Federal Direct Stafford Loans
Federal Direct Stafford Loans are low interest loans for students used to help pay for the cost of your education. The lender is the U.S. Department of Education rather than a bank.
There are two types of Federal Direct Stafford Loans available to students—subsidized and unsubsidized. Your eligibility to receive subsidized and/or unsubsidized loans is determined by the information reported on your FAFSA.
Federal Direct Subsidized Loan
A low interest loan that is available to students who demonstrate financial need. The government pays the interest on your behalf while you are enrolled in school at least half time. Principal payments begin six months after you graduate or drop below half-time enrollment. Information on current interest rates and repayment options can be found at studentaid.gov.
Federal Direct Unsubsidized Loan
A low interest loan that is available to students who do not demonstrate financial need. Interest begins accruing from the time the loan is disbursed, although repayment is deferred the while you are enrolled in school at least half-time. If the interest is deferred it will then accrue and become part of the principal that is owed on the loan. Principal payments begin six months after you graduate or drop below half-time enrollment. Information on current interest rates and repayment options can be found at studentaid.gov.
Direct subsidized loan limits for dependent students are $3,500 per year for freshman, $4,500 for sophomores and $5,500 for all other undergraduates. There is an additional $2,000 in unsubsidized loan eligibility. Independent students are eligible for higher loan limits dependent upon grade level. Additional information can be found at studentaid.gov.
How to Request a Federal Direct Stafford Loan
You apply for a Federal Direct Stafford Loan by completing a Free Application for Federal Student Aid (FAFSA). After your FAFSA has been processed, we will notify you through a financial aid award notification of the type(s) of aid you are eligible to receive. You accept your student loans on the online Student Loan Confirmation Form.
Entrance Counseling and a Master Promissory Note
First time Federal Direct Stafford Loan borrowers must complete an electronic Master Promissory Note and Entrance Counseling at the Direct Loans website, studentaid.gov, before their loan can be disbursed. The Master Promissory Note is your agreement to repay the loan. Entrance counseling provides borrowers with information on loan repayment and student rights and responsibilities associated with the loan.
Direct Loans charges a loan fee (an origination fee) that is a percentage of the principal amount of the loan. The fee is deducted from the loan before you receive the loan funds. Visit studentaid.gov for current fees.
Your federal student loan funds will be disbursed directly into your Dominican University student account to pay tuition and other university expenses. Loans are disbursed in equal amounts for each term that your loan was approved for. If you are enrolled less than half-time in any term, you cannot receive Federal Direct Stafford Loan funds for that term.
Loans are an important part of financial aid packages. Yes, they must be repaid, but there are smart ways to borrow. For starters, the federal government student loans included in many aid package come with many benefits not typically offered with private bank loans:
- You don’t have to repay any of it until six months after you leave school.
- The interest rate is often lower. It’s also fixed; it will never rise.
- The government pays the interest for you on subsidized loans while you’re in school. (With unsubsidized loans, you may want to consider making interest payments while still in school).
- Take only what you need. You can cancel all or part of your loan if you don't need it.
- Review the many loan repayment plans available including income-based repayment.
- Check out this sample loan repayment schedule.
How to Avoid Default: Default is the failure to repay a loan according to its terms. For most federal student loans, you will default if you fail to make a required payment for more than 270 days. You can lose eligibility for federal student aid and may face legal consequences. There are many repayment plans available including ones based on your income that can help you avoid defaulting on your student loans. Learn about steps to avoid default.
Students who have borrowed a Stafford student loan and cease to be enrolled at least half-time must complete exit counseling. Exit counseling covers many topics including repayment options and debt-management strategies. Students complete exit counseling at studentaid.gov.