Federal Direct Subsidized & 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. To be 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, enrolled or accepted in a degree seeking program at least half-time as an undergraduate student (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 and the borrower must also maintain Methodist University’s Satisfactory Academic Progress (SAP) for Financial Aid Eligibility. At Methodist University a student is required to sign for any federal loan and complete all required Federal documentation prior to the end of the student’s current academic year enrollment, (per federal guideline 34 CFR 668.164(g)(2)(ii)). Any missing documents can be found on the student’s Methodist myMU Portal.

Direct Loan Subsidized Loan Time Limitation

If you received your first federal student loan after June 30, 2013, there is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans. In general, you may not receive Direct Subsidized Loans for more than 150% of the published length of your program. This is called your “maximum eligibility period.”

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, 2008Total 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

See the Federal Student Aid Web site for interest rates.

Applying for a Federal Direct Loan (Student)

  1. New and Returning Students: Complete and submit a Free Application for Federal Student Aid (FAFSA) if one has not been completed at https://studentaid.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 offer of financial aid. Refer to the borrowing limits chart above 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.
  2. New and Returning Students: Sign your offer of Financial Aid and return it to the Methodist University Office of Financial Aid to confirm the amount of Federal Direct Loans for processing, and complete Informed Borrowing Confirmation at www.studentloans.gov each year.
  3. New Students: Complete the Direct Loan Entrance Counseling at https://studentloans.gov You will need your FSA ID. The FSA ID number is available at https://fsaid.ed.gov.* The Department of Education will automatically notify Methodist University of the completed Entrance Counseling.
  4. New Students: Complete the Direct Loan Master Promissory Note (MPN) at https://studentloans.gov You will need your FSA ID. The FSA ID number is available at https://fsaid.ed.gov. The Department of Education will automatically notify Methodist University of the completed Master Promissory Note (MPN).

Please note: 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 https://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 (800) 557-7394.

Loan Disbursements

The Federal Direct Loan 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 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 any time before a loan has disbursed to Methodist University. If the loan has already been disbursed and credited to the student’s account in the Office of Student Accounts, the borrower may cancel a loan within 30 days from the date it disbursed and credited to the student’s account in the Office Student Accounts. 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 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 owing a balance on the student’s account in the Office of Student Accounts, which the student will be responsible.

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 https://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 must complete the Exit Counseling at https://studentloans.gov.

Loan Repayment

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 (877) 557-2575 or the Student Loan Ombudsman Web site.

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 https://studentaid.ed.gov/repay-loans/consolidation.