Loans are funds that you have to pay back, usually after you graduate. Student loan assistance from one or more programs may be included as part of a financial aid award.
Federal Direct Student Loans
Students who are U.S. citizens or permanent residents and have filed a Free Application for Federal Student Aid (FAFSA) are eligible, including those who do not qualify for need-based aid. Students who do not qualify for need-based aid are ineligible for the interest subsidy from the federal government. Borrowers of unsubsidized Direct Loans can either pay the interest quarterly or choose to have the interest accrue while they are enrolled in college.
Federal Direct Student Loan Maximum Annual Amounts
|Student Grade Level||Subsidized||Unsubsidized|
|4th Year and above||$5,500||$2000|
|Maximum undergraduate Aggregate Limit||$23,000||$8,000|
Interest Rate/Loan Fees
The interest rate for subsidized Direct Loans is fixed at 3.4% for loans disbursed between July 1, 2012, and June 30, 2013. If a student qualifies for the in-school subsidy, the federal government pays the interest on the loan while the student is enrolled. The interest rate on unsubsidized Direct Loans is 6.8%, with the borrower responsible for paying any accrued interest. An origination fee of 1.0% of the principal loan amount is deducted from each disbursement before it is credited to the student account.
Direct Student Loan Application Process
Students typically apply for Direct Loans during the summer and must complete the following steps in order to obtain a loan:
- File a FAFSA so that eligibility for any subsidized loan amount can be established.
- Provide copies of student and parent 2012 federal tax returns and W-2 forms to Student Financial Services.
- Complete a Federal Direct Student Loan Authorization Form (PDF)
- First-time borrowers must complete an Electronic Master Promissory Note (eMPN) at studentloans.gov
- First-time borrowers must complete loan entrance counseling at studentloans.gov
Direct Loan Repayment
Repayment of Direct Loans begins six months after the student graduates or otherwise ceases enrollment. The standard repayment term is 10 years, and alternate terms such as extended repayment, graduated repayment and income-contingent repayment are also available. Information about loan repayment plans (with sample repayment calculators) is available at studentaid.ed.gov.
Federal Perkins Loan
This is a need-based loan with a fixed interest rate of 5%. Students can borrow up to $5,500 per year, and no interest accrues while borrowers are enrolled at Bates. Loans are repaid over a 10-year period that begins nine months following the student’s graduation.Next: Parent Loans