Direct Loan Program (Federal aid for students)
Direct Loans are low-interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the U.S. Department of Education rather than a bank or other financial institution.
With direct loans, you
- Borrow directly from the federal government and have a single contact - the Direct Loans Servicing Center - for everything related to the repayment of your loans, even if you receive Direct Loans at different schools.
- Have online access to your Direct Loan account information 24 hours a day, 7 days a week at Direct Loans on the web.
- Can choose from several repayment plans that are designed to meet the needs of almost any borrower, and you can switch repayment plans if your needs change.
The maximum amount you can borrow each year in Direct Subsidized and Unsubsidized Loans depends on your grade level and on whether you are a dependent student or an independent student. The following table shows the maximum amount of money you may borrow each academic year in Direct Subsidized and Unsubsidized Loans:
Annual Limits Dependent Student (1) Independent Student(2)
$5,500 (maximum $3,500 subsidized) $9,500 ($3,500) (3)
$6,500 ($4,500) $10,500 ($4,500)
3RD- AND 4TH-YEAR UNDERGRADUATE
$7,500 ($5,500) $12,500 ($5,500)
NA (All graduate and professional students are considered independent.) $20,500
(1) Except those whose parents are unable to borrow a PLUS loan.
(2) These limits also apply to dependent students whose parents are unable to borrow a PLUS loan.
(3) The numbers in parentheses represent the maximum amount that may be subsidized.
The actual loan amount you are eligible to receive for an academic year is determined by your school and may be less than the maximum annual amounts shown in the chart above.
Maximum Lifetime Limits (Aggregates)
BELOW ARE THE AGGREGATE (TOTAL) LIMITS FOR DIRECT SUBSIDIZED AND UNSUBSIDIZED LOANS:
- $31,000 for dependent undergraduate students excluding those whose parents are unable to borrow a PLUS Loan (no more than $23,000 may be subsidized)
- $57,500 for independent undergraduate students and dependent undergraduates whose parents are unable to borrow a PLUS loan (no more than $23,000 may be subsidized)
- $138,500 for graduate or professional students (no more than $65,500 may be subsidized; includes loans for undergraduate study)
These aggregate limits include both Direct Subsidized and Unsubsidized Loans and any subsidized and unsubsidized Federal Stafford Loans received through the Federal Family Education Loan (FFEL) Program.
NSLDS, as mentioned above, is a government web site where students can track and monitor all of their government student loans.
With a Direct PLUS Loan, a graduate/professional student or the parent of a dependent student can borrow up to the cost of the student's attendance minus other financial aid the student receives.
Smart borrowing means limiting your borrowing so that you do not reach your aggregates prior to graduating with your intended degree. It also means graduating with minimal debt. Talk with your advisor or financial aid counselor to establish a plan for minimizing the debt you take on while attending Davenport.
Comparison of Federal Loans
Various loan options exist. The Federal Direct Student Loans, PLUS and Grad PLUS are all federal loan programs. In addition, there are private (sometimes called “alternative”) loan options available to you. The federal loans often have the best interest rates, deferment options, and repayment plans. You should maximize your eligibility especially for the Direct Loan program prior to considering other loans.
During in-school periods (enrolled at least half-time) and in grace periods*, no interest accrues on Federal Subsidized Direct Loans. Repayment of principle on Unsubsidized Direct Loans also begins six months after the student graduates or ceases to be enrolled at least half time, but there is no interest subsidy (meaning the student is responsible for paying the interest that accrues during in-school and grace periods, as well as in repayment). Students can begin repayment while still in school. Beginning repayment early may reduce some of the overall interest charged on a loan. Students should update all their demographic information as it changes to all of their lenders in order to receive important information regarding their loans.
*Effective July 1, 2012 any new subsidized loan disbursed on or after July 1, 2012 and before July 1, 2014 will have interest accrued during grace period.
The Direct Parent Loan for Undergraduate Students (PLUS) is available to credit-worthy parents of dependent, undergraduate students. PLUS loans are not subsidized and parents are responsible for all interest that accrues on the loan from the day it is disbursed until the loan is paid-in-full. Current interest rates are available in the information above. Proceeds are normally disbursed electronically to the school in multiple disbursements (usually one per semester). Parent borrowers begin repayment 30 days after the loan is fully disbursed, and standard repayment lasts ten years.
More information is available at the Federal Government web site. You can apply for a Direct Parent Loan at studentaid.gov.
Interest rates can change each year, but the rate will remain fixed for the lifetime of the loan. Interest rates are summarized below.
|Loan Type||Interest Rate 2022/23||Interest Rate Cap|
|Undergraduate Direct Loan||4.99%||8.25%|
|Graduate Direct Loan||6.54%||9.5%|
|Direct Plus Loan||7.54%||10.5%|
Many alternative educational loans are available. These are consumer loans, not federal aid, and may have income requirements and credit checks. Davenport does not and will not recommend a lender for private educational loans. We encourage student and parent borrowers to select a lender based upon their educational and financial needs. Student and parent borrowers may select any lender they wish which may or may not be included in the online list.
