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 units). Subsidized loans are awarded to students who demonstrate financial need.
Note: Beginning July 1, 2012, graduate students will no longer be able to participate in the federal subsidized loan program.
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 Subsidized student 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 Loan Limit |
Additional Unsubsidized Eligibility | ||
|---|---|---|---|---|
|
Grade Level |
Earned Credits |
Annual Loan Limit |
Dependent |
Independent |
|
Freshman |
0-29 |
$3,500 |
$2,000 |
$6,000 |
|
Sophomore |
30-59 |
$4,500 |
$2,000 |
$6,000 |
|
Junior |
60-89 |
$5,500 |
$2,000 |
$7,000 |
|
Senior |
90+ |
$5,500 |
$2,000 |
$7,000 |
|
Graduate |
N/A |
$8,500 |
N/A |
$12,000 |
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.
Direct Student Loan
Maximums
The Federal Direct Student Loan Program also has limits on the total amount you can borrow.
|
Students |
Undergraduate |
Graduate |
|---|---|---|
|
Dependent |
$31,000 |
N/A |
|
Independent |
$57,500 |
$138,500* |
*Includes all borrowing at the undergraduate level
The Cost of Borrowing
You will pay 1.0 percent 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
New subsidized loans for undergraduate students made on or after July 1, 2012, and before July 1, 2013, have a fixed interest rate of 3.4 percent. Beginning July 1, 2012, graduate students will no longer be able to participate in the federal subsidized loan program. Existing subsidized loans for graduate students will continue to have a fixed interest rate of 6.8 percent.
New unsubsidized loans for both undergraduate and graduate students made on or after July 1, 2012, and before July 1, 2013, have a fixed interest rate of 6.8 percent.
The U.S. Department of Education's Direct Loan Servicer will send you a quarterly loan interest statement.
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.
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).
Repayment Options
Borrowers have four repayment options.
- The Standard Repayment Plan allows you to repay your loan with a fixed monthly payment of no less than $50 over a period of no more than 10 years. See Appendix IV.
- The Extended Repayment Plan also has minimum payments of $50 per month, but allows you to take from 12 to 30 years to repay your loans.
- The Graduated Repayment Plan allows your payments to start out at one level, and then gradually increase every two years.
- The Income Contingent Repayment Plan gives you the flexibility to tie your payments to your Adjusted Gross Income.
You can estimate your monthly payments with various repayment plans by using the repayment calculators available online from the U.S. Department of Education’s Direct Loan Web site.
You may consider a Federal Direct Consolidation Loan to simplify repayment by combining loans from the Federal Direct Student Loan Program, the Federal Stafford Loan Program, and the Federal Perkins Loan Program.
If you have questions about repayment or a problem making a payment on your loan, the Direct Loan Servicing Center (1-800-848-0979) will work with you to help you avoid the costs and adverse consequences of delinquency. Deferment and forbearance are options that can help you manage the repayment of your loan.
