As of the 2008-2009 school year, UHCL will participate in the Direct Loan program.
What does this mean?
In the Federal Stafford Loan program, there are two parallel loan programs: Federal Family Education Loans (FFEL) and Direct Loans (DL). With the FFEL program, students work with a lender, a guarantor, often a different loan servicer, their university and the U.S. Department of Education. With Direct Loans students work with their university and the U.S. Department of Education. You may be aware that several lenders have exited the FFEL Loan program recently, and most others have increased loan fees charged to students. Beginning with the 2008-09 school year, UHCL will participate only in the Direct Loan program.
If you have previous loans with another lender, those loans remain unchanged. After finishing school or when attending less than half-time, you can request a Direct Consolidation Loan from the Direct Loan Program or the FFEL program to combine all FFEL and Direct Loans.
Federal Direct Subsidized Loans are low-interest, deferred payment loans to undergraduate and graduate students who demonstrate financial need. Need is calculated based on the FAFSA along with the cost of school and other financial aid. These funds assist students with educational expenses. The federal government “subsidizes’ the interest on these loans before repayment begins or during periods of deferment.
The Federal Direct Unsubsidized Loan program provides low-interest, deferred payment loans to undergraduate and graduate students regardless of financial need. These funds assist students with educational expenses.
Interest is charged from the time the loan is disbursed until it is paid in full. Interest can be deferred while a student is attending school and enrolled at least half-time. However, deferred interest is capitalized, or added to the original balance of the loan. If possible, it is best to pay the interest due when the lender sends the quarterly interest statement.
Undergraduate Subsidized: 6.0% fixed
Graduate Subsidized: 6.8% fixed
All Unsubsidized: 6.8% fixed
In addition to interest, all loans have a 2.0% origination fee. However, you will receive an upfront 1.5% rebate at the time of origination based on paying your first 12 monthly payments on time, so the fee assessed is only ½ percent. This fee will be reduced from the amount that disburses to your student account.
To apply for a Federal Direct Loan, you must complete the FAFSA. To be eligible, you must be enrolled at least half-time and meet other general federal student aid eligibility requirements. We will offer Federal Direct Loans as part of your award package. You may accept, reduce, or decline (via E-Services) the amount you wish to borrow.
Students borrowing a Federal Direct Loan must complete a Federal Direct Loan Electronic Master Promissory Note (e MPN) before loan money can be disbursed. Once a Federal Direct Loan eMPN is completed and the loan is disbursed to your student account, you do not have to sign a Federal Direct Loan eMPN again (it is valid for 10 years).
To complete the eMPN, you must go to www.dlenote.ed.gov. You will need your U.S. Department of Education PIN to sign your eMPN electronically. After you sign your eMPN, electronic notification will be sent to UHCL. We cannot disburse your Federal Direct Loan until you have completed your eMPN and, if this is your first loan, have completed Entrance Counseling.
The federal government requires a student borrowing their first loan to participate in loan counseling prior to receiving a Federal Direct Loan. Entrance Counseling will explain various aspects of student loans, such as repayment and interest, and your rights and responsibility. It concludes with a 15-question quiz. You must get all answers correct to successfully complete Entrance Counseling can be completed at www.dlssonline.com. You will need your U.S. Department of Education PIN to successfully complete Entrance Counseling. After you complete Entrance Counseling, the results will be sent electronically to UHCL, although you may wish to print a copy of the rights and responsibilities page for your records.
When UHCL is notified by the Federal Direct Loan Processor that they have a valid e MPN on file for you and you have completed Entrance Counseling (if needed), your Federal Direct Loan will automatically be credited to your student account as long as all other federal student aid eligibility requirements are met.
You have the right to reduce or cancel your Federal Direct Loan offer. You may do so in E-Services, or you may notify us in writing (via email or snail mail).
The federal government sets limits on the amount of money a student can borrow. UHCL awards students that have filed the FAFSA the maximum amount eligible under such limits. The annual limit applies to the most a student can borrow in one academic year, while the aggregate limit applies to the maximum a student can borrow in a lifetime. If a student is not eligible for subsidized loans, which are need based, those amounts may be added to unsubsidized loan amounts shown below.
The federal government requires that students participate in Exit Counseling prior to leaving or graduating from college. To complete Exit Counseling, go to www.dl.ed.gov. You will need your U.S. Department of Education PIN to successfully complete Exit Counseling.
During Exit Counseling you will learn about additional deferment and forbearance and how to get the necessary forms. Even though you have a six month grace period, the Exit Counseling process will help you set up a repayment plan, a direct withdrawal and a payment date. The Direct Loan Servicing Center, who handles all Federal Direct Loan repayments, hosts Exit Counseling.
Repayment of Federal Direct Stafford Loans begins 6 months after a student graduates or ceases to be enrolled at least half time.
Contact Federal Direct Loan Servicing Center at www.dl.ed.gov or call them at (800) 848-0979, TTY (800) 848-0983.
Date Updated: 16-MAY-2008
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