Methodist University Office of Financial Aid - Federal Direct Loans Sub/Unsub

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Federal Direct Subsidized and Unsubsidized Loans for Students

Methodist University participates in the William D. Ford Federal Direct Student Loan Program (Federal Direct Loans) for the processing of the Federal Direct Subsidized and Unsubsidized loans. These are low-interest loans for eligible students to help cover the cost of higher education. In the William D. Ford Federal Direct Loan program, loan proceeds are provided directly from the U.S. Department of Education. As with all federal student aid, to become eligible you must complete the Free Application for Federal Student Aid (FAFSA), the borrower must be a U.S. citizen or eligible non-citizen as defined by the FAFSA, the student borrower must be a U.S. citizen or eligible non-citizen as defined by the FAFSA, enrolled or accepted for enrollment in a degree program on at least a half-time basis as an undergraduate (6 semester hours) or graduate student (3 semester hours), have not met their aggregate loan limit, must not be in default on any federal education loans or owe an overpayment on a federal education, and the borrower must also maintain Methodist University's Satisfactory Academic Progress (SAP) for Financial Aid Eligibility. A student must sign for the loan and complete all required documentation prior to the end of the student’s current academic year enrollment. There are two types of Federal Direct Loans offered at Methodist University:

Federal Direct SUBSIDIZED Loan: Direct Subsidized Loans are for undergraduate students with financial need as defined by the FAFSA. The borrower is not charged interest while enrolled in school at least half-time.

Federal Direct UNSUBSIDIZED Loan: Undergraduates and graduate students are not required to demonstrate financial need to receive a Direct Unsubsidized Loan; however the FAFSA must be completed. The Unsubsidized loan cannot exceed the educational cost of attendance minus other financial aid. Interest accrues (accumulates) on an unsubsidized loan from the time of the first disbursement. The borrower can pay the interest while in school and during grace periods and deferment or forbearance periods, or allow it to accrue and be capitalized (that is, added to the principal amount of the loan). If the borrower chooses not to pay the interest as it accrues, this will increase the total amount repaid because of charged interest on a higher principal amount.

Borrowing Limits

Borrowing limits depend on class standing and academic level, and vary for undergraduates, graduate and professional students.

Federal Direct Loan Borrowing Limits

Dependent Students	Max Subsidized	Unsubsidized = Total Annual Amt
		Effective July 1,2008	Total annual limit
0-29.5 Freshman	$3,500	$2,000	$5,500
30-61.5 Sophomore	$4,500	$2,000	$6,500
62-93.5 Junior OR 94+ Senior	$5,500	$2,000	$7,500

Independent Students and Plus denials	Max Subsidized	Unsubsidized = Total Annual Amt
		Effective July 1, 2008	Total annual limit
0-29.5 Freshman	$3,500	$6,000	$9,500
30-61.5 Sophomore	$4,500	$6,000	$10,500
62-93.5 Junior OR 94+ Senior	$5,500	$7,000	$12,500
Graduate or Professional	*$0	*$20,500	$20,500

* Effective July 1, 2012: The Budget Control Act (BCA) of 2011 (Pub. L. 112-25)

Aggregate Loan Limits
Dependent Undergraduate: $31,000 (Maximum $23,000 in Subsidized)

Independent Undergraduate: $57,500 (Maximum $23,000 in Subsidized)

Graduate or Professional: $138,500 (Maximum $65,500 in Subsidized)

Direct Loan Interest Rate and Origination Fee:

The Federal Direct Loan interest rate for loans disbursed on or after July 1, 2012:

subsidized loans is 3.4% with a loan origination fee of 1%.
unsubsidized loans is 6.8% with a loan origination fee of 1%.

The Federal Direct Loan interest rate for loans disbursed on or after July 1, 2013:

subsidized loans is 6.8% with a loan origination fee of 1.051%
unsubsidized loans is 6.8% with a loan origination fee of 1.051%.

Applying for a Federal Direct Loan (Student)

New and Returning Students: Complete and submit a Free Application for Federal Student Aid (FAFSA) if one has not been completed at www.fafsa.ed.gov. Direct Loan eligibility is determined by the federal government and reported to Methodist University’s Office of Financial Aid for inclusion on the student’s financial aid award letter. Refer to the borrowing limits chart below for the maximum amount a student can borrow each year, depending on the student’s dependency status (as determined by the FAFSA) and the student’s academic level.
New and Returning Students: Sign your award letter and return it to the Office of Financial Aid to confirm the amount of Federal Direct Loans for processing.
New Students: Complete the Direct Loan Entrance Counseling at www.studentloans.gov. Once on the site, “Sign In” under the “Manage My Direct Loan” located on the left side of the page. You will need your social security number, date of birth and your Federal Student Aid PIN to sign in (same PIN used to electronically sign the FAFSA); the PIN number is available at www.pin.ed.gov. To complete the Direct Loan Entrance Counseling, select the link titled “Complete Entrance Counseling.” The Department of Education will automatically notify Methodist University of the completed Entrance Counseling.
New Students: Complete the Direct Loan Master Promissory Note (MPN) at www.studentloans.gov. Once on the site, “Sign In” under the “Manage My Direct Loan” located on the left side of the page. You will need your social security number, date of birth and your Federal Student Aid PIN to sign in (same PIN used to electronically sign the FAFSA); the PIN number is available at www.pin.ed.gov. To complete the Master Promissory Note, select “Complete Master Promissory Note,” then select “Subsidized/Unsubsidized” for the Federal Direct Undergraduate Student Loan. The Department of Education will automatically notify Methodist University of the completed Master Promissory Note (MPN).

