Financial Aid

Value = Quality + Affordability
 

Federal Direct Loan Program: Frequently Asked Questions (FAQ)

 

 
Q. What is the interest rate and what fees are charged for Direct Loans?
A. See chart below for the 2014-2015 interest and fees. Effective for loans with periods of enrollment (loan periods) beginning on or after July 1, 2014.
Loan Program 
 
                                        DL
 
Interest
Fees
Federal Subsidized Direct Loan - Undergraduates
 
4.66%
*1.072%
Federal Unsubsidized Direct Loan -Undergraduates
 
4.66%
*1.072%
Federal Unsubsidized Direct Loan - Graduates
 
6.21%
*1.072%
Federal Parent PLUS
 
7.21%
*4.288%
Federal Graduate PLUS
 
7.21%
*4.288%

*subject to change for the 2014-2015 academic year

Q. What are the aggregate loan limits?
Aggregate Direct Student Loan Limits
  Combined Base Limit for Subsidized and Unsubsidized Loans Additional Limit for Unsubsidized Loans Total Limit for Unsubsidized Loans (minus subsidized amounts)
Dependent Undergraduate Students (whose parents were not denied a PLUS loan) $23,000 $8,000 $31,000
Independent Undergraduate Students (and dependent students whose parents were denied a PLUS loan) $23,000 $34,500 $57,500
Graduate and Professional Students $65,500   $138,500
Unsubsidized Loan
Q. What types of Direct Loans are available?
A. Subsidized Direct Student Loans are available to students who have completed a Free Application for Federal Student Aid (FAFSA) and are eligible based on financial need. No interest is charged while attending school at least half-time, during your grace period, and during deferment periods.
Unsubsidized Direct Student Loans are available to students who have completed the FAFSA, but eligibility is not based on financial need. Interest accrues during in-school, grace period and deferment. Interest accruing during these periods may be paid or capitalized.
PLUS Loans are available to credit-worthy parents of dependent undergraduate students. Parents may borrow the difference between the student's total cost of education and all other aid the student is receiving.
PLUS Loans for Graduate Students are available to credit-worthy Graduate students. Students may borrow the difference between the total cost of education and all other aid received. In order to borrow a PLUS Loan for Graduate Students, a student must complete a FAFSA and utilize funds from the Direct Student Loan.
Consolidation Loans are available to students and parents. Direct Consolidation Loans allow borrowers to combine one or more of your federal education loans into a new loan that offers several advantages such as one monthly payment, flexible repayment options, or reduced monthly payments.  Parent PLUS Loans cannot be consolidated with the student's loans.
Q. What are the eligibility requirements?
A. A student must be enrolled at least half-time at a school and must meet general eligibility requirements for the Federal Student Aid (FSA) programs.
Q. How do I apply for the DL Program?
A. A Free Application for Federal Student Aid (FAFSA) must be completed. There is a place on the application that allows you to indicate that you wish to be considered for a federal loan.  Once Baldwin Wallace reviews the results from the FAFSA and a financial aid award is processed, you will be notified of the eligibility for the loan and the maximum amount. Additional information regarding applying for a Direct Loan will be made available by the BW Office of Financial Aid.
Q. How does the Federal Direct Consolidation process work?
A. Once you graduate or choose to no longer attend school on a half-time basis, you can contact the DL Program for an application for a Direct Consolidation Loan, which will combine the FFEL Program and DL loans into one type of loan. When it comes time to begin repaying the loans, you will be provided with several options concerning consolidation to be able to choose which one has the greatest advantage. You may call the U.S. Department of Education Consolidation Department at 1-800-557-7392 or visit www.loanconsolidation.ed.gov.
Q. What type of repayment plans are offered through DL?
A. The repayment periods for Stafford Loans. When it comes time to repay, you can pick a repayment plan that best suits your financial situation. The Direct Loan Program offers four repayment plans with various term selections:
         Standard Repayment Plan: Under this plan, you will pay a fixed amount of at least $50 each month for up to 10 years. This plan results in the lowest total interest paid of any repayment plan. If you have not selected a repayment plan by the time repayment begins, your loan(s) will be placed on the Standard Repayment Plan.
        Graduated Repayment Plan: Under this plan, you will pay a minimum payment amount at least equal to the amount of interest accrued monthly for up to 10 years. Your payments start out low, and then increase every two years. Generally, the amount you will repay over the term of your loan will be higher under the Graduated Repayment Plan than under the Standard Repayment Plan. This plan may be beneficial if your income is low now but is likely to steadily increase.
        Extended Repayment Plan: There are two options.
o    Fixed Monthly Payment Option:Under this plan, you will pay a fixed amount of at least $50 each month for up to 25 years. To be eligible for this plan, your Direct Loan balance must be greater than $30,000. Repayment under this plan will result in lower total interest paid when compared to graduated plans with similar terms.
o    Graduated Monthly Payment Option: Under this plan, you will pay a minimum amount of at least $50 or the amount of interest accrued monthly, whichever is greater, for up to 25 years. Your payments start out low and then increase every two years. To be eligible for this plan, your Direct Loan balance must be greater than $30,000. Repayment under this plan may provide lower initial monthly payments, although the total interest paid may be greater when compared to plans with similar terms with fixed payments. This plan may be beneficial if your income is low now but is likely to steadily increase.
** Extended repayment terms are available to Direct Loan borrowers with no outstanding principal or interest balances as of October 7, 1998 and with more than $30,000 in Direct Loans.
       Income Contingent Repayment (ICR) Plan: A repayment plan that bases your monthly payment on your yearly income, family size, and loan amount. As your income increases or decreases, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven.
The ICR Plan is NOT available if you have a Direct PLUS Consolidation Loan(s) made before July 1, 2006 and/or a Direct PLUS Loan(s). However, you are eligible to repay any Direct Consolidation Loan(s) made on/after July 1, 2006 under the ICR Plan even if it includes a PLUS Loan(s).
Each year your monthly payment will be based on your family size, annual Adjusted Gross Income (AGI) as reported on your federal tax return, and the total amount of your Direct Loan(s). To participate in the ICR Plan you must authorize the U.S. Internal Revenue Service (IRS) to inform the U.S. Department of Education (ED) of the amount of your income. This information will be used to calculate your repayment amount, which will be adjusted annually to reflect changes in your AGI. If you select the ICR Plan, you will be billed for only the interest amount that accrues on your loan(s) each month, until the required documentation is received by the Direct Loan Servicing Center.
For more information, visit www.myedaccount.com, click on Question Center. Review the repayment chart below.
 
