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Federal Direct Loan Program (FDLP)
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Department of Education Servicers
For more information, contact:
TG Customer Assistance
(800) 845-6267
cust.assist@tgslc.org
Stafford Loans
Federal Direct Stafford Loans are low-interest loans available to undergraduate and graduate students to help finance their postsecondary education. They help cover the cost of attendance.
Federal Direct Stafford Loans come in two varieties:
A subsidized Federal Direct Stafford Loan* is based on financial need. The federal government pays the interest for the student during the following periods:
- While the student is enrolled in school at least half time
- During the six-month grace period after the student drops below half-time enrollment
- During a period of deferment (a period when payments of principal are temporarily postponed)
* The Budget Control Act of 2011 eliminates the interest subsidy for Federal Direct Stafford Loans made to graduate and professional students for periods of enrollment beginning on or after July 1, 2012.
An unsubsidized Federal Direct Stafford Loan is not based on financial need. It is available to a student who does not qualify for a subsidized Stafford loan or to supplement a student's subsidized Stafford loan. The student is responsible for paying all of the interest on an unsubsidized loan.
TG provides a brief overview of Federal Direct Stafford Loans, including:
- Cost of attendance
- Who qualifies
- Interest rates and fees
- How to apply
- How the loan funds are delivered
- Loan amounts
- Loan amount changes
- Paying back the loan
Cost of attendance (COA)
A Federal Direct Stafford Loan is a loan made by the U.S. Department of Education (ED) to an eligible student, disbursed through the school. ED and the school determine the student's eligibility from data that he or she provided on the Free Application for Federal Student Aid (FAFSA).
The school determines the amount of Federal Direct Stafford Loan funds the student may borrow, considering the cost of attendance (COA), the student's year in school, the student's expected family contribution (EFC, as calculated by ED according to federal law), and other estimated financial assistance.
Each school determines the COA — an estimate of that student's educational expenses for the period in which the student is enrolled. A student's COA generally is the sum of the following:
- Tuition and fees, including costs of rental or purchase of equipment (including equipment for instruction by telecommunications), materials, or supplies required of all students in the same course of study.
- Room and board with adjustments for students who live at home with their parents, for students who live on campus, for students who live off-campus but not with their parents, and for students who attend less than half time.
- Books, supplies, transportation, and miscellaneous personal expenses, including a reasonable amount, as determined by the school, for the documented rental or purchase of a personal computer that the student will use to study.
- The origination fee for a Direct Loan. A school may also include the fees required for private student loans.
- For a student with dependents, dependent care costs incurred during the student's class time, study time, field work, internships, and commuting time.
- Allowance for the one-time direct costs of obtaining a first professional license or certificate for students who are enrolled in a program that requires such professional licensure or certification, if the cost is to be incurred during (not after) a period of enrollment, even if the exam is after the end of the period.
- For reasonable costs of study-abroad programs approved for credit by the student's home school.
- For a disabled student, an allowance for reasonable expenses related to the student's disability, including special services, personal assistance, transportation, equipment, and supplies.
- For reasonable costs to students engaged in a work experience through a cooperative education program.
Who qualifies
Federal Direct Stafford Loans are available to undergraduate students and graduate and professional students who, among other eligibility criteria, are:
- U.S. citizens or eligible noncitizens
- Enrolled or accepted for enrollment on at least a half-time basis in an eligible program at an eligible school
- Registered with the U.S. Selective Service System (for males not exempt from registration)
A student may not qualify if he or she has defaulted on a federal education loan, owes an overpayment on other federal student aid, has been convicted of a drug-related offense while receiving federal student aid, or is incarcerated. The student also may be ineligible if, while receiving federal student aid, he or she has been convicted of or has pled nolo contendere (no contest) or guilty to a crime involving fraud in obtaining federal student aid funds and has not completed the repayment of such funds.
Full details on eligibility criteria are provided on the Federal Direct Stafford/Ford Loan / Federal Direct Unsubsidized Stafford/Ford Loan Master Promissory Note (MPN), the form a student must sign to obtain a Federal Direct Stafford Loan.
Interest rates and fee
The interest rate for a subsidized Federal Direct Stafford Loan made to an undergraduate student for which the first disbursement is made on or after:
| July 1, 2010, and before July 1, 2011 | is 4.5%* |
| July 1, 2011, and before July 1, 2012 | is 3.4%* |
* The interest rate is fixed for the life of the loan.
