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FATV Videos

Federal Direct Student Loan Programs

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What is the FDSLP?

Congress established the William D. Ford Federal Direct Student Loan Program (FDSLP) to reduce complexity within the financial aid process. FDSLP is a federal loan program that includes the William D. Ford Federal Direct Stafford Loans both subsidized and unsubsidized.

The difference between the FDSLP and the traditional Federal Family Education Loan Program is that the FDSLP does not involve the use of a private lender such as a bank. You are borrowing from the federal government and the money is disbursed directly to your Mercer County Community College student account.

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Applying for a Federal Direct Loan

When you complete the Free Application for Federal Student Aid or the Renewal Free Application for Federal Student Aid, you are applying for all of the aid programs for which you may be eligible and taking the first step toward your direct loan application.

To request a student loan, you must file your FAFSA, wait for a response, then go to your "MyMercer Portal" on our web site at www.mccc.edu/mymercer. After you logon to MyMercer click on "WebAdvisor for Students". You may then apply online. Be sure that your electronic entrance quiz and promissory note are completed at www.studentloans.gov.

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Federal Direct Student Loan Limits

The following criteria have been established for determining the amount of money to be distributed to a student in the Federal Direct Student Loan Program:

  • Students who have not completed their first academic year may borrow up to $3,500 per year under the subsidized program and up to an additional $2000 under the unsubsidized program.
  • Students who have completed their first academic year but have not completed their sophomore year, are eligible to borrow up to $4,500 per year under the subsidized program and up to an additional $2000 under the unsubsidized program.
  • Students who have completed their sophomore year but have not completed their senior year may borrow up to $5,500 per year and up to an additional $2000 under the unsubsidized program.
  • Graduate students may borrow up to $20,500 per year.

The annual maximum amount may be awarded to you as a combination of subsidized and unsubsidized William D. Ford Federal Direct Stafford Loans. You must pay the interest on the portion that is unsubsidized while in school, and during any grace or in-school deferment periods, unless you elect to have the interest added to the principal. This is called capitalization. Having the interest capitalized will mean larger payments when you begin repayment.

Independent students may borrow additional funds beyond the annual limit of the subsidized Federal Direct Student Loan. Additional unsubsidized Federal Direct Student Loan limits for independent students are as follows:

  • Undergraduate independent students who have not completed their first academic year may borrow up to $6,000.
  • Undergraduate independent students who have completed their first academic year but have not completed their sophmore year may also borrow up to $6,000.
  • The aggregate amount for Federal Direct Student Loan for undergraduate dependant students is $31,000 (no more than $23,000 of which can be subsidized).
  • The aggregate amount for Federal Direct Student Loan for undergraduate independant students is $57,500 (no more than $23,000 of which can be subsidized).
  • Graduate and professional students: Currently $138,500 (no more than $65,500 of which can be subsidized).
  • Dependent undergraduate students may not borrow the additional amount under the unsubsidized Federal Direct Student Loan because of the availability of the education loans for parents. Exceptions may be made by a financial aid counselor if the parent is denied an education loan.

Consistent with federal regulations, Federal Direct Student Loans have an origination fee currently of 1.072 percent that is deducted from the amount borrowed. This is called the origination fee.

For any loan disbursment for a loan where the first disbursment is/will be... The original fee percentage for Direct Subsidized and Direct Unsubsidized Loans is...
Before 7/1/2013 1.0 %
On or after 7/1/2013 and before 12/1/2013 1.051%
On or after 12/1/2013 and before 10/1/2014 1.072%
On or after 10/1/2014 and before 10/1/2015 1.073%

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Interest Rates

The interest rate on Stafford loans first disbursed beginning July 1, 2014 is fixed at 4.66%

Interest rates on subsidized Stafford loans for undergraduate students will continue to adjust downward according to the following schedule:

