Direct Student Loans

The Federal Direct Student Loan program is the U.S. Department of Education’s major form of self-help aid. Direct Loans are either subsidized or unsubsidized and interest on both loans are fixed. A subsidized loan is awarded on the basis of financial need. The federal government pays the interest on the loan (“subsidizes” the loan) until the student begins repaying the loan. An unsubsidized loan is not awarded on the basis of need. Students are charged interest from the time the loan is disbursed until it is paid in full. If the interest is allowed to accumulate on an unsubsidized loan, it is “capitalized,” or added to the principal amount of the loan, thus increasing the repayment amount. If a student chooses to pay the interest as it accrues, he or she will have less to repay later. A student must be enrolled in an eligible program of study, and enrolled at least half-time to be eligible for a Stafford Loan. Loan eligibility is established by the Department of Education. Certain conditions may be applicable and may decrease the total annual amounts or type of loans required. In general, a direct student loan may be deferred until the student graduates, leaves school, or drops below half-time enrollment. At that time, the student will have a six month grace period before beginning repayment. Under certain circumstances students may receive deferments or forbearances on student loans. However, these are not automatic.

It is the student’s responsibility to contact the servicer that holds the loan and to provide documentation for the request. Students must also continue making scheduled payments until notification is received that deferment or forbearance has been granted. Students are required to complete entrance counseling prior to receiving loan funds. Exit counseling prior to leaving the University of Pikeville or graduating. You can access NSLDS at http://www.nslds.gov to complete your Exit Counseling and receive detailed information on your loan servicer, payments and loan balances.

Direct PLUS Loan

Federal Direct PLUS Loans enable parents with good credit histories to borrow funds for the educational expenses of each child who is a dependent undergraduate student enrolled at least half-time. The interest rate is variable and accumulates on the loan from the date of the first disbursement until the loan is paid in full unless a request is made for a deferment and a six month grace period during the parent plus loan credit check. The yearly limit on the PLUS Loan is equal to the student’s cost of attendance minus any other financial aid that is received. Students are allowed an additional $4,000-$5,000 per year toward their unsubsidized loan if the parents are denied credit when applying for a Direct PLUS loan. This amount is based upon student’s current grade level.

Direct Loan Limits (Subsidized an Unsubsidized)
  1. Except those whose parents are unable to borrow a PLUS loan.
  2. These Limits also apply to dependant students whose parents are unable to borrow a PLUS loan.
  3. The numbers in parentheses represent the maximum amount that may be subsidized.
  4. Graduate and professional students are not eligible to recieve Direct Subsidized Loans for loan periods beginning on or after July 1, 2012.
  5. The aggregate amounts for graduate students include loans for undergraduate study.

The chart below shows average indeptedness for students at a private, nonprofit institution.

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