For an unsubsidized Federal Direct Stafford Loan made to an undergraduate student or any Federal Direct Stafford Loan (subsidized or unsubsidized) made to a graduate or professional student for which the first disbursement is made on or after July 1, 2006, the interest rate is fixed at 6.8%.
There are two exceptions to the interest rate charged on Federal Direct Stafford Loans.
- For Federal Direct Stafford Loans first disbursed on or after October 1, 2008, to active duty service members, no interest is charged during periods of qualifying active duty military service (for up to 60 months).
- If the student qualifies under the Servicemembers Civil Relief Act, an interest rate (that exceeds 6%) on a loan obtained prior to his or her active duty military service may be limited to 6% during his or her active duty military service.
In addition, the student may receive an up-front interest rebate on a Federal Direct Stafford Loan. The rebate is equal to a percentage of the loan principal that is borrowed. The disclosures that the student receives about his or her loan will provide information about the up-front interest rebate.
The up-front interest rebate for a Federal Direct Stafford Loan for which the first disbursement is made on or after July 1, 2010, is 0.5%.*
To keep an up-front interest rebate that a student receives on his or her loan, the student must make all of his or her first 12 required monthly payments on time when the loan enters repayment. "On time" means that the Direct Loan Servicing Center must receive each payment no later than six days after the due date. The student will lose the rebate if he or she does not make all of the first 12 required monthly payments on time. If the student loses the rebate, ED will add the rebate amount back to the principal balance and recalculate accrued interest on the loan account. This will increase the amount that the student must repay.
* The Budget Control Act of 2011 eliminates the authority for ED to provide the up-front interest rebate for a Federal Direct Stafford loan first disbursed on or after July 1, 2012.
Contact the Direct Loan Servicing Center for more information on these exceptions.
In addition to interest, the student pays a loan origination fee that is a percentage of the principal amount for each Federal Direct Stafford Loan received. ED deducts the fee before the student receives any loan money, so the loan amount the student actually receives is less than the amount that must be repaid.
The origination fee for a Federal Direct Stafford Loan for which the first disbursement is made on or after July 1, 2010, is not to exceed 1.0%.
How to apply
A student can request a Federal Direct Stafford Loan by completing the Free Application for Federal Student Aid (FAFSA). The student can complete the FAFSA online at www.fafsa.ed.gov. For assistance with the FAFSA process, call TG Customer Assistance at (800) 845-6267.
After the student submits a FAFSA, ED determines his or her expected family contribution (EFC) calculated according to federal law. The FAFSA requires the student to list the schools he or she is considering attending. Information from the FAFSA is sent to each of these schools. The student's school determines the financial aid award package, considering the student's cost of attendance, EFC, and other estimated financial assistance along with other factors such as the student's year in school and dependency status. This package may include (according to the student's eligibility) federal, state, or institutional grants or scholarships, the maximum amount of Federal Direct Stafford Loan funds that the student may borrow, and other financial aid. The student may accept the maximum loan amount offered or a lesser amount when he or she completes a Federal Direct Stafford/Ford Loan / Federal Direct Unsubsidized Stafford/Ford Loan Master Promissory Note (MPN). The student can complete an MPN online at StudentLoans.gov or request a paper MPN from ED's system or his or her school. Generally, one MPN will cover all of the Federal Direct Stafford Loans the student borrows. However, there may be circumstances under which the student is required to complete more than one MPN. The school will inform the student in these cases. The student may also request a new MPN any time he or she borrows. If the student does not want to receive more than one loan under this MPN, he or she must notify the school in writing.
After ED approves the Federal Direct Stafford Loan, the student will receive a disclosure statement providing details and terms of the loan from ED. This disclosure becomes part of the MPN, so the student is encouraged to keep this document until the loan is paid in full. Contact the Direct Loan Servicing Center with any questions.
How the loan funds are delivered
ED disburses Federal Direct Stafford Loan funds electronically directly to the school. In most cases, the school delivers the loan funds to the borrower in two equal amounts — half at the beginning of the academic year and half midway through the academic year.
The school may deliver some or all of the student's loan money by crediting it to the student's account at the school or may give it to the student directly by check or other means. ED sends the borrower a disclosure containing details about the loan before the school delivers each disbursement of the loan.
If the student has not previously received a Federal Direct Stafford Loan or a FFELP Stafford Loan, he or she must receive entrance counseling before the school can deliver the first disbursement of his or her loan.
Loan amounts
The school decides how much a student can borrow in a Federal Direct Stafford Loan, based on federal law. A school will award a student with financial need as much as possible in a subsidized Federal Direct Stafford Loan.