Please note: When the loan(s) have been processed, you will receive an updated award letter from MU listing your loan has been PROCESSED. Once the loan is processed/booked, the loan is assigned a Loan Servicer on behalf of the Department of Education. For a complete listing of Loan Servicers, please visit www.studentloans.gov and choose Loan Servicers at the bottom right. For additional information regarding interest rates, repayment etc for Federal Direct Sub/Unsub, Parent/Graduate PLUS, please contact the Direct Loan Servicing Center at 1-800-848-0979.

Loan Disbursements

The Federal Direct Loan award is issued in multiple disbursements during the academic year. If the borrower plans to enroll for :

full time in the Day program for the Fall and Spring semesters, the loan will be issued in two equal disbursements (one disbursement per semester).
full time in the Evening program, six semester hours in each term for the four terms (two terms Fall and two terms Spring), the loan award will be issued in four equal disbursements. Due to diverse schedules in the Evening Program, loan disbursements will be determined based upon the number of hours enrolled (the loan disbursement will be set when the student has officially begun the 6th semester hour course).

Loan Cancellation/ Reinstatement

A student or parent borrower may cancel or reduce a loan anytime before a loan has disbursed to Methodist University. If the loan has already been disbursed and credited to the student’s account in the Business Office, the borrower may cancel a loan within 30 days from the date it disbursed and credited to the student’s Business Office account. A student may reinstate a Federal Direct subsidized (sub) and unsubsidized (unsub) loan at any time prior to the end of the student’s current academic year enrollment. The Federal Parent PLUS for Parents/Graduate students and Alternative Loans MAY NOT be reinstated once reduced or cancelled. Instead, the borrower must reapply online. To reinstate,reduce, or cancel a loan, the borrower must complete the Loan Revision Form.Important Notice: Canceling any loan disbursement could result in a balance to be due on the student's account in the Business Office which the student will be responsible for paying.

Borrowers cannot cancel a loan disbursement if the designated time period described above has already passed. Instead, the borrower can repay the loan disbursement directly by contacting the loan holder which can be found by accessing www.nslds.ed.gov. The borrower will be responsible for any interest that may have accrued and/or any loan fees.

Enrolled for less than 6 Semester Hours, Withdrawing or Graduating From MU: Loan Exit Counseling

Federal regulations require students who have borrowed a Federal Direct Loan and are graduating, leaving school, or dropping below half-time enrollment to complete an Exit Counseling. During the Exit Counseling, the student borrower will review rights and responsibilities as a student borrower, important information about repaying student loans, consolidation, repayment options, discharge and forgiveness as well as useful information to help manage student loans during repayment. Students may complete the Exit Counseling at the National Student Loan Database (NSLDS) site. NSLDS is a secure central database that stores information on all loans and grants processed though the Department of Education’s federal student aid program. When completing the Exit Interview, the student must provide a permanent address, phone number, employer (if working) and three (3) different references with complete names, addresses and phone numbers. One reference can be a relative. The other two cannot be relatives. This site is created to collect information from schools and lenders so that aid can be more efficiently processed. It is updated every 30-60 days by the schools and the lender(s), so recent disbursements may not show immediately.

Loan Repayment

When you graduate, drop below half time, or withdraw from your academic program, you will receive a six-month grace period for your Direct Subsidized and Unsubsidized Loans. Your grace period begins the day after you stop attending school on at least a half-time basis. Once your grace period ends, you must begin repaying your loan(s). If you re-enroll in school at least half time before the end of your 6-month grace period, you will receive the full 6-month grace period when you stop attending school or drop below half-time enrollment. Please visit the Department of Education’s Federal Student Aid website for additional loan repayment information or to use the loan repayment calculator.

Ombudsman

If a borrower disputes the terms of the Federal Direct Loan in writing and the holder of the loan is unable to resolve the dispute, a borrower may seek the assistance of the Office of Education's Student Loan Ombudsman. The Student Loan Ombudsman will review and attempt to informally resolve dispute and may be reached at 1-877-557-2575 or www.ombudsman.ed.gov

Loan Consolidation

A Direct Consolidation Loan Program is available that allows a borrower to consolidate (combine) one or more of the eligible federal education loans into one loan. For more details and information, go to www.loanconsolidation.ed.gov.