Federal Direct Student Loans

Overview of the Federal Direct Loan Process

There are two federal student loan programs.  One is the William D. Ford Federal Direct Loan Program (Direct Loan) in which eligible students and parents borrow directly from the U.S. Department of Education. These loans are repaid directly to the U. S. Department of Education.  The other program is the Federal Family Education Loan (FFEL) Program in which private lenders provide funds that are guaranteed by the federal government.  FFEL loans are repaid to the bank or private lender that provided the loan funds.

The University of Georgia participates solely in the Federal Direct Loan Program which enables students who are enrolled half-time or more to borrow low interest money for educational expenses directly from the U.S. Department of Education. You can request consideration for a Federal Direct Loan as follows:

1. When completing the Free Application for Federal Student Aid (FAFSA) for the appropriate Award Year be sure to answer question 26 on the 2008-09 FAFSA or question 31 on the 2009-10 FAFSA or,
2. If you have completed the Financial Aid Application Process for the 2008-09 Award Year and you have a 2008-09 financial aid Award, you can request we add the Direct Loan for the 2008-09 Award Year by completing our on-line Change in Aid Request.

If eligible, we will include the loan(s) on your Financial Aid Award on OASIS.  If required, you will then be instructed how to confirm your acceptance of the loan amount.

Once you have accepted the Direct Loan(s) and if you have not previously borrowed a Federal Direct Loan while enrolled at UGA, Student Accounts in the Bursar's Office will mail or e-mail you information instructing you to complete and electronically sign the Web-based Master Promissory Note (MPN). Student Accounts will also direct you to complete the Web-based federally mandated loan entrance counseling. If you have previously completed a Federal Direct Loan Master Promissory Note and received a Federal Direct Loan at UGA, you generally will not be required to sign another promissory note or to complete loan entrance counseling.

The Student Accounts Department (not OSFA) will disburse your loan funds to you. Please refer to their Web page at http://www.bursar.uga.edu/fin_aid_disbursement.html for additional information.

There are two types of Federal Direct Stafford Student Loans:

The Federal Direct Subsidized Loan

• The U.S. Department of Education pays the interest on the Subsidized Loan amount borrowed while you remain in school at least half time
• The maximum amount of annual Subsidized Loan for which you are eligible is the lesser of the Statutory Annual Maximum for your Grade Level or your Estimated Financial Need (EFN) minus all other aid awarded from all sources.

The Federal Direct Unsubsidized Loan

• You are responsible for paying the interest on the Unsubsidized Loan from the time the loan is disbursed until it is fully re-paid. You can pay the interest while in school or allow the interest to accrue (capitalize). See Origination Fee and Interest Rates below.
  
• The maximum amount of annual Unsubsidized Loan for which you are eligible is the lesser of the Statutory Annual Maximum for your Grade Level or your Cost of Attendance (COA) minus all other aid awarded from all sources.
  

Undergraduate Loan Grade Level

The Loan Grade Level for undergraduates is determined by the total number of semester hours earned at UGA plus any hours accepted in transfer.

Statutory Annual Loan Limits for Subsidized and Unsubsidized Loans for Undergraduates Effective 2008-09 Award Year

Note: *Post-Baccalaureate students enrolled in an eligible second undergraduate degree are subject to the same annual maximum loan amounts as level 3-4 students.

**Post-Baccalaureate students pursuing preparatory coursework for enrollment in a graduate or professional program are subject to the level 5 annual maximum loan limit.

Post-Baccalaureate students enrolled in preparatory coursework for enrollment in an undergraduate program cannot exceed $4,625 for dependent students and $8,625 for independent students.

Required Proration of Statutory Annual Loan Limits For Graduating Seniors

When students pursuing an undergraduate degree are awarded Subsidized and/or Unsubsidized Loans for one semester because they are graduating at the end of the awarded semester and they ultimately enroll in fewer than 15 hours, their one term Loan(s) must be prorated.   The U. S. Department of Education regulations do not require proration when the graduating seniors are enrolled in at least 15 hours their graduating term.

The prorated Loan amount(s) is determined as follows:

Statutory Annual Loan Limits for Subsidized and Unsubsidized Loans for Graduate and Professional Students

Undergraduate, Graduate and Professional students should carefully note the annual loan amounts apply to the entire Award Year i.e. the Fall, Spring and Summer semesters. You may request your annual loan maximum over Fall, Spring, and Summer semesters, or over Fall and Spring. If you request or receive less than your annual loan maximum over Fall and Spring, you can subsequently request we award the balance of your annual loan maximum for the Summer Semester, if you are otherwise eligible. For example:

Aggregate Loan Limits for Subsidized and Unsubsidized Loans

The total outstanding loan debt you can accrue from the federal student loan program is:

• $31,000 as a dependent undergraduate student. (Only $23,000 of this can be subsidized)
  
• $57,500 as an independent undergraduate student (only $23,000 of this amount can be subsidized).
  
• $138,500 as a graduate or professional student (only $65,500 of this amount can be subsidized). This debt limit includes any federal student loans received for undergraduate study.
  
• $224,000 as a VETMED or PHARMD student (only $65,500 of this amount can be subsidized). This debt limit includes any federal student loans received for undergraduate study.

Origination Fee and Interest Rates:

The Origination Fee for Federal Direct Subsidized and Unsubsidized Loans is 2.0 percent for loans in which the first disbursement of principal is made on or after July 1, 2008.  The Origination Fee is retained by the federal government to reduce the cost of supporting these low interest loans; however, 1.5 percent of the fee is rebated up front to the student at the time the loan is disbursed. When loan repayment begins, the student must make the first 12 loan payments on time; otherwise, the amount rebated will be reversed by Federal Direct Loan Servicing and charged back to the total loan amount owed.

The Origination Fee for Federal Direct Subsidized and Unsubsidized Loans will be reduced to 1.5 percent for loans in which the first disbursement of loan principal is made on or after July 1, 2009, and the amount of the fee rebated up front to the student at the time of disbursement will also be reduced to 1.0 percent effective July 1, 2009.

The Origination Fee for Federal Direct Parent PLUS Loans and Graduate/Professional Student PLUS Loans is 4 percent and 1.5 percent is rebated up front to the borrower at the time the PLUS loan is disbursed.

The Interest Rate is fixed at 6.0 percent for Federal Direct Subsidized Loans for Undergraduates which are first disbursed on or after July 1, 2008.  The interest rate is fixed at 5.6 percent for Federal Direct Subsidized Loans for Undergraduates which are first disbursed on or after July 1, 2009.  The interest rate for Undergraduate Unsubsidized Loans and for Graduate/Profesional student Subsidized and Unsubsidized Loans disbursed on or after July 1, 2008 is fixed at 6.8 percent.

The Interest Rate is fixed at 7.9 percent for Federal Direct Parent PLUS Loans and Graduate/Professional Student PLUS Loans disbursed on or after July 1, 2006.