Federal Direct Loans are available to all students who file the Free Application for Federal Student Aid (FAFSA) who are enrolled at least half-time. Federal Direct Loans are a useful resource for students who need to bridge a gap in the cost to attend college.
The maximum Direct Loan amount for which the student is eligible is reflected on the financial aid award letter, which also indicates whether portions of the Direct Loan will be subsidized (no interest charged while you are a full time student).
What kinds of Direct Loans are available?
Direct Loans are either subsidized or unsubsidized. You can receive a subsidized loan and an unsubsidized loan for the same enrollment period. Learn More >>
Awarded on the basis of financial need. You will not be charged any interest before you begin repayment (repayment begins once you graduate). The federal government “subsidizes” the interest during periods of enrollment.
Not awarded on the basis of need. You’ll be charged interest from the time the loan is disbursed until it is paid in full. If you allow the interest to accumulate, it will be capitalized-that is, the interest will be added to the principal amount of your loan and additional interest will be based upon the higher amount.
NOTE: If your interest is capitalized, it will increase the amount you have to repay. If you choose to pay the interest as it accumulates, you’ll repay less in the long run. In addition, the amount of interest you pay during the first 60 months that interest payments are required may be tax deductible.
How much can I borrow?
If you’re a dependent undergraduate student you can borrow up to:
- $5,500 if you’re a first-year student enrolled in a program of study that is at least a full academic year. (A maximum of $3,500 of these dollars may be in Subsidized loans)
- $6,500 if you’ve completed your first year of study and the remainder of your program is at least a full academic year.(A maximum of $4,500 of these dollars may be in Subsidized loans)
- $7,500 a year if you’ve completed two years of study and the remainder of your program is at least a full academic year. (A maximum of $5,500 of these dollars may be in Subsidized loans)
If you’re an independent undergraduate student or a dependent student whose parents are unable to get a PLUS Loan, you can borrow up to:
- $9,500 if you’re a first-year student enrolled in a program of study that is at least a full academic year (only $3,500 of this amount may be in subsidized loans).
- $10,500 if you’ve completed your first year of study and the remainder of your program is at least a full academic year (only $4,500 of this amount may be in subsidized loans).
- $12,500 a year if you’ve completed two years of study and the remainder of your program is at least a full academic year (only $5,500 of this amount may be in subsidized loans).
NOTE: Loan amounts are subject to change. Please visit direct.ed.gov for the most up to date information.
What’s the interest rate charged on these loans?
Interest rates and loan calculators can be found at www.direct.ed.gov.
How do I accept and receive my Direct Loan?
In order to accept a Federal Direct Loan you must complete the steps listed below:
If you were awarded Federal Direct Loans you will need to accept or reject your loan(s) through your student portal. You also have the option of accepting them at a reduced amount. Instructions are listed below:
- Log into your student portal
- Select the Financial Aid tab
- Select Manage My Loans.
First Time Borrowers
- Complete Loan Entrance Counseling
First time borrowers are required to complete Loan Entrance Counseling (Not the Financial Awareness Counseling). Complete this on the U.S. Department of Education’s website: www.studentloans.gov
- Sign the Master Promissory Note (MPN)
First time borrowers are required to sign an MPN, which will be valid for continuing years during their enrollment at Alma College. Complete this on the U.S. Department of Education’s website: www.studentloans.gov
Once you have completed the steps to accept your Direct Loan, the U.S. Department of Education will pay you through your school. Your loan will be disbursed in at least two installments, and no installment will be greater than half the amount of your loan.
Will I have an opportunity to cancel my loan after I
sign the promissory note?
Yes. Your school must notify you in writing whenever it credits your account with your Direct Loan funds. This notification must be sent to you no earlier than 30 days before, and no later than 30 days after the school credits your account. You may cancel all or a portion of your loan if you inform your school that you wish to do so within 14 days after the date that your school sends you this notice, or by the first day of the payment period, whichever is later. Your school can tell you the first day of your payment period.
What are my repayment options?
After you graduate, leave school, or drop below half-time enrollment, you have six months before you begin repayment. There are many options available to you for repaying your federal student loans. Learn More >>