- Davenport University encourages you to maximize your Federal Direct Loan eligibility prior to pursuing a private loan.
- Private loans should be viewed as supplemental to other financial aid.
- Private (i.e., Alternative) loans generally require a credit check and are not guaranteed by the Federal government.
- Thoroughly read through repayment guidelines, interest rate information, and other details before applying for a private loan.
- Loan Fees -- Most lenders do not charge loan origination fees. Be sure to check all fees and interest rates before applying.
Student Loans are a good way to finance your education; however, just like car loans, mortgages and even credit cards, student loans are loans and must be repaid by the student or the parent, depending upon who takes the loan out.
Student loans have limits. Be sure to read the information below to understand the maximum amounts that are available both per academic year and the lifetime limits (otherwise known as loan aggregates).
It's important that you Know Your Debt.
Key things to remember about using student loans:
- Borrow only what is necessary to finance your education.
- Look for alternatives to borrowing, such as scholarships, grants, and work study.
- Use the budgeting tools we have available.
- Contact your financial aid counselor to discuss smart borrowing and establishing a plan to finance your academic program.
- Contact Career Services to look for employment opportunities.
- Students have the right to cancel or reduce their student loan prior to disbursement. Contact your financial aid counselor for more information.
- Do your homework. Many private banks and lenders, as well as the federal government, are in the student loan business.
- Visit Federal Student Aid to learn more about Federal Government Direct Loans.
- Try not to take out a larger loan then necessary to fund your college experience. Be sure to apply for things such as work-study positions, grants, and scholarships to help pay for your college expenses. This will help lower the amount of money you may need to borrow.
- Keep track of what kind of loan(s) you have, whom you’ve borrowed the money from and how much you borrow. Loans have different minimum monthly payments, interest rates and repayment plans. Don’t just sign the promissory note and forget about it. Keep it in a safe place so that you can refer back to it.
- Shop and compare. Loans come in several varieties: subsidized, unsubsidized, and alternative. You should maximize your federal loan options prior to considering bank-based loans. Bank-based loans have different interest rates and payback options. Make sure you look at all the loan options and choose the one that is most appropriate for your financial needs.
- Remember loans have to be paid back. They are not free whether your loan is subsidized or unsubsidized; you will owe interest on the money that you borrow. If your loan is larger than the amount needed to pay for your tuition, you may receive a check for the excess amount. If you decide to spend this check, keep in mind that you must pay it back along with interest fees.
- Keep in mind loans must be repaid even if you do not finish school. When the time comes to pay back your student loans, make sure you set up a repayment plan that makes sense for your financial situation.
- You must start repaying your student loan six months (your grace period) after your official graduation date or the date that you decide to leave school. If for some reason you have trouble paying back your student loans, you can seek a hardship deferment of the loan until you’re able to pay back the money you owe. Contact your servicer to get deferment and loan consolidation options.
- Understand what loan consolidation is and realize that it is not always beneficial for everyone.
Q&A about Student Loans
WHO OWNS MY LOAN?
If you are not sure who owns your loan, you can check on the National Student Loan Data System (NSLDS) at www.studentaid.gov. You will have to use your federal FSA ID (the one you received to sign your FAFSA) and your social security number. You will then be able to find out who the holder of your loan is, who the servicer is and how much you owe etc. You can also call your school and ask them for assistance.
WHERE DO I SEND MY PAYMENT?
Student loan payments are to be sent to your loan servicer. Sometimes student loans are sold which may change where you have to send your payment. If you are unsure of where to send your payment, review the written materials from your lender, visit their website or call them.
CAN I CHANGE MY PAYMENT AMOUNT/PAYMENT PLAN?
Usually, borrowers can change their repayment plan at least once a year and sometimes monthly. There are certain minimum monthly requirements that must be met, depending on the payment plan. Contact your lender or servicer for more information.
MY LOAN WAS SOLD-WHAT DOES THIS MEAN?
Just like a car, bank or mortgage loan, student loans can be sold to another bank, lender, to the U.S. Department of Education or to a secondary market. Regardless of who holds your student loan, you are still legally obligated to repay the full amount of the loan and the interest fees.
I MISSED MY PAYMENT, WHAT DO I DO NOW?
Contact your lender immediately to discuss your options. Consider changing your repayment plan if your current plan is not working for you. Keep track of all communications.
I CAN’T MAKE MY PAYMENT, WHAT SHOULD I DO?
Don’t ignore the debt…it won’t go away. There are many options to help, including changing your payment due date, repayment plan, or requesting a deferment or forbearance. Contact your lender or school for assistance.
DON’T SEE YOUR QUESTION HERE?
Submit a question to FinancialAid@davenport.edu and we will do our best to provide an answer within two business days. Please indicate “LOAN QUESTION” in the subject line of the email.