toll Free: (877) 826-1600
(440) 826-8048 (fax)
finaid@bw.edu

BW's Federal ID Code: 003014

FIRST STEPS FOR APPLYING FOR A FEDERAL DIRECT LOAN

Entrance Counseling and Electronic Master Promissory Note (eMPN) Procedures
BW students planning to borrow a Federal Direct Loan must complete Entrance Counseling and submit an electronic Master Promissory Note (eMPN). These steps should be followed by students who have received a financial aid award from the Financial Aid Office (FAO).

You need your FSA ID number to complete this process. If you do not have an ID, read instructions on how to create a FSA ID. Each requirement takes approximately 15-20 minutes to complete. Be sure you have enough time to complete the process in a single session. You may not have the option to save your work.

Step One:

Complete Entrance Counseling

  1. Review the Entrance Counseling Materials.
  2. Visit studentloans.gov.
  3. Click the green "Log In" button.
  4. Sign in with your Username and FSA ID.
  5. Click "Complete Entrance Counseling" and follow the instructions.

Step Two:

Complete the electronic Master Promissory Note (eMPN)

  1. Visit studentloans.gov
  2. Click the green "Log In" button.
  3. Sign in with your Username and FSA ID.
  4. Click "Sign Master Promissory Note" and follow the instructions.

SUBSIDIZED VS. UNSUBSIDIZED FEDERAL DIRECT LOANS

Federal Direct Subsidized Loans

  • Available for degree seeking students attending at least half-time and maintaining satisfactory academic progress (SAP)
  • Student must be registered for classes and file necessary financial aid applications.
  • Eligibility is based on financial need.
  • Entrance interviews are required of all first time loan borrowers.
  • Repayment begins 6 months after a student graduates, withdraws or drops below half-time status.
  • Borrowers may choose from several repayment options.
  • An origination fee will be deducted from each loan prior to disbursement.
  • The subsidized interest is paid by the federal government while the student is in school.
  • The current Direct Subsidized Loan Interest rate is 4.29 percent for undergraduate students.
  • The origination fee is 1.073 percent. (Fees are subject to change.)

Federal Direct Unsubsidized Loans
Student must meet all terms of Federal Direct Loan except:

  • The loan is not need-based.
  • The federal government does not pay the interest on your behalf.
  • The current Direct Unsubsidized Loan interest rate is 4.29 percent for undergraduate students and 5.84 percent for graduate students.
  • The origination fee for all students is 1.073 percent. (Fees are subject to change.)

RESOURCES

Federal Direct Loan Change Form - This form is to be completed by students who:

  1. have received a Financial Aid Award Letter with Federal Direct Loan eligibility; and
  2. who wish to decline or reduce the Direct Loan(s) that have been offered to them.

National Student Loan Data System (NSLDS) - This is where the federal government keeps track of your student loans. It is the best place to review all of your federal student loan debt.

Repayment Options - This is the Department of Education's information on repayment options.

Repayment Calculator - This tool calculates an estimated monthly payment.

FREQUENTLY ASKED QUESTIONS ABOUT FEDERAL DIRECT LOANS

What is the interest rate and what fees are charged for Direct Loans?
See the chart below for the 2015-2016 interest rates and fees effective for loans with periods of enrollment (loan periods) beginning on or after July 1, 2015.

Loan ProgramDirect Loan
InterestFees
Federal Subsidized Direct Loan - Undergraduates4.29%*1.073%
Federal Unsubsidized Direct Loan - Undergraduates4.29%*1.073%
Federal Unsubsidized Direct Loan - Graduates5.84%*1.073%
Federal Parent PLUS6.84%*4.292%
Federal Graduate PLUS6.84%*4.292%

*Subject to change for the 2015-2016 academic year

What are the aggregate loan limits?

Aggregate Direct Loan Limits
 Combined Base Limit for Subsidized and Unsubsidized LoansAdditional Limit for Unsubsidized LoansTotal Limit for Unsubsidized Loans (minus subsidized amounts)
Dependent Undergraduate Students (whose parents were not denied a PLUS loan)$23,000$8,000$31,000
Independent Undergraduate Students (and dependent students whose parents were denied a PLUS loan)$23,000$34,500$57,500
Graduate and Professional Students$65,500 $138,500
Unsubsidized Loan

What types of Direct Loans are available?
Direct Subsidized Loans are available to students who have completed a Free Application for Federal Student Aid (FAFSA) and are eligible based on financial need. No interest is charged while attending school at least half-time, during your grace period, and during deferment periods.

Direct Unsubsidized Loans are available to students who have completed the FAFSA, but eligibility is not based on financial need. Interest accrues during school, grace period and deferment. Interest accruing during these periods may be paid or capitalized.

PLUS Loans are available to credit-worthy parents of dependent undergraduate students. Parents may borrow the difference between the student's total cost of education and all other aid the student is receiving.

PLUS Loans for Graduate Students are available to credit-worthy graduate students. Students may borrow the difference between the total cost of education and all other aid received. In order to borrow a PLUS Loan for Graduate Students, a student must complete a FAFSA and utilize funds from the Direct Loan.

Consolidation Loans are available to students and parents. Direct Consolidation Loans allow borrowers to combine one or more federal education loans into a new loan that offers several advantages such as one monthly payment, flexible repayment options, or reduced monthly payments. Parent PLUS Loans cannot be consolidated with the student's loans.

