Direct loans will be awarded to students who submit a FAFSA as part of their financial aid package. You may see two Direct loans. One is a subsidized loan, meaning the government is paying the interest while the student attends college at least half time, until they graduate. The subsidized loan will be $3,500 the freshman year of college, $4,500 for the sophomore year, and $5,500 for the junior and senior years of college. The other is an unsubsidized Direct loan of $2,000 which will be offered every year. Interest will start accruing on unsubsidized loans once funds are distributed. Wealthier families may not qualify for the subsidized loan in which case, both Direct loans would be unsubsidized. Direct loans are the only student loans available in the student’s name without the requirement of a co-signer. Students can borrow up to $27,000 in Direct loans over their four years of college.
Once you have made the final decision of where your student will be attending college, you will have the option to accept or decline both loans or you can choose to only accept the subsidized loan and decline the unsubsidized loan. The first step to accept Direct loans is through the college, usually through the college student portal. The next step is for the student to log in to www.studentaid.gov using their FSA ID to complete a process called Entrance Counseling and sign a Master Promissory Note (MPN). We can complete the loan process in May or June. Your college will be notified when this process is complete and the funds will be directly distributed to your school, half for the fall semester and half for the spring semester.