  • 5.6 percent for loans first distributed July 1, 2009 to July 1, 2010
  • 4.5 percent for loans first distributed July 1, 2010 to July 1, 2011
  • 3.4 percent for loans first distributed July 1, 2011 to July 1, 2012
  • 3.4 percent for loans first distributed July 1, 2012 to July 1, 2013
  • 3.86 percent for loans first distributed July 1, 2013 to July 1, 2014

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General Requirements

Once you are awarded a Federal Direct Student Loan, you must fulfill certain conditions before loan dollars can be credited to your account. These include, but may not be limited to:

Loan Entrance Counseling Quiz An Entrance Interview is actually an electronic counseling session which is designed to help you better understand your obligation as a borrower and provides other useful information on the loan process. Entrance Interviews are usually required of first time borrowers, and you will be notified if you are required to attend one. The Entrance Interview can be completed online at www.studentloans.gov.

Signing the Master Promissory Note The Direct Loan Master Promissory Note is to be completed online at www.studentloans.gov. If you accept the loan, complete the note in full and submit online. This is usually a one-time requirement.

Finally, you must meet all other criteria applicable to the federal aid programs in general, such as enrollment (6 credits or above), good standing, citizenship or permanent residency, financial aid transcripts on file, and supply any other relevant documentation requested by the aid office.

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Using Your Loan to Pay Your Term Bill

Your Federal Direct Student Loan will show as a financial aid credit on your schedule once your signed promissory note is received by the Financial Aid Office. Term bills are sent out in July for the Fall term, and in November for the Spring term. This credit, as well as any other financial aid credits, can be applied against the charges itemized on the bill.

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Refund Checks

If your financial aid, including your Student Loan, exceeds your charges for the term, you will be issued the difference in the form of a refund check.

However, to qualify for a refund, you must have taken all steps necessary to complete your aid. This means that you have completed a properly signed Promissory Note, as well as any and all other information we may have requested. When all documents have been received and reviewed, your financial aid is credited to your individual student account and, if you are entitled, a refund check is issued during the semester.

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Declining a Direct Loan

Many students who wish to decline Direct Loan offers never notify the Financial Aid Office of this fact. Failure to do so can result in delays in processing your other aid or, your receiving unnecessary communication from this office. If you have not returned the acceptance agreement or you made your decision to decline after you returned the agreement, please call or write the office so that your record can be accurately updated.

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Loan Repayment

Students who borrow a Federal Direct Student Loan and have borrowed a Federal Stafford Loan in the past, can have their loans consolidated so that they will be making only one payment. Loan consolidation will be made at the request of the student when entering repayment. The college will provide more information to you regarding this option during the semester or visit www.studentloans.gov or www.nslds.ed.gov/nslds_SA for account information.

Loan repayment begins six months after you leave school or cease to be enrolled on at least a half-time basis. These six months are referred to as a grace period.

The federal government offers various loan repayment options listed below.

  • The standard loan repayment plan requires fixed monthly repayment amount paid over a fixed period of time.
  • The extended repayment plan assumes a fixed annual repayment amount paid over an extended period of time.
  • The graduated repayment plan establishes annual repayment amounts at two or more levels. Repayments are paid over a fixed or extended period of time.
  • The income contingent repayment plan calls for varying annual repayment amounts based on the Adjusted Gross Income (AGI) of the borrower over an extended period of time, as determined by the U.S. Department of Education.

While you are enrolled in school (6 credits or above), no payments are due on the subsidized Federal Direct Student Loan, and no interest accrues (unless you are repaying a previous loan and are enrolled less than part time).

The grace period for the unsubsidized Federal Direct Student Loan is the same as the subsidized, but you must continue to pay the interest on the loan while in school and in the the grace period.

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Additional Information

The information in this fact sheet is subject to change without notice. The information was accurate at the time it was printed. Further changes to laws or regulations may make some of the information incomplete or inaccurate.

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FATV Answers on Demand

Loan Overview

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