Undergraduate Direct Loans
What are Direct Loans?
The Federal Direct Loan is available through the Federal Direct Loan Program to help both undergraduate and graduate students pay for their education. To receive federal loans for any term, a student must be enrolled at least half-time. Half-time enrollment is five hours for graduate or law students or six hours for undergraduate students or professional Pharmacy students (PY2, PY3, and PY4).
There are two types of Federal Direct Loans–subsidized and unsubsidized.
The Direct Subsidized Loan
Eligibility for subsidized loans is based on financial need as determined by federal guidelines. A loan is called “subsidized” because the government pays interest for the student during:
- At least half-time enrollment in school
- The six-month grace period after the student ceases attendance on at least a half-time basis.
- During periods of deferment
The Direct Unsubsidized Loan
This loan is available to students regardless of income or need. With an unsubsidized loan, you are responsible for all interest that accrues during in-school, grace and deferment periods. You may choose to pay the interest portion only while in school, during grace periods, and deferment periods. Students should contact the U.S. Department of Education to make arrangements for these payments. If you choose to defer such payments, the interest will be capitalized, resulting in an increase in both total debt and the amount of monthly payments.
Advantages of the Direct Loan
- For both Federal Direct Subsidized and Unsubsidized loans with a first disbursement date between July 1, 2016 and June 30,2017, the interest rate is fixed at 3.76%. For both Federal Direct Subsidized and Unsubsidized loans with a first disbursement date between July 1,2017 and June 30,2018, the interest rate is fixed at 4.45%.
- It carries low origination fees. Many other loans have significantly higher fees.
- Repayment of the loan does not begin until you graduate or drop below half-time status.
- In cases of economic hardship, payments may be deferred, extended, or reduced.
- The loan is forgiven in case of permanent disability or death.
- Have online access to your Direct Loan account information via the federal servicer’s website
- Can choose from several repayment plans and can switch repayment plans as desired.
Loans are usually issued for a single academic year, and both eligibility and amount are re-determined annually throughout your academic career.
Eligibility for Direct Loans
Your Direct Loan eligibility is determined by the Office of Financial Aid and is based on information you provided in the Free Application for Federal Student Aid (FAFSA).
Federal criteria include:
- Enrollment in an eligible school at least half-time in a degree program
- U.S. citizenship, permanent residency, or eligible noncitizen status
- Satisfactory academic progress (as determined by the Office of Financial Aid)
- No unresolved defaults or overpayments owed on Title IV educational loans and grants
- Satisfaction of all Selective Service Act requirements
How Much Can I Borrow?
Borrowing limits are based on your dependency status and year in school. You are considered independent if you:
- Are at least 24 years old
- will be working on a degree beyond a bachelor’s degree during the school year; or
- you are married when the Free Application for Federal Student Aid (FAFSA) is filled;
- have children who receive more than half of their support from you; or
- have dependents (other than your children or spouse ) who live with you and receive more than half of their support from you, now and through June 30, 2013; or
- are an orphan or ward of the court or were a ward of the court until age 18; or
- are a veteran of the U.S. Armed Forces
- are currently serving on active duty in the U.S. Armed Forces
- are an emancipated minor (NOTE: The United States Department of Education does not recognize Emancipation of a Mississippi Resident as being valid to establish independent student status for Federal Financial Aid.)or in a legal guardianship
- are determined to be an unaccompanied youth who was homeless or at risk of being homeless.
If you do not meet any of the above criteria, you are considered a dependent student for financial aid purposes.
You can never borrow more than the cost of education, less other financial aid received (special rules apply for recipients of Americorps benefits). Below are the maximum amounts you may borrow.
Federal Direct Loan limits are as follows:
If dependent, your combined subsidized and unsubsidized Direct annual eligibility is as follows:
If independent, your subsidized and unsubsidized Direct annual eligibility is as follows:
The cumulative maximum amount that may be borrowed as dependent undergraduate is $31,000 ($23,000 maximum subsidized) and for an independent is $57,500 ($23,000 maximum subsidized).
As of July1, 2013, a limit has been established on the amount of Direct Subsidized Loans that a first-time borrower may receive. Students may not receive Direct Subsidized Loans for more than 150% of the published length of the academic program in which they are currently enrolled. Progress towards this limit is tracked by Department Of Education based on information provided by the school(s).
For both Federal Direct Subsidized and Unsubsidized loans with a first disbursement date between July 1, 2016 and June 30,2017, the interest rate is fixed at 3.76%. For both Federal Direct Subsidized and Unsubsidized loans with a first disbursement date between July 1,2017 and June 30,2018, the interest rate is fixed at 4.45%.
All Direct Subsidized and Direct Unsubsidized Loans with a first disbursement date between October 1, 2016 and September 30, 2017 will have a loan origination fee of 1.069% deducted from the principal upon each disbursement. All loans with a first disbursement date between October 1, 2017 and September 30,2018 will have a loan origination fee of 1.066%.
The Application Process
Complete the Free Application for Federal Student Aid (FAFSA) online at www.fafsa.gov. Be sure to include the University of Mississippi’s school code 002440 on your application.
Disbursements of Funds
Before the Federal Direct Loan can disburse, the student must complete all of the following actions (in addition to maintaining eligibility for the award):
- Accept all or a part of the financial aid package by accessing their individual “Financial Aid Notification” online in the student’s MyOleMiss portal.
- Complete Loan Entrance Counseling (or request alternate counseling options from the OFA). Financial aid advisors are available during regular business hours to answer questions at the completion of the counseling session.
- Complete the Master Promissory Note.
Funds will credit first to your Bursar bill and any excess funds will be mailed to your permanent address or directly deposited to your personal account.
Section 479A(c) of the Higher Education Act, as amended (HEA), and the Direct Loan Program regulations give the OFA the authority to refuse to originate a Direct Loan or to reduce the amount of an individual borrower’s eligibility for a Direct Loan. Any such determination is made on a case-by-case basis. The decision will be provided to the student or parent borrower in writing and documentation supporting the determination and retained in the student’s file.
Per federal regulation, loans may be disbursed up to 10 days prior to the semester in which they are allotted. Generally, the OFA will disburse loan amounts 3-5 days prior to the beginning of the semester. During the semester, the OFA will disburse loan funds on a daily basis as eligible.
When a disbursement is made to the bursar account, students are notified by email. In that email, they are informed that borrowers have the right to cancel all or a portion of their Direct Loan(s) at any time within 14 days of disbursement. To exercise this right, the borrower must contact the OFA in writing. Although cancellation may be possible after 14 days, UM cannot process a loan cancellation if more than 120 days have lapsed since disbursement. In addition, unless the funds are paid back to UM by the borrower, the school is not required to return any portion of a loan that was delivered as a refund to the student or parent as a result of a credit balance.
Borrowers Rights and Responsibilities
Students who decide to accept a Federal Direct Loan have certain rights and responsibilities. To learn more, go to: https://finaid.olemiss.edu/borrowers-rights-and-responsibilities/.
National Student Loan Data System (NSLDS)
NSLDS is the Department Of Education’s (DOE) central database for Federal Title IV student aid (including Pell Grants, Iraq and Afghanistan Service Grants, TEACH Grants, Direct or Perkins Loans). If students receive funding under any of these programs, information related to those awards will be provided by UM to NSLDS and shall be accessible to eligible guaranty agencies, lenders, and colleges as authorized by DOE. Students may view their own data on NSLDS at nslds.ed.gov.