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Other Loan Questions

How will I get the loan money?

You'll be paid through your school, generally in at least two installments. No installment may exceed one-half of your loan amount. Your school will use your loan money first to pay for tuition and fees, room and board, and other school charges. If any loan money remains, you'll receive the funds by check or other means, unless you give the school written authorization to hold the funds until later in the enrollment period.

Generally, if you're a first-year undergraduate student and a first-time borrower, your school cannot disburse your first payment until 30 days after the first day of your enrollment period.

What are the current interest rates?

Direct Subsidized Loans:

Undergraduate students—If the first disbursement of your subsidized loan is between July 1, 2012 and June 30, 2013, the interest rate on your loan is fixed at 3.4%.

Graduate and professional degree students—Are no  longer eligible to receive subsidized loans.

Direct Unsubsidized Loans—The interest rate is fixed at 6.8% for all borrowers (undergraduate and graduate).

Prior Federal Loans and Financial Aid History—If you currently have a Stafford Loan and would like to check the interest rate, servicer information, and other financial aid history, go to the National Student Loan Data System (www.nslds.ed.gov).

Interest rate cap for military members—If you qualify under the Service Members Civil Relief Act, the interest rate on loans you obtained before entering military service may be capped at 6% during your military service. You must contact your loan servicer to request this benefit.

In addition, the Department does not charge interest (for a period of no more than 60 months) on Direct Loans first disbursed on or after October 1, 2008, while a borrower is serving on active duty or performing qualifying National Guard duty during a war or other military operation or other emergency, and serving in an area of hostilities qualifying for special pay.

Other than interest, is there a charge for this loan?

There is a loan fee on all Direct Subsidized and Unsubsidized Loans. The loan fee is a percentage of the amount of each loan you receive. For loans first disbursed on or after July 1, 2010, the loan origination fee is 1.0%. The loan origination fee will be deducted proportionately from each loan disbursement. The specific loan origination fee that you are charged will be reflected in a disclosure statement that the U.S. Department of Education sends to you.

How do I pay back my loans?

When you receive your first Direct Loan, you will be contacted by the servicer for that loan (you repay your loan to the loan servicer). Your loan servicer will provide regular updates on the status of your Direct Loan, and any additional Direct Loans that you receive. If you’re not sure who your loan servicer is, you can look it up on www.nslds.ed.gov.

When do I begin repaying my loans?

After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you begin repayment. During this period, you'll receive repayment information from your loan servicer, and you'll be notified of your first payment due date. Payments are usually due monthly.

Repayment Plans—The Direct Loan Program offers several repayment plans that are designed to meet the different needs of individual borrowers. Generally, you’ll have 10 to 25 years to repay your loan, depending on the repayment plan that you choose. You will receive more detailed information on your repayment options during entrance and exit counseling sessions at your school. To learn more about Direct Loan repayment plans, go to the Repayment Information page on the U.S. Department of Education Web site.

What if I have trouble repaying the loan?

Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily stop or lower the payments on your loan. For more information, go to the Repayment Information page on the U.S. Department of Education Web site or contact your loan servicer.

Can my loan be cancelled (discharged)?

Yes, but only under a few circumstances. For more information, go to the Cancellation/Discharge page on the U.S. Department of Education Web site.

You also may qualify for forgiveness of some or all of your loan balance: If you teach full-time for 5 years at a school or educational service agency serving low-income families and meet other requirements, or

After you have made 120 payments on a Direct Loan while employed in certain public service jobs (additional conditions apply).

Go to the Stafford Loan Forgiveness Program for Teachers and Public Service Loan Forgiveness pages on the U.S. Department of Education Wed site for additional details.