Non-Consolidation Loans
Consolidation Loans
Standard Repayment Plan
* Repayment up to 10 years
* Lowest total interest paid
* Automatic payment plan if payment plan is not chosen
* Repayment up to 10 to 30 years based on total education indebtedness
Graduated Repayment Plan
* Repayment up to 10 years
* Payments start out low, then increase every two years
* Beneficial if income is low now, but may steadily increase
* Repayment up to 10 to 30 years based on total education indebtedness
* Payments start out low, then increase every two years
* Beneficial if income is low now, but may steadily increase
Extended Repayment Plan
* Repayment up to 25 years
* Must have more than $30,000 in Direct Loans
* Monthly payment will be lower than Standard Repayment
* Will pay more on loan because of the interest that accumulated during the longer repayment period.
 
Income Contingent Repayment
* Repayment up to 25 years
* Monthly payments based on annual income, family size, and total amount of Direct Loans
* Unpaid portion of loan is forgiven, but you may have to pay income tax on the amount that is forgiven
 
 
Q. Who do I call about loan repayment questions?
A. Direct Loan Servicing Center Customer Service Representatives are available to answer borrower phone calls at 1-800-848-0979 from Monday through Friday 8:00 am E.S.T. to 8:30 pm E.S.T.
or visit the Federal Loan Servicing Site 

Q. How can I keep track of my Federal Student Loans borrowed?
A. Knowing who is servicing your federal student loans is critical in shaping your financial future. It is recommended that you visit the National Student Loan Data System (NSLDS) Student Access website at www.nslds.ed.gov. NSLDS provides a central database for student aid and allows students access to view information from schools, guaranty agencies, the Direct Loan program, as well as other programs; which is a valuable tool in managing your federal student loan information. Managing your debt is your responsibility, and the NSLDS website is a critical tool in assisting you. Keeping track of your financial obligations allows you to create a better financial future.
You will need your Federal Student Aid PIN to access the website; you have used the PIN when electronically signing your loans or when completing your FAFSA.  You can request a duplicate PIN be sent to you at www.pin.ed.gov.  

 

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