Federal Direct Loan FAQs

Q. What are the interest rates and fees charged in the Federal Direct Loan Programs?
Q. I completed entrance counseling under the FFEL program, do I have to complete Direct Loan entrance counseling?
Q. I previously borrowed loans through the FFEL program. Will I have to repay two different lenders?
Q. What are the types of repayment options in Direct Lending?
Q. Where can I find information about who services my federal loans?
Q. I borrowed previously from a lender through the FFEL program. Do I have to complete another Master Promissory Note (MPN)? 

Q. What are the interest rates and fees charged in the Federal Direct Loan Programs?

A.

 

Interest rates and loan fees for Federal Direct Loans
disbursed on or after October 1, 2015
 
Interest
 Fees
Undergraduate Federal Direct Subsidized Loan
4.29 %
1.068 %
Undergraduate Federal Direct Unsubsidized Loan
4.29 %
1.068 %
Graduate Federal Direct Unsubsidized Loan
5.84 %
1.068 %
Federal Direct PLUS Loan
6.84 %
4.272 %

 

Q. I completed entrance counseling under the FFEL program, do I have to complete Direct Loan entrance counseling? 

A. No. Previously completed entrance counseling sessions under the FFEL program are acceptable in the Direct Loan program. Only first-time borrowers will be required to complete the entrance counseling for Direct Subsidized and Unsubsidized Loans, as well as the Graduate PLUS Loan.
 

Q. I previously borrowed loans through the FFEL program.  Will I have to repay two different lenders?

A. Possibly. Many FFEL program loans have already been sold to the Department of Education, so your loans may be held by a different lender/servicer than the original one from which you borrowed. Upon repayment, you may owe loan funds to multiple entities. You may choose to make numerous monthly payments or you have the option of consolidating your student loans into one payment with the Department of Education. For further information pertaining to loan consolidation, please visit the Department of Education's website

Q. What are the types of repayment options in Direct Lending?

A. There are five repayment options: standard, extended, graduated, income-contingent and income-based.

Standard - With the standard plan, you'll pay a fixed amount each month until your loans are paid in full. Your monthly payments will be at least $50, and you'll have up to 10 years to repay your loans.

Extended - To be eligible for the extended plan, you must have more than $30,000 in Direct Loan debt and you must not have an outstanding balance on a Direct Loan as of Oct. 7, 1998. Under the extended plan you have 25 years for repayment and two payment options: fixed or graduated. Fixed payments are the same amount each month, as with the standard plan, while graduated payments start low and increase every two years, as with the graduated plan below.

Graduated - With this plan your payments start out low and increase every two years. The length of your repayment period will be up to ten years. If you expect your income to increase steadily over time, this plan may be right for you. Your monthly payment will never be less than the amount of interest that accrues between payments. Although your monthly payment will gradually increase, no single payment under this plan will be more than three times greater than any other payment.

Income-Contingent (not available for parent PLUS loans) - Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of:

1) the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or

2) twenty percent of your monthly discretionary income.

If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year. However, capitalization will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalized.

The maximum repayment period is 25 years. If you haven't fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged.

Income-Based - Under this plan the required monthly payment will be based on your income during any period when you have a partial financial hardship. Your monthly payment may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If you meet certain requirements over a specified period of time, you may qualify for cancellation of any outstanding balance of your loans.

Q. Where can I find information about who services my federal loans?

A. All of your student loan information may be found online through StudentLoans.gov. You will need your FSA ID to access your account. Please note that StudentLoans.gov only provides record of federal loans; private loans are not documented in this database.  

Q. I borrowed previously from a lender through the FFEL program. Do I have to complete another Master Promissory Note (MPN)?

A. Yes. All borrowers must complete a new MPN to receive loan funds because you will be borrowing from a new lender.