Federal Direct Loans
Direct Stafford Loans, from the William D Ford Federal Direct Loan Program, are low-interest loans for eligible undergraduate and graduate students to help cover the cost of higher education. These federal loans are borrowed directly from the U.S. Department of Education at participating schools. These loans do not require a credit check. A small origination fee is withheld from the loan when it is disbursed to you. You do not have to make payments on Direct Stafford Loans while you are enrolled at least half-time (deferment). You also have a six month grace period after you graduate or drop below half-time enrollment before you begin repayment.
There are two types of Federal Stafford Loans: subsidized and unsubsidized.
1. Direct Subsidized Loans provide a fixed interest rate and are available to undergraduate students who
demonstrate financial need based on the results of the Free Application for Federal Student Aid (FAFSA). You are not charged interest on these loans while you are in school at least half-time and during deferment periods. The interest on a student’s subsidized loan begins during the student’s grace period. Graduate students are no longer eligible for Subsidized loans.
A new borrower on or after July 1, 2013 must complete their degree within 150% of the published length of the borrower’s program to remain eligible for the interest subsidy benefits on all Direct Subsidized Loans. If a degree is not completed within the 150% timeframe, the borrower will lose all subsidy benefits and future eligibility for Direct Subsidized Loans.
2. Direct Unsubsidized Loans provide a fixed interest rate of 4.29% for undergraduate loans (5.84% for graduate students) disbursed July 1, 2015 through June 30, 2016 and are available to students regardless of financial need (although the FAFSA still must be filed). Interest accrues on an unsubsidized loan from the time it is first disbursed to you. You can pay the interest while you are in school or allow it to accrue and be capitalized (added to the principal of the loan) upon repayment.
There are borrowing limits on the maximum amount you are eligible to borrow each academic year (annual loan limit) and in total (aggregate loan limit). A student may qualify to borrow both subsidized and unsubsidized loans based upon his/her demonstrated financial need and the maximum loan limit per grade level. The actual amount that you can borrow depends on your grade classification, whether you are a dependent or independent student, and other factors, and may be less than the maximum amounts shown in the loan limit chart.
Borrowing a Direct Loan: Master Promissory Note & Entrance Counseling
• If you are a first-time borrower of Direct Stafford Loans you will need to complete a Direct Loan Master Promissory Note (MPN) at www.studentloans.gov using your FSA ID. The MPN is a legal document in which you promise to repay your loan and any accrued interest and fees to the U.S. Department of Education. The MPN explains the terms and conditions of your loan and is used for loans that you receive over a period of multiple academic years.
• New borrowers of Direct Stafford Loans also need to complete Entrance Counseling at www.studentloans.gov using the FSA ID. This process helps students to understand their rights and responsibilities as a Direct Loan borrower.
• If you have borrowed Direct Loans at UNI in previous years you have already completed both of these requirements. However, new students who may have borrowed Direct Loans while attending another institution will still need to complete Entrance Counseling before receiving their loans at UNI.