Federal Direct Student Loans
The William D. Ford Federal Direct Loan Program enables students to borrow loans from, and repay loans to, the U.S. Department of Education instead of to a bank or lending institution.
Note that no separate financial aid application is required for the Federal Direct Student Loan Program. Your eligibility will be determined on the basis of your FAFSA and other documents that may be requested of you by the College of Medicine’s Financial Aid Office. An unsubsidized loan can be used to offset all or part of a borrower’s expected family contribution. Important terms and conditions for William D. Ford Federal Direct Loan Program are as follows:
Annual Amounts Available
For unsubsidized loans, the maximum amount that will be recommended for a 9-month academic year is $40,500, less the amount of the student’s subsidized loan. Junior medical students, who have a 12-month academic year, may borrow up to $47,167.
Aggregate Amounts Available
The overall aggregate limit for subsidized and unsubsidized loans is $224,000 for a student enrolled in certain health professions programs of study, including medicine. This aggregate limit includes loans received for undergraduate, graduate, and professional school enrollment.
To receive a Direct Student Loan, as well as other federal student aid, you must:
- Demonstrate financial need. A student’s eligibility for a Federal Direct Unsubsidized Loan is determined by subtracting total needs-based aid (scholarships and grants) from the cost of study. In essence, eligibility for the Direct Unsubsidized Loan is the cost of attendance less total award resources received. The College of Medicine’s Financial Aid Office will assist students in determining their eligibility for Federal Direct Student Loans.
- Be a U.S. citizen or eligible non-citizen.
- Have a valid Social Security Number.
- Be making satisfactory academic progress as defined by the school.
- Certify on the FAFSA that you are not in default on a federal student loan and that you do not owe money back on a federal student grant.
- Register with the Selective Service, if required.
- Certify on the FAFSA that you will use federal student aid only for educational purposes.
- Answer the question on the FAFSA that asks if you have ever been convicted of possessing or selling drugs.
- Be enrolled or accepted for enrollment as a least a half-time student.
Normally, there will be two disbursements of loan proceeds during the academic year here at Howard University. There will be one near the beginning of the first semester and a second near the beginning of the second semester. Each of these disbursements will be equal to one-half of the total amount of the loan less fees.
For Federal Direct Student Loans, there is a loan origination fee that can be found here. This fee is deducted from each loan disbursement. Loan origination fees are retained by the federal government to help reduce the cost of these programs to the government.
The interest rate on Federal Direct Student Loans disbursed on or after July 1, 2006 will be a fixed rate that can be found here. Borrowers are not charged interest on subsidized loans during periods of at least half-time school enrollment, during the automatic grace period, and during authorized deferment periods. For unsubsidized loans, however, interest will be charged beginning the day the loan is disbursed until the day the loan is repaid. Students have the option of paying the interest when it is charged while in school, during the grace period, and/or during deferment, or may choose the option of allowing the interest to accumulate until the beginning of the repayment period when it will be capitalized or added to the loan principal.
Master Promissory Note
Each student approved to receive a Federal Direct Student Loan must sign a Master Promissory Note (MPN). The MPN enables you to sign a Direct Loan promissory note only once during your academic career at the Howard University College of Medicine. This one note will allow you to continue to borrow each year up to the aggregate amount along as enrollment is continuous. Signing the MPN is your promise to repay your Direct Student Loans in accord with the specified terms and conditions. The MPN also includes important language about your rights and responsibilities as a student loan borrower. Students may go to www.studentloans.gov to access the Master Promissory Note.
Entrance and Exit Counseling
The entrance counseling session or interview occurs before the school makes your first loan disbursement. The exit counseling session or interview occurs at graduation or withdrawal from school. Both sessions are required and will provide important information about your Federal Direct Student Loans, including interest rates, loan fees, yearly and total maximum amounts that may be borrowed, maximum repayment periods, repayment options, grace and deferment periods, forbearance provisions, and the definition and consequences of default. To complete the requirement, access the following website: www.studentloans.gov.
Repayment begins six months after graduation or from the date enrollment status changes to less than one-half time. There are several repayment options for students who need flexibility in repaying their Direct Student Loans. These options are the standard repayment plan, the graduated repayment plan, the income sensitive repayment plan, and the extended repayment plan. There is no penalty for prepayment of the loan.
For all Federal loans, student borrowers have an automatic grace period of 6 months before repayment begins. The grace period begins when the student graduates or is no longer enrolled as at least a half-time student. No application for the grace period is required.
A deferment differs from a grace period in that it must be applied for. For Federal Direct Student Loan borrowers, deferments are available for: (1) at least half-time study at an eligible school and (2) up to three years for any reason that has caused an economic hardship. During deferment periods for Federal loans, payments on the principal may be deferred but interest is charged. Students may pay this interest or may let it accrue and be capitalized at the end of the deferment period.