Federal Direct Subsidized and Unsubsidized Loans (for students)

DESCRIPTION:

Federal Direct Subsidized and Unsubsidized Loans are undergraduate and graduate loans funded by the federal government.

Federal Direct Subsidized Loans are based on financial need. The federal government pays the interest during in-school, grace and deferment periods.

Federal Direct Unsubsidized Loans are not based on financial need. The federal government does not pay the interest for these loans. Students may choose to defer interest payments until repayment begins; however, the student is responsible for all interest that accrues. The accrued interest automatically capitalizes to the loan principal.

HOW TO APPLY:

In order to be considered for these loans, students must file the Free Application for Federal Student Aid (FAFSA) and have the results sent to the VCU Office of Financial Aid, ensuring that information provided on the application is complete and accurate. Failure to resolve any problems with the processing of the application, or delays in resolving the problems, may preclude the student from being considered for these loans.

ELIGIBILITY CRITERIA:

To be considered for an award, the student must:

• be enrolled at half time (6 or more credit hours each semester for undergraduates, 5 or more credit hours each semester for graduates),
• be a U.S. citizen or eligible noncitizen,
• demonstrate financial need (for Federal Direct Subsidized Loans only),
• meet Satisfactory Academic Progress Standards as defined by the VCU Office of Financial Aid, and
• not owe a refund on a federal student grant or be in default on a federal student loan.

INTEREST RATES:

Direct Subsidized and Direct Unsubsidized Loans first disbursed on or after July 1, 2006, have a fixed interest rate of 6.8%. For more information on interest rates, contact the Direct Loan Servicing Center at (800) 848-0979.

FEES:

There is a 1.0 percent fee deducted from each disbursement of Federal Direct Subsidized and Unsubsidized Loans. This fee goes to the federal government to help reduce the cost of these loans.

RENEWAL:

Awards cannot be automatically renewed. Students must apply annually and continue to meet the eligibility requirements listed above.

AWARD AMOUNTS/LOAN LIMITS:

Award amounts are initially offered based on full-year, full-time enrollment and are prorated for students who enroll less than full-year, full-time. For example, a student with full-year, half-time enrollment will receive a prorated award in the amount of 50% of the original award amount. Students in a second bachelor's degree program may borrow at undergraduate maximum loan limits.

Loan Limits

	Dependent (as defined by the FAFSA)		Independent (as defined by the FAFSA)
	Annual Limit, Subsidized and Unsubsidized Combined	Aggregate Limit Subsidized and Unsubsidized Combined	Annual Limit, Subsidized	Annual Limit, Subsidized and Unsubsidized Combined	Aggregate Limit Subsidized	Aggregate Limit Subsidized and Unsubsidized Combined
Freshmen (less than 24 earned hours)	$3,500	$23,000	$3,500	$7,500	$23,000	$46,000
Sophomore (24 to 53.9 earned hours)	$4,500	$23,000	$4,500	$8,500	$23,000	$46,000
Junior/Senior (54 or more earned hours)	$5,500	$23,000	$5,500	$10,500	$23,000	$46,000
Graduate			$8,500	$20,500	$65,500	$138,500
Professional-Medical/Dental			$8,500	$40,500	$65,500	$189,125
Professional-Pharmacy			$8,500	$33,000	$65,500	$189,125
Professional-Health Admin			$8,500	$33,000	$65,500	$189,125
Professional-all other			$8,500	$20,500	$65,500	$138,500

NOTES:

1. The graduate debt limit includes outstanding loans from undergraduate programs.

2. Dependent students whose parents' have been denied PLUS loans due to adverse credit history may be eligible borrow additional unsubsidized funds.

MASTER PROMISSORY NOTE:

In order to receive your Federal Direct Subsidized or Unsubsidized Loan funds, you must complete a Master Promissory Note (MPN). You are required to complete the MPN online at dlenote.ed.gov. You will be required to use your Personal Identification Number (PIN) issued by the U.S. Department of Education to complete the MPN. If you do not have a PIN, you may obtain a PIN at www.pin.ed.gov.

Returning students who received Federal Direct Subsidized or Unsubsidized Loans at VCU beginning with the 1999-2000 academic year may not be required to sign another loan promissory note. Current regulations allow students to sign one promissory note that will be used for all loans borrowed, subsidized or unsubsidized, for a period of time, up to 10 years.

The MPN does not show loan amounts because it can serve as the student's promissory note for future years. The loan amount(s) will be included in the most recent financial aid award notification. Students will receive their Loan Disclosure Statement from the federal Loan Origination Center for each new loan borrowed. The disclosure statements provide information about the types and amounts of loans borrowed, the loan period, and the anticipated disbursement dates. Students should maintain the statements for their records.