What are the eligibility requirements?
A student must be enrolled at least half-time at a school and must meet general eligibility requirements for the Federal Student Aid (FSA) programs.

How do I apply for the Direct Loan Program?
When completing the FAFSA, indicate that you want to be considered for a federal loan. Once the FAO reviews the results from the FAFSA and a financial aid award is processed, you will be notified if you are eligible for a loan and the maximum amount.

How does the Federal Direct Consolidation process work?
Once you graduate or drop below half-time, you can contact the Direct Loan Program for an application for a Direct Consolidation Loan, which will combine your Federal education loans into one loan. When you need to begin repayment, you will be provided with several consolidation options. For more information, contact the U.S. Department of Education Consolidation Department at 1-800-557-7392 or visit www.loanconsolidation.ed.gov.

What type of repayment plans are offered through the Direct Loan Program?
When it comes time to repay, you can pick a repayment plan that suits your financial situation. The Direct Loan Program offers four repayment plans with various term selections:

  • Standard Repayment Plan: Under this plan, you pay a fixed amount of at least $50 each month for up to 10 years. This plan results in the lowest total interest paid of any repayment plan. If you have not selected a repayment plan by the time repayment begins, your loan(s) will be placed on the Standard Repayment Plan.
  • Graduated Repayment Plan: Under this plan, you will pay a minimum payment amount equal to at least the amount of interest accrued monthly for up to 10 years. Your payments start out low, and then increase every two years. Generally, the amount you repay over the term of your loan will be higher under the Graduated Repayment Plan than under the Standard Repayment Plan. This plan may be beneficial if your income is low now but is likely to steadily increase.
  • Extended Repayment Plans:
    Extended repayment plans are available to Direct Loan borrowers with no outstanding principal or interest balances as of October 7, 1998 and with more than $30,000 in Direct Loans.
  1. Fixed Monthly Payment Option: Under this plan, you pay a fixed amount of at least $50 each month for up to 25 years. To be eligible for this plan, your Direct Loan balance must be greater than $30,000. Repayment under this plan will result in lower total interest paid when compared to graduated plans with similar terms.
  2. Graduated Monthly Payment Option: Under this plan, you pay a minimum amount of at least $50 or the amount of interest accrued monthly, whichever is greater, for up to 25 years. Your payments start out low and then increase every two years. To be eligible for this plan, your Direct Loan balance must be greater than $30,000. Repayment under this plan may provide lower initial monthly payments, although the total interest paid may be greater when compared to plans with similar terms with fixed payments. This plan may be beneficial if your income is low now but is likely to steadily increase.
  • Income Contingent Repayment (ICR) Plan: This repayment plan bases your monthly payment on your yearly income, family size and loan amount. As your income increases or decreases, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven.

The ICR Plan is NOT available if you have a Direct PLUS Consolidation Loan(s) made before July 1, 2006 and/or a Direct PLUS Loan(s). However, you are eligible to repay any Direct Consolidation Loan(s) made on/after July 1, 2006 under the ICR Plan even if it includes a PLUS Loan(s).

Each year your monthly payment will be based on your family size, annual Adjusted Gross Income (AGI) as reported on your federal tax return, and the total amount of your Direct Loan(s). To participate in the ICR Plan you must authorize the U.S. Internal Revenue Service (IRS) to inform the U.S. Department of Education (ED) of the amount of your income. This information will be used to calculate your repayment amount, which will be adjusted annually to reflect changes in your AGI. If you select the ICR Plan, you will be billed for only the interest amount that accrues on your loan(s) each month, until the required documentation is received by the Direct Loan Servicing Center.

Repayment Plan Overview

 Non-Consolidation LoansConsolidation Loans
Standard Repayment Plan* Repayment up to 10 years
* Lowest total interest paid
* Automatic payment plan if payment plan is not chosen
* Repayment up to 10 to 30 years based on total education indebtedness
Graduated Repayment Plan* Repayment up to 10 years
* Payments start out low, then increase every two years
* Beneficial if income is low now, but may steadily increase
* Repayment up to 10 to 30 years based on total education indebtedness
* Payments start out low, then increase every two years
* Beneficial if income is low now, but may steadily increase
Extended Repayment Plan* Repayment up to 25 years
* Must have more than $30,000 in Direct Loans
* Monthly payment will be lower than Standard Repayment
* Will pay more on loan because of the interest that accumulated during the longer repayment period.
 
Income Contingent Repayment* Repayment up to 25 years
* Monthly payments based on annual income, family size, and total amount of Direct Loans
* Unpaid portion of loan is forgiven, but you may have to pay income tax on the amount that is forgiven
 

Who do I call about loan repayment questions?
Visit Federal Loan Servicing for a list of toll-free numbers for Direct Loan Servicers.

How can I keep track of my Federal Direct Loans?
Knowing who is servicing your federal student loans is critical in shaping your financial future. Visit the National Student Loan Data System (NSLDS) Student Access website at www.nslds.ed.gov. NSLDS provides a central database for student aid and allows students access to view information from schools, guaranty agencies, the Direct Loan program, as well as other programs; which is a valuable tool in managing your federal student loan information. Managing your debt is your responsibility, and the NSLDS database is a vital tool for keeping track of your financial obligations.