Stafford Loans

Federal Direct Student Loan Program

UMUC participates in the William D. Ford Federal Direct Student Loan program, which offers long-term, low interest loans from the U.S. Department of Education. This is the largest federal aid program and is the programs you are most likely to find in your aid offer.

Note: Students must be enrolled at least half-time to be eligible for a direct loan disbursement.

Subsidized and Unsubsidized Loans

There are two types of Federal Direct Student Loans: subsidized and unsubsidized. The primary difference is the point at which interest begins to accrue. Your financial aid award may include a combination of subsidized and unsubsidized loans. For example, a freshman with a subsidized loan of $500 may also receive an offer of an unsubsidized loan for $3,000 to meet the annual limit for a freshman.

Subsidized Loans

No interest will accrue on a subsidized loan, and no principal will be due until the end of the six-month grace period that will begin when you graduate, leave the university or drop below half-time enrollment (6 credits). Subsidized loans are awarded to undergraduate students who demonstrate financial need.

For first-time borrowers applying for Direct Subsidized Loans on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that you can receive such loans. If this limit applies to you, you may not receive Direct Subsidized Loans for more than 150 percent of the published length of your program. This is called your "maximum eligibility period." You can find the published length of any program of study in UMUC's course catalogs.

Unsubsidized Loans

Interest on an unsubsidized loan begins on the day the loan is disbursed and continues until the day that you repay the loan in full. You can pay the accumulating interest while you are in school; during the grace period; during deferment; or you have the option of capitalizing the interest (adding unpaid, accumulated interest to the total unsubsidized amount borrowed when you begin repayment). Capitalizing the interest may give you a way to postpone making interest payments, but it also increases the total cost of your unsubsidized loan.

What is a Federal Direct Subsidized loan?

Annual and Aggregate Loan Maximums

Direct Loan Annual Limits

The amount you can borrow annually depends on your grade level, as determined by your earned units.

Annual & Aggregate Loan Limit

Grade Level

Earned Credits

Dependent Undergraduate Student

Independent Students

Freshman

0–29

$5,500—a maximum of $3,500 can be subsidized

$9,500—a maximum of $3,500 can be subsidized

Sophomore

30–59

$6,500—a maximum of $4,500 can be subsidized

$10,500—a maximum of $4,500 can be subsidized

Junior

60–89

$7,500—a maximum of $5,500 can be subsidized

$12,500—a maximum of $5,500 can be subsidized

Senior

90+

$7,500—a maximum of $5,500 can be subsidized

$12,500—a maximum of $5,500 can be subsidized

Graduate

N/A

N/A

$20,500

Subsidized and Unsubsidized Aggregate Loan Limit

N/A

$31,000—no more than $23,000 of this amount may be in subsidized loans

$57,500 for undergraduates—no more than $23,000 of this amount may be in subsidized loans


$138,500 for graduate or professional students—no more than $65,000 of this amount may be in subsidized loans (the graduate aggregate limit includes all federal loans received for undergraduate study)

You are independent if you meet at least one of the following conditions:

  • Are 24 years of age of older;
  • Enrolled in a masters or doctorate program;
  • Legally married at the time you sign your FAFSA application;
  • Have children or other dependents who receive more than half of their support from you now and through June 30 of the year in which you receive financial aid;
  • Have legal dependents other than a spouse or children who receive more than half their support from you;
  • Are a foster child, or ward of the court after the age of 13;
  • Are a legally emancipated minor with documentation of the court judgment (emancipated minor is a formal legal status that must be declared in a court of law. Simply moving out of your parents’ household does not count. A judge must legally declare you emancipated. The court order must still be in effect when you file your FAFSA);
  • Are in legal guardianship as determined by a court;
  • Are homeless (Homeless is defined as lacking fixed, regular, adequate housing. This includes living in shelters, hotels, cars, etc.);
  • Are a veteran of the Armed Forces;
  • Are currently serving on active duty in the Armed Forces for other than training purposes.

The Cost of Borrowing

You will pay 1.073% of your Direct Student Loan proceeds to the U.S. Department of Education as a loan origination fee. This fee will be deducted from each disbursement before it is credited to your university account.

The Interest Rate

Interest rates for Direct Loans
first disbursed on or after July 1, 2014

Loan type

Borrower type

Loans first disbursed on or after July 1, 2014 and before July 1, 2015

Loans first disbursed on or after July 1, 2015 and before July 1, 2016

Direct Subsidized Loans

Undergraduate

4.66%

4.29%

Direct Unsubsidized Loans

Undergraduate

4.66%

4.29%

Direct Unsubsidized Loans

Graduate or Professional

6.21%

5.84%

Entrance Loan Counseling

When you are a new borrower of a Federal Direct Student Loan at UMUC, you must complete an entrance loan counseling session so that you will know your rights and responsibilities as a borrower. The online session will take you about 20 minutes to complete. You will only need to complete this information once.

In addition to the online session, please read the Entrance Counseling Addendum regarding the Time Limitation on Direct Subsidized Loan Eligibility for First-Time Borrowers on or after July 1, 2013.

What is a Master Promissory Note?

Promissory Note

Borrowing from the Direct Loan program requires the completion of an Electronic Master Promissory Note (e-MPN). While attending UMUC you can use the E-MPN for multiple loans over one or more academic years. You will only need to complete this information once.

Repayment

You will begin to repay your loan at the end of a 6-month grace period that begins when you graduate, leave school, or drop below half-time enrollment (6 units). For more information about repayment, please visit this web site.

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