Students may decline or reduce the amount of their loan(s) by filling out the Award Acceptance Agreement or Change Form, or by notifying the VCU Office of Financial Aid in writing. To avoid incurring interest charges and loan fees, funds must be returned within 120 days of disbursement. The loan fee will be reduced or eliminated in proportion to the amount of the disbursement returned. Please note that students who do not return their signed MPN by October 1 will have their loan canceled for the academic year.

DISBURSEMENT:

Federal regulations require two disbursements of all Federal Direct Subsidized and Unsubsidized Loans. The first disbursement should be made during the first week of classes, provided that all necessary documents have been received and that there are no changes in expected enrollment status. The second disbursement should be made during the first week of classes of the second semester for fall/spring loans, provided that all necessary documents have been received and that there are no changes in expected enrollment status.

Refunds from Federal Direct Subsidized and Unsubsidized Loans are deposited directly to the designated bank account that the student has requested. If a student does not request the refund be deposited to a specified bank account, a refund check will be mailed to the student to the permanent address on file.

CHANGES IN ENROLLMENT STATUS:

If you use your loan(s) to pay your university charges (tuition, fees, room, and board) and during the drop period you reduce the number of credit hours in which you expected to enroll, any refund due from this reduction in charges may go to repay your loan(s).

If you use your loan(s) to pay your university charges (tuition, fees, room, and board) and you withdraw from all of your classes or drop below half-time, any refund may go to repay your loan(s).

REPAYMENT:

Repayment of Federal Direct Subsidized and Unsubsidized Loans begins six months after graduation or when a student drops below half-time enrollment. The length of repayment and monthly payment amounts depends on the outstanding loan balance, the interest rate, and repayment policies. Federal Direct Unsubsidized Loan borrowers with deferred interest will have the interest capitalized at the end of the in school or grace period.

LENDER:

The lender for the Federal Direct Loan Program is the Federal Government. Their contact information is:

U.S. Department of Education
Borrower Servicing Department
Direct Loan Servicing Center
PO Box 4609
Utica, New York 13504-4609
Telephone No.: 1-800-848-0983
Web: www.dlservicer.ed.gov
(Note: you will need your federal Personal Identification Number (PIN) to access this site.)

DEFAULT:

For loans repayable in monthly installments, borrowers will be declared in default after 270 days of not making scheduled payments (for loans repayable in less frequent installments, borrowers will be declared in default after 330 days of not making scheduled payments). If you default on a Federal Direct Subsidized or Unsubsidized Loan and the servicer is unable to collect, it will harm your credit rating and the federal government may take action to recover the loan. You cannot receive further financial aid if you are in default status.

DEFERMENT/FORBEARANCE:

Your monthly loan payment may be temporarily suspended if you qualify for a deferment or forbearance. A deferment is a period in which repayment of the principal balance is postponed. During a deferment, the government pays the interest charged on Federal Direct Subsidized Loans; you are responsible for the interest that accrues on Federal Direct Unsubsidized, PLUS, Unsubsidized Consolidation, and PLUS Consolidation Loans in deferment. If you are not eligible for a deferment you may still be eligible for forbearance.

There are several deferment types:

Economic Hardship Deferment Request
Education Related Deferment Request
    • Internship/Residency
    • Teacher Shortage Area
In School Deferment Request
    • Engaged in at least half-time studies
    • Engaged in a Graduate Fellowship
    • Engaged in Rehabilitation Training
Parental Leave/Working Mother Deferment Request
Public Service Deferment Request
    • Active duty in the Armed Forces
    • Serving full-time Public Health Service
    • Active duty in National Oceanic & Atmospheric Administration (NOAA)
    • Serve in the PEACE CORPS
    • Full-time paid volunteer in ACTION PROGRAMS
    • Full-time volunteer in a TAX-EXEMPT ORGANIZATION
Temporary Total Disability Deferment Request
Unemployment Deferment Request

Forbearance is an arrangement to postpone or reduce your monthly payment amount for a limited and specific period of time in which you are charged interest. If you indicate a temporary inability, but willingness to pay the loan(s), you may ask for or be offered forbearance. You must apply and qualify for forbearance and the U.S. Department of Education must approve the request in order for a forbearance to be in effect.

There are several forbearance types:

• Americorps Forbearance Request
• General Forbearance Request
• Internship/Residency Forbearance Request
• Loan Debt Burden Forbearance Request

For details about deferment/forbearance options, visit www.dlservicer.ed.gov.

(Note: you will need your federal Personal Identification Number (PIN) to access this site).