Federal Direct Loan Details
The Federal Direct Loan Program enables a student to borrow money directly from the federal government to help with educational expenses. The Financial Aid Office processes the loan for you, and Student Accounts disburses the funds. Repayment is made to the federal government through a Direct Loan Servicing Center.
There are 4 types of Direct Loans: Subsidized, Unsubsidized, Parent PLUS and Graduate PLUS. Subsidized and Unsubsidized loans are for the student; the Parent PLUS loan is a loan for the parent of a dependent student. The Graduate PLUS loan is a loan for graduate and professional students. Loan type and amounts are determined when the student completes the financial aid application process. There are also annual loan limits and aggregate loan limits that students are bound by. There is a 1.072% origination fee charged on subsidized and unsubsidized loans. Parent and Graduate PLUS loans have a 4.288% origination fee. These rates are effective December 1, 2013.
Annual Direct Loan Limits
|Dependent Students (Except students whose parents cannot borrow PLUS)||Base amount||Additional unsubsidized loan amount|
|Junior or Senior||$5,500||$2,000|
Independent Undergraduate Students and Dependent Students (Whose parents cannot borrow PLUS)
|Base amount||Additional unsubsidized loan amount|
|Junior or Senior||$5,500||$7,000|
Graduate and Professional Students (Whose parents cannot borrow PLUS)
|Unsubsidized loan maximum amount|
The aggregate loan limit is defined as the total amount of money a student may borrow. Dependent, undergraduate students may borrow up to $31,000. Independent, undergraduate students may borrow up to $57,500. Graduate students may borrow up to $138,500 (inclusive of the undergraduate amounts). For the undergraduate student a maximum of $23,000 can be subsidized. Of the graduate student total, only $65,500 can be subsidized.
Over a four-year period beginning July 1, 2008, the interest rate on subsidized loans made to undergraduate students was reduced. The applicable interest rates for loans made during this period are as follows:
|First disbursement of a loan||Interest rate on the unpaid balance|
|Made on or after||And made before||Interest Rate %|
|July 1, 2010||July 1, 2011||4.5 percent|
|July 1, 2011||July 1, 2012||3.4 percent|
|July 1, 2012||July 1, 2013||3.4 percent|
|July 1, 2013||July 1, 2014||3.86 percent|
|July 1, 2014||July 1, 2015||4.66 percent|
These apply to subsidized loans first disbursed on or after July 1 of each year through June 30 of the next year. This change does not affect any prior loans made to borrowers; the terms and interest rates of those loans remain the same.
The 4.66% interest rate applies to subsidized and unsubsidized loans for undergraduate borrowers. The interest rate for graduate loans is 6.21%.
UWF encourages students to borrow wisely and conservatively. While the loans are available to help you, borrow money that is needed to cover your educational expenses only. Try to avoid borrowing at the maximum levels each year because this could lead to unmanageable debt after graduation. This could also cause you to reach your aggregate limit prior to obtaining your degree.
Students have the ability to track their federal financial aid history through the National Student Loan Data System (NSLDS). This website provides student loan detail for all loans a student has borrowed. Information in the NSLDS database is accessible to authorized agencies, lenders, and institutions.
A subsidized loan is need-based and accrues no interest while you are attending school at least half-time. If you do not qualify for a subsidized loan, we will process an unsubsidized loan. An unsubsidized loan does accrue interest from the time the loan is disbursed. You have the option to pay the interest every 90 days or let it capitalize. We encourage you to pay the interest, if possible, to avoid additional interest charges. Subsidized and Unsubsidized loans have a 6-month grace period before repayment begins, and you can prepay the loan at any time without penalty.
Get more detailed information regarding Federal Direct Loans, including repayment plans and estimated payment calculators at understanding how to repay loans.
Time Limitation on Direct Subsidized Loan Eligibility - Effective July 1, 2013
Regulations pertaining to Federal Direct Subsidized Loan eligibility for First-Time borrowers were changed effective July 1, 2013. This regulation only applies to NEW borrowers and limits a student's subsidized loan eligibility to 150% of program length. We have included location to the Department of Education PDF document which details these changes and provides specific examples.
Federal Direct PLUS Loan
As mentioned above, the Parent PLUS loan is a loan for parents. The parent will borrow money for the student's educational expenses. The loan amount is determined by the student's cost of education minus other types of financial aid awarded. Repayment may be deferred (upon request) until six months after the student ceases half-time enrollment; however, interest will accrue and be added to the principal balance of the loan. The interest rate on a PLUS loan is fixed at 7.21%. A parent must be able to pass a credit check in order to qualify. The application is available on-line in .pdf format on our Forms page.
