William D. Ford Direct Loan Program

Program Description

The Direct Stafford Loan Program is the best financing option for a student to pursue and should be considered before any private educational loan options. The loan is available to students regardless of the level of financial need.

Subsidized Loan

This federal educational loan is available to students who demonstrate financial need. It is available to students accepted/enrolled on at least a half time basis in an undergraduate or graduate degree program.

Unsubsidized Loan

This federal loan was established by the federal government for students who are not eligible or have limited eligibility for the subsidized Direct Stafford Loan. Students may borrow under the same terms as the subsidized Direct Stafford Loan program with one exception: the government does not pay the interest on an unsubsidized loan (note: see difference in interest rate below). The student either pays all interest that accrues on this loan during the time of enrollment, grace period and repayment, or may capitalize the interest during the period of enrollment.

There is a $31,000 total borrowing limit for Dependent Undergraduate students excluding those whose parents are unable to borrow a Direct PLUS loan and a $57,500 limit for Independent Undergraduate students and dependant undergraduates whose parents are unable to borrow a Direct PLUS loan of which no more than $23,000 may be in subsidized loans. Graduate students may borrow a total of $138,500, however, no more than $65,500 of this amount may be in subsidized loans; include loans for undergraduate students.

Consolidation Loans

Students may consolidate their loans with Direct Lending after leaving school. Loan consolidation can ensure that the student is paying one low monthly payment to one servicer. This is a very useful tool for students who might have student loans borrowed from the Federal Family Education Loan (FFEL) program. Keep in mind that while loan consolidation can lower your monthly loan payment, it could extend the length of time that you have to repay your loan, meaning that you will pay more money in interest over the life of the loan. Also keep in mind that when you consolidate, you waive your 6-month grace period until repayment begins, so consider waiting to apply for a consolidation loan until you have used up much of your grace period.

To apply for a consolidation loan, please click www.loanconsolidation.ed.gov

Disbursements

Direct loans are normally disbursed two times per year, usually at the beginning of each term for loans that will be disbursed over two terms (academic year). Disbursements will be made through directly to the student's account . All first time Direct Stafford loan borrowers at NewBold Technical Institute must complete an entrance interview and an MPN (Master Promissory Note) prior to the disbursement of any funds. You may complete the interview at www.studentloans.gov. All borrowers also need to complete a Direct Stafford Loan MPN at www.studentloans.gov.

Fees

Fees are deducted from the loan funds at the time of disbursement and are included the amount a student will pay back. For Direct Stafford Loans that are first disbursed between July 1, 2009 and June 30, 2010, there is a fee of up to 1.5 percent of the loan, deducted proportionately from each loan disbursement. This fee may change for loans disbursed between July 1, 2010 and June 30, 2010. For a Direct Stafford Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, if you don't make your loan payments when scheduled, you may be charged collection costs and late fees.

Interest

The accruing interest while in school is paid by the Federal government during your in-school, deferment and grace periods for subsidized borrowers. The interest during these periods is the responsibility of the borrower for unsubsidized loans. Interest will be billed quarterly and it is recommended that unsubsidized borrowers pay the interest at this time. Otherwise unpaid interest will be capitalized for unsubsidized borrowers at the end of the grace period.

Interest Rates

The interest rate on Subsidized Loans will be:

Grace Period

Six months after graduating, withdrawing or dropping below half-time enrollment.

Repayment

Begins after the grace period. May be delayed by deferment options available to borrowers. Repayment may extend up to 10 years, or may be extended up to 25 years depending on the amount owed and type of repayment plan selected. A minimum payment of $50 per month is required while in repayment. Consolidation is also available. For more information visit the Direct Consolidation Loan site.