Federal Direct Loans

Overview: Federal Direct Loans

Direct loans are low-interest loans for students to help pay for the cost of a student's education after high school. These loans are awarded to undergraduate, graduate, and professional students who meet the following criteria:

  • Enrolled in an eligible degree-seeking program
  • Enrolled at least half-time (6 credits for undergraduate students, 4 credits for graduate, 6 credits for professional students)

The lender is the U.S. Department of Education rather than a bank or other financial institution. There are two types of federal Direct loans and your eligibility for both is determined using your FREE Application for Federal Student Aid (FAFSA).

Direct Subsidized Loans:

  • Available to undergraduate students who have financial need.
  • 4.66% fixed interest rate effective for loans first disbursed on or after July 1, 2014 and prior to July 1, 2015. Interest rates on prior Subsidized Loans borrowed vary.
  • 3.86% fixed interest rate during repayment for Undergraduates who borrow for the 2013-2014 school year, as of July 1, 2013. Interest rates on prior Subsidized Loans borrowed vary.
  • In addition to the interest rate, there is a 1.072% loan fee charge for loans disbursed from December 1, 2013 to September 30th, 2014. For loans disbursed on or after October 1st, 2014, the loan fee will be 1.073%. The loan fee will be proportionately deducted from each loan disbursement.
  • Repayment begins six months after you graduate or drop below half-time enrollment.
  • The U.S. Department of Education pays the interest on the loan
    • While you are in school enrolled at least half-time.
    • In some cases, for six months after you graduate or drop below half-time enrollment.
    • During deferment periods.
  • If you receive a Direct Subsidized Loan that is first disbursed between July 1, 2012 and July 1, 2014, you will be responsible for paying any interest that accrues during your grace period. If you choose not to pay the interest that accrues during your grace period, the interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan.)
  • As of July 1, 2012, Direct Subsidized Loans are no longer available to graduate/professional students.
  • New: 150% Rule on Direct Subsidized Loans
    • A new borrower on or after July 1, 2013 becomes ineligible to receive additional Direct Subsidized Loans if the period during which the borrower has received such loans exceeds 150 percent of the published length of the borrower’s educational program. The borrower also becomes responsible for accruing interest during all periods as of the date the borrower exceeds the 150 percent limit.
    • For example, a student enrolled in a four-year program will have six years’ worth of subsidized loan eligibility.

Direct Unsubsidized Loans:

  • Available to undergraduate and graduate students; there is no requirement to demonstrate financial need.
  • 4.66% fixed interest rate effective for loans first disbursed on or after July 1, 2014 and prior to July 1, 2015. Interest rates on prior Unsubsidized Loans borrowed vary.
  • 3.86% fixed interest rate for Undergraduates who borrow for the 2013-2014 school year.
  • 6.21% fixed interest rate for Graduate/Professionals who borrow for the 2014-2015 school year with payment periods that begin on or after July 1, 2014.
  • 5.41% fixed interest rate for Graduate/Professionals who borrow for the 2013-2014 school year with payment periods that begin on or after July 1, 2013.
  • In addition to the interest rate, there is a 1.072% loan fee charge for loans disbursed from December 1, 2013 to September 30th, 2014. For loans disbursed on or after October 1st, 2014, the loan fee will be 1.073%. The loan fee will be proportionately deducted from each loan disbursement.
  • Interest begins to accrue (accumulate) once disbursed. Interest rates on prior Unsubsidized Loans borrowed vary.
  • You are responsible for paying the interest on a Direct Unsubsidized Loan during all periods. If you choose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan.)

No payments required while you are enrolled at least half-time. Repayment begins six months after you graduate, leave school, or drop below half-time enrollment. At this time, you will need to conduct an exit interview. You will then need to work with your Federal Direct Servicer for payment arrangements and information.

Additional information can be found at: http://studentaid.ed.gov/types/loans

Borrowing limits for each academic year depend on your class level:

Undergraduate Students:
Freshman
(Yearly Limit)
Dependent: $5,500 (maximum $3,500 may be subsidized)
Independent: $9,500 (maximum $3,500 may be subsidized)
Sophomore
(Yearly Limit)
Dependent: $6,500 (maximum $4,500 may be subsidized)
Independent: $10,500 (maximum $4,500 may be subsidized)
Junior/Senior
(Yearly Limit)
Dependent: $7,500 (maximum $5,500 may be subsidized)
Independent: $12,500 (maximum $5,500 may be subsidized)
2nd or Post Baccalaureate
(Yearly Limit)
Dependent: $5,500 (maximum $3,500 may be subsidized)
Independent: $9,500 (maximum $3,500 may be subsidized)
Aggregate Loan Limit Dependent: $31,000 (maximum $23,000 may be subsidized)
Independent: $57,500 (maximum $23,000 may be subsidized)
Graduate/Law Students:
Yearly Limit

2014-2015: $20,500 in Unsubsidized Loans

Aggregate Loan Limit $138,500 (maximum $65,500 may be subsidized. This limit includes Stafford Loans received for undergraduate study.)
Medical Students:
Yearly Limit 2014-2015: $40,500 in Unsubsidized Loans
Aggregate Loan Limit $224,000 (maximum $65,500 may be subsidized. This limit includes Stafford Loans received for undergraduate study.)

 

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Applying for the Loan

  1. Accept your loan(s) in MyUH
    • First-time borrowers are required to complete Direct Loan Entrance Counseling AND Direct Loan Master Promissory Note (MPN) for each type of loan you accepted prior to receiving the first disbursement of a Direct Loan. If you have already completed an Entrance Counseling and/or MPN at another school, you must still complete one at the University of Hawaiʻi at Mānoa.

    Please be aware that it can take up to one week for our office to receive notification that you completed your Entrance Counseling and MPN.

  2. Login to https://studentloans.gov . Click on the "Sign in" button.
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  3. Enter in your information at the sign in screen. Your PIN is the same as your FAFSA PIN. If you do not have a PIN, go to http://www.pin.ed.gov to apply for one.
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  4. Click on the "Complete Master Promissory Note" link:
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Financial Aid Services will be notified once you have completed and signed your MPN and Entrance Counseling.

If you have questions regarding the Entrance Counseling or Master Promissory Note, please call Direct Loans at 1-800-557-7394.

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