The most that the student can borrow in subsidized and unsubsidized Federal Direct Stafford Loans annually is equal to the student's cost of attendance minus other estimated financial assistance, without going over the maximum amounts permitted for his or her year of study (see below). These limits are effective for loans made on or after July 1, 2008.
| Federal Direct Stafford Loan maximums1 Annual limits per year of study |
|
|---|---|
Dependent undergraduates2 |
|
| Year | Max. (subsidized and unsubsidized)3 |
| First year | $5,500 — no more than $3,500 of this amount may be subsidized |
| Second year | $6,500 — no more than $4,500 of this amount may be subsidized |
| Third year and beyond | $7,500 — no more than $5,500 of this amount may be subsidized |
| Independent undergraduates2 (and dependent undergraduates whose parents are unable to borrow under the PLUS Loan Program) |
|
| Year | Max. (subsidized and unsubsidized)3 |
| First year | $9,500 — no more than $3,500 of this amount may be subsidized |
| Second year | $10,500 — no more than $4,500 of this amount may be subsidized |
| Third year and beyond | $12,500 — no more than $5,500 of this amount may be subsidized |
| Graduate and professional students | |
| Year | Max. (subsidized and unsubsidized)3 |
| For any year of study | $20,500 — no more than $8,500 of this amount may be subsidized |
| Aggregate limits Maximum amounts over academic career |
|
| Type of student | Max. (subsidized and unsubsidized) |
| Dependent undergraduates | $31,000 — no more than $23,000 of this amount may be subsidized |
| Independent undergraduates (and dependent undergraduates whose parents are unable to borrow under the PLUS Loan Program) | $57,500 — no more than $23,000 of this amount may be subsidized |
| Graduate and professional students | $138,500 — no more than $65,500 of this amount may be subsidized |
1 Certain health profession students may qualify for higher limits.
2 All undergraduate Federal Direct Stafford annual loan limits are subject to proration.
3 The borrower may receive less than the maximum if he or she receives other financial aid that is used to cover the cost of attendance. Keep in mind that ED will pay interest on only subsidized Federal Direct Stafford Loans while the student is attending at least half time.
Loan amount changes
The school may adjust the loan amount if the student's financial circumstances or enrollment status changes. For example, if the student changes his or her program of study or receives additional financial aid funds, the school may be required to reduce the amount of a Federal Direct Stafford Loan.
Before the Federal Direct Stafford Loan funds are delivered to the student, he or she may cancel all or part of the loan at any time by notifying ED or the school.
After the Federal Direct Stafford Loan funds are delivered to the student, he or she may cancel all or part of the loan within 120 days of the date the school delivered the loan money (by crediting the student's account at the school, by paying it directly to the student, or both) by informing the school. If the student informs the school within the specified timeframe that he or she wishes to cancel all or part of the loan, the school will return the cancelled loan amount to ED. If the student asks the school to cancel all or part of his or her loan outside the specified timeframe, the school may process the student's cancellation request, but it is not required to do so.
Paying back the loan
No payment of principal is required while the student is in school (attending at least half time) or for six months after the student drops below half-time enrollment or ceases attendance. This six-month interval is called a grace period. On a subsidized Federal Direct Stafford Loan, ED pays the interest during this time. On an unsubsidized Federal Direct Stafford Loan, the student is responsible for all interest and can pay it while in school or allow it to be capitalized (added to the principal).
The repayment period for each Federal Direct Stafford Loan the student receives begins on the day after the student's grace period ends. The Direct Loan Servicing Center will notify the student of the date his or her first payment is due. The student may prepay (pay more than his or her established monthly repayment amount) all or part of a loan at any time without penalty.
The student can choose from several repayment plans that are designed to meet the needs of almost any borrower, and the student can switch repayment plans at least annually, as his or her needs change. These repayment plans are explained in more detail during the student's exit counseling session.
Generally:
- A $50-per-month minimum payment is required unless the student makes other arrangements with the Direct Loan Servicing Center.
- The payment amount must be equal to at least the monthly interest due on the loan.
- The standard repayment term is generally 10 years.
More details on repaying a Federal Direct Stafford Loan are provided on the Federal Direct Stafford/Ford Loan / Federal Direct Unsubsidized Stafford/Ford Loan Master Promissory Note (MPN) and the Borrower's Rights and Responsibilities Statement.
Additional information about Federal Direct Stafford Loans is available online at ED's Student Aid on the Web.
