William D. Ford Federal Direct Student Loans

Eligibility

To qualify for federal student loans, a student must be:

  • matriculated
  • enrolled in a degree-seeking program
  • enrolled at least half time (6 credit hours per term)
    • PLEASE NOTE: Audited courses and repeat courses do not count in determining enrollment time status.

These loans are available to students of any age.

It is strongly recommended that students apply for federal student loans before applying for supplemental loans. Federal loans are the most beneficial loan options to students and their families as a whole. To request federal student loans, students must submit the FAFSA (Free Application for Federal Student Assistance) and other requested documents. Federal student loans consist of the Direct Subsidized Loan, Direct Unsubsidized Loan, and Perkins Loan.

Loan Types

A subsidized loan is awarded on the basis of financial need. You will not be charged any interest while you are in school (enrolled at least half time) or during deferment, as the federal government subsidizes (pays) the interest during these periods. An unsubsidized loan does not depend on financial need. You will be charged interest from the time the loan is disbursed until it is paid in full. The interest may be paid while you are still in school or during any deferment periods; if allowed to accrue, it will be capitalized (added to the principal balance) at the beginning of the repayment period, thereby increasing the total cost of your loan.

Interest Rate and Fees

The interest rate for a subsidized Direct Student Loan offered to undergraduates in the 2009-2010 academic year is fixed at 5.6% (in the 2008-2009 academic year this loan had a fixed interest rate of 6%). The interest rate for undergraduate unsubsidized, graduate subsidized, and graduate unsubsidized Direct Student Loans is fixed at 6.8%. As of July 1, 2008, there will be an origination fee of 2% charged on federal loans, minus a 1.5% rebate, to net a 0.5% origination fee (prior to July 1, 2008, the origination fee was 2.5%). This fee will be subtracted from the amount borrowed, and will be reflected in the disbursements issued to the University (for example, a $5,500 loan will be disbursed for $5,473). The rebate is honored provided the student makes 12 consecutive on-time payments once the loan first enters repayment.

Loan Limits

Depending on individual circumstances, a student may be offered a portion of a subsidized and unsubsidized loan; however, the total combined amount cannot exceed the annual loan limit (base limit). Please visit http://www.nasfaa.org/PDFs/2008/5715AnnualLoanLimits.pdf to review the annual loan limit chart. In the event of a parent PLUS loan denial (explained in greater detail under PLUS loan features), students may borrow an additional unsubsidized loan beyond the standard annual limit. Graduate students may borrow up to a maximum of $20,500 per academic year through the Federal Direct Loan program, of which no more than $8,500 can be subsidized. The remaining loan eligibility for the academic year will be awarded in the form of an Unsubsidized Federal Direct Loan.

Please note: The actual amount a student is eligible to borrow cannot exceed the University of Rochester's cost of attendance minus any other assistance received.

Aggregate Limits

The total outstanding Federal Direct Student Loan debt an undergraduate dependent student may have is limited to $31,000 (of which no more than $23,000 may be subsidized). The aggregate limit for an undergraduate independent student is $57,500 (of which no more than $23,000 may be subsidized). For graduate students, the maximum is $138,500 (of which no more than $65,500 may be subsidized). This aggregate limit figure includes any Federal Stafford/Direct Loans received during undergraduate study.

Canceling Loans

If you wish to decline either your Federal Direct Loan or Perkins Loan, you (the student) must do so in writing either by email, fax, or postal mail. Requests from parents will not be honored. Please note that you must decline your Federal Perkins Loan (if awarded) before declining your Federal Direct Loan. If, at a later date, you decide you would like to restore all or a portion of your Federal Direct Loan, you may do so by notifying our office in writing before the end of the academic year or term for which you are enrolled. Please be aware that we may not be able to restore a Perkins Loan due to funding limitations.

Additional Notes on Loans

  • Federal loans require multiple disbursements. For example, if you are enrolled in a fall/spring academic year, you will receive half in the fall and half in the spring. If you are enrolled in a fall/winter/spring academic term you will receive one third of your loans in the fall, one third in the winter, and one third in the spring.

  • Once a student drops below half-time enrollment (6 credit hours), withdraws, becomes inactive, or graduates, the Federal Direct Loan enters a 6-month grace period, during which no payments are required. Once the grace period expires, repayment begins.

  • Notices to complete federally required exit counseling will be sent during your final term before graduation or shortly after we receive notification that you have withdrawn, become inactive, or dropped below half-time enrollment.

  • All federal loans can be consolidated once they enter grace or repayment periods.