What are Direct Loans?

 

The Federal Direct Loan is available through the the Federal Direct Loan Program to help both undergraduate and graduate students pay for their education.

 

There are two types of Direct Loans--subsidized and unsubsidized.

 

 

The Direct Unsubsidized Loan

 

This loan is available to students regardless of income or need. With an unsubsidized loan, you are responsible for all interest that accrues during in-school, grace and deferment periods. You may choose to pay the interest portion only while in school, which would keep your loan balance at principal. If you choose to defer such payments, the interest will be capitalized, resulting in an increase in both total debt and the amount of monthly payments.

 

Advantages of the Direct Loan

• The interest rate is fixed at 6.8%.

• It carries low origination fees.

• Repayment of the loan does not begin until you graduate or drop below half-time status.

• In cases of economic hardship, payments may be deferred, extended, or reduced.

• The loan is forgiven in case of permanent disability or death.

Loans are usually issued for a single academic year, and both eligibility and amount are redetermined annually throughout your academic career.

 

Eligibility for the Direct Loan

 

Your Direct loan eligibility is determined by the Office of Financial Aid and is based on information you provided in the Free Application for Federal Student Aid (FAFSA).

 

Federal criteria include:

• Enrollment in an eligible school at least half-time in a degree program

• U.S. citizenship, permanent residency, or eligible noncitizen status

• Satisfactory academic progress (as determined by the Office of Financial Aid)

• No unresolved defaults or overpayments owed on Title IV educational loans and grants

• Satisfaction of all Selective Service Act requirements

 

How Much Can I Borrow?

 

Borrowing limits are based on your dependency status and year in school. You are considered independent if you will be working on a degree beyond a bachelor's degree during the school year.

You can never borrow more than the cost of education, less other financial aid received (special rules apply for recipients of Montgomery Chapter 30 VA benefits and Americorps benefits). Below are the maximum amounts you may borrow.

As a graduate student, your unsubsidized Direct loan annual eligibility is as follows:

 

	Graduate
Unsubsidized	$20,500
Total	$20,500

 

The cumulative maximum amount that may be borrowed as an undergraduate is $23,000 for a dependent and $57,500 for an independent student. The cumulative combined maximum for both undergraduate and graduate loans is $65,500 for subsidized only and $138,500 for unsubsidized and subsidized combined.

Sample Loan Repayment Disclosure Information

 

Interest Rate

 

The interest rate is fixed at 6.8%.

 

Loan Fees

 

For all Direct Loans made between July 1, 2012 and June 30, 2013, the origination fee will be 1.00% of the principal loan amount.

 

Example:

Loan amount	$2,000
Total up-front fee (0.50%)	- $20
Amount disbursed Fall	$990
Amount disbursed Spring	$990

 

 

 

The Application Process

 

Here's a step-by-step guide to the Direct loan application process:

1. Complete a Free Application for Federal Student Aid (FAFSA) application online at the Department of Education's website http://fafsa.ed.gov.

2. Once your FAFSA is processed, you will receive a Student Aid Report (SAR) documenting your financial resources and expected family contribution towards educational costs. An electronic copy will be sent to the Office of Financial Aid of the school listed on your application. The University of Mississippi's school code is 002440.

3. Check your SAR for accuracy. If there are errors, follow the correction process indicated on the SAR or as instructed by the Office of Financial Aid.

4. From the information obtained in the SAR and other supporting documents, we will generate an online Financial Aid Award Notification documenting the financial aid available to you including Direct Loan eligibility.

5. The student may accept all or a part of the aid and indicate his/her choice of lender by accepting and confirming the Financial Aid Award Notification online.

6. The student must complete Loan Entrance Counseling on the Web.

7. Once the Financial Aid Award Notification has been accepted and submitted and Loan Entrance Counseling has been completed, you may sign your school-certified Direct Loan application/Promissory Note online. You will not need to e-sign a new Master Promissory Note if one is already on file with your lender.

8. You will receive a Notice of Guarantee and Disclosure Statement. This is your notice of loan approval, and it contains essential information about the terms and conditions of your loan. It also tells you the amount of your loan and an estimated date for the arrival of funds.

 

Disbursements of Funds

 

An Electronic Funds Transfer (EFT) will be sent directly to our school. The amount of the proceeds will be the loan amount less the fees. Funds will credit first to your Bursar bill and any excess funds will be mailed to your permanent address or directly deposited to your personal account.