Federal Direct PLUS Loan for Graduate Students
The Grad PLUS loan is a federal loan allowing a graduate student to borrow up to the total cost of education minus any other financial aid. The interest rate is fixed at 7.21%, and repayment is generally deferred while in school.
In order to qualify for the Grad PLUS, the student must meet basic eligibility requirements:
- Complete the FAFSA. While it is not required, it is our recommendation that you borrow your maximum unsubsidized loan limits prior to applying for a Grad PLUS.
- Be enrolled in a minimum of 6 graduate level credit hours.
- Be a US Citizen or Eligible Non-Citizen.
- Maintain Satisfactory Academic Progress Standards.
- Pass a required credit check.
An application can be obtained on our Forms page and submitted to the Financial Aid Office to process. There is a Master Promissory Note that must be completed that is different from the Subsidized/Unsubsidized Master Promissory Note.
Master Promissory Note
The Master Promissory note (MPN) is a promissory note that is used to secure loans for multiple academic years. As a student borrower under the Direct Loan Program, you will only sign one MPN for all of your Direct Loans at UWF. The electronic MPN site, allows you to complete and sign a MPN on the web as an alternative to using a paper MPN. The Financial Aid Office will be electronically notified when you have signed the promissory note. Because you only sign the promissory note when you receive your first loan, it is important that you save all loan correspondence sent to you regarding your Direct Loans. You must notify us in writing when you want to decline or reduce a loan award.
The federal government requires you to complete entrance counseling prior to disbursement of your first Federal Direct Loan. Entrance counseling explains your rights and responsibilities as a student loan borrower. After you review the information if you still have questions, please contact the Financial Aid Office.
Complete entrance counseling.
Exit counseling is required at the time you graduate, withdraw, or drop below half-time enrollment. Exit counseling will review the same rights and responsibilities as entrance counseling but will also give you important information regarding the repayment of your Direct Loan. Understanding the repayment provisions of your loan will help you avoid default. Failure to complete exit counseling prior to leaving school will result in a HOLD on your academic record. This hold prevents the release of grades, transcripts and diploma, registration for future terms, and receipt of additional financial aid.
Complete exit counseling.
Loan consolidation enables a borrower to take all of their existing student loans and consolidate them into one monthly payment. Loan consolidation is not for everyone, but can be very beneficial. Several companies offer loan consolidation. If you are considering consolidation, review the information at Direct Loan Consolidation. Please contact Direct Lending, or the company of your choice directly, for additional information and to answer any questions.
Although it is not required, you are encouraged to exhaust all federal loan eligibility prior to applying for a private/alternative loan. The terms of a federal loan are generally more favorable than a private loan. In the event you do not qualify for financial aid, have reached the aggregate loan limit, or need aid in excess of what you have been awarded, you may apply for a private loan, often referred to as an alternative loan. With this type of loan, you are applying through a private lender, and the Financial Aid Office only certifies your enrollment and cost of education. A credit check is done by the lender to determine approval. The lender determines interest rate, processing fees, and repayment.
You have the right to select any lender of your choice, and we will process the application for you. We do not recommend specific lenders and have elected not to publish specific information on individual loans/lenders due to the fact that borrower benefits are subject to change without notice. Interest rates and loan terms vary greatly among lenders; you should look at all options in selecting a private loan. The best way to locate a lender is to do an internet search for "private student loans". Detailed information regarding a specific loan can be found on the lender website or by contacting them directly. There are also comparison tools that can be found online which allow you to see multiple options for multiple lenders in the same way people do research for a mortgage lender. Due to legislative and economic changes in the student loan industry, we recommend that you contact a lender prior to submitting a loan application to determine if they are accepting applications from UWF students. There are certain lenders who have chosen to accept applications only for students attending specific institutions.
We are required by federal regulation to provide the disclosures in the Truth in Lending Act. Private loan borrowers are required to complete an Applicant Self-Certification Form when requesting a private loan. The form is provided by your lender; however, if needed, the form is available in the Financial Aid Office for you to complete and submit to the lender.
Private loans are disbursed using the same method as other types of financial aid - your Higher One Debit card or ACH to your bank account.
All lenders will conduct a credit check. Keep in mind that multiple credit inquiries do reduce a borrower's credit score.
Every effort has been made to ensure that the information on this web site is accurate. However, due to frequent changes in Federal and State regulations, and revisions to the University of West Florida operating policies, the information is subject to change without notice.