Federal Direct Stafford Loan

What is a Federal Direct Stafford Loan?
The Federal William D. Ford Direct Stafford Loan is a loan for matriculated students made through the U.S. Department of Education. Direct Loans are either subsidized or unsubsidized. A subsidized loan is awarded on the basis of financial need. If you qualify for a subsidized loan, the federal government pays interest on the loan until you begin repayment. An unsubsidized loan is not awarded on the basis of need. If you qualify for an unsubsidized loan, you will be charged interest from the time the loan is disbursed until it is paid in full. You can choose to pay the interest or allow it to accumulate. If you allow the interest to accumulate, it will be capitalized--that is, the interest will be added to the principal amount of your loan and will increase the amount you have to repay. If you pay the interest as it accumulates, you will repay less in the long run.

150% Rule for Subsidized Loans

On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (MAP-21) (Public Law 112-141) was enacted and limits a first time borrower's eligbility for Direct Subsidized Loans to period not to exceed 150% of the length of the borrower's educational program. 

First time borrowers on or after July 1, 2013 are subject to the provisions in this legislation.  Generally speaking a first time borrower in one who did not have an outstanding balance of principle or interest on a Direct Loan or FFEL Loan on July 1, 2013.

MAP-21 legislation affects first time borrowers from July 1, 2013 forward.  If you have Subsidized loans prior to July 1, 2013 with an outstanding balance you are not considered a first time borrower and MAP-21 legislation will not effect you.

More information on MAP-21 can be found on the Department of Education's Federal Student Aid website.

How Much Can I Borrow?
If you are enrolled at least a half-time basis, 6 or more credit hours, and if you are a dependent undergraduate student, you can borrow up to:

  • $5,500 if you are a first-year student (0 - 23 credits earned)
  • $6,500 if you are a second year student (24+ credits earned)

If you are enrolled at least a half-time basis, 6 or more credit hours AND you are an independent undergraduate student or a dependent student whose parents are unable to qualify for a PLUS loan, you can borrow an additional $4,000 unsubsidized loan annually. Note: The amounts given above are the maximum yearly amounts you can borrow in both subsidized and unsubsidized Direct Loans. However, you cannot borrow more than your cost of attendance minus any other financial aid for which you are eligible. This means that you may receive less than the annual maximum amounts.

The total debt you can have outstanding from all Direct Loans and Federal Family Education Loans combined is:

  • $31,000 as a dependent undergraduate student; (no more than $23,000 of this amount may be in subsidized loans)
  • $57,500 as an independent undergraduate student; (no more than $23,000 of this amount may be in subsidized loans)

Interest Rate

The current interest rate for the Federal Direct Stafford Loan can be found on the Calculators section of the Federal Student Aid web site.

There is a fee of 1.0% ) that will be deducted proportionately from each disbursement of your loan.

How Do I Apply?

To apply for a Federal Direct Student Loan, all applicants must first file a Free Application for Federal Student Aid (FAFSA). All students will be packaged with the maximun Subsidized and Unsubsidized loans that they are eligible for.  MCC strongly recommends that you only accept the loan amounts that you must have to financually support the completion of your course work. For guidelines on the Financial Aid application process, check out the Applying section of this web site.

Students who are borrowing a Federal Direct Student Loan at MCC for the first time are required to complete Loan Entrance Counseling.

Once the Loan Entrance Counseling session is completed, the MCC Financial Aid Office will receive an electronic confirmation. Students should print the confirmation form at the end and keep it for their records. Students who do not complete Loan Entrance Counseling session will NOT receive their Direct Loans.

Also, students who are borrowing a Federal Direct Student Loan for the first time are required to sign a Master Promissory Note (MPN). By signing the MPN, the student agrees to the terms and conditions of the loan. Signing the MPN is done electronically using the student's Federal PIN. The student will be notified by the MCC Financial Aid Office if they need to sign a MPN.

Both the loan entrance counseling and the Master Promissory Note signing are done at StudentLoans.gov.

How Is My Loan Disbursed?

The US Department of Education will pay your student loan funds through Monroe Community College. Your loans will be disbursed in two equal installments, one approximately 30 days after the first day of classes AND once you attendance has been reported for those classes.  The second disbursement will be at the midpoint of the semester, as long as you are attending classes.. If you are a 1st year, 1st time borrower, your first disbursement will be delayed until 30 days after the start of the loan period. Your loan money must first be applied to your school account to pay for tuition and fees, and other school charges. If loan money remains, you can receive the funds directly in your bank account by signing up for E-Refunds through the Student Accounts Office.  If you do not sign up for E-Refunds you will receive a paper check in the mail but please note the paper process takes much longer than the E-Refunds..

How Do I Repay My Student Loan?

After you graduate, leave school, or drop below half-time enrollment, you have six months before you begin repayment of your federal student loans.  This is called a grace period.  After you leave school or drop below half-time enrollment, you will receive information about repayment and will be notified of the date repayment begins.  However, you are responsible for beginning repayment on time, even if you do not receive this information.

For more information on Repayment of student loans, visit the Repaying section of the Federal Student Aid web site. In addition, the repayment plans are further explained during during your online entrance and exit counseling sessions.

For more information of the Federal Direct Student Loan program, you can go to the Federal Student Aid Direct Loan website.