Federal Direct Lending Program
What You Need to Know
The Federal government guarantees students' access to low-interest student loans to help meet the costs of higher education. In order to qualify for Federal Direct Stafford Loans, students must file a FAFSA annually. The Federal Direct Parent Plus Loan is also available for parents of dependent students. It is recommended that students determine their eligibility for all Federal Title IV student aid before utilizing private education loan options, as the terms and conditions of the federal programs may be more favorable. All federal student and parent loans are submitted to the National Student Loan Data System (www.NSLDS.ed.gov), and will be accessible by the student, as well as guaranty agencies, lenders, and schools who are authorized users of the data system.
Interst rates for Stafford and Plus loans for the 2014-15 academic year are:
- 4.66% for Stafford Subsidized Loan (need-based, does not accrue interest while the student is enrolled in college)
- 4.66% for Stafford Unsubsidized Loan (not need-based, accrues interest even while the student is enrolled in college)
- 7.21% for Parent Plus Loan
Annual and Aggregate Limits for Direct Subsidized and Unsubsidized Stafford Student Loans:
Direct Lending Instructions
Stafford Student Loans are guaranteed loans made by the federal government to students who meet the eligibility criteria as determined by the FAFSA. Eligible students are permitted to borrow set amounts of Stafford loan each year that they are in college. A portion of your Stafford loan may be Subsidized, meaning that no interest will accrue on this portion of the loan while you are in college. If you have been awarded Stafford Student Loans via your Art Academy Award letter, and wish to receive them, there are a few steps you must take.
Log onto www.studentloans.gov and go to the box titled ďManaging My Direct Loan.Ē Here you can electronically sign a Stafford Subsidized/Unsubsidized MPN. You must also complete Entrance Counseling, which explains your responsibilities as a first-time borrower. This is a REQUIREMENT for all students borrowing federal loans, and we will not disburse your loans without receiving notification that you have completed counseling.
Once your MPN and Entrance Counseling are complete the Art Academy will automatically be notified, and you will be ready to receive your Stafford Student Loans in the fall. There is no credit approval required for Stafford Student Loans.
The Parent Plus Loan is a federal loan option for parents of dependent students, used primarily to close any cost of attendance gap once all other student aid had been awarded. This is a credit contingent loan, so you must apply and be approved before receiving any loan funds.
The application window for the Parent Plus Loan 2015-16 will open on April 1, 2015. Parents who would like to apply for the Parent Plus Loan must sign a Parent Plus Master Promissory Note AND fill out a Parent Plus application at studentloans.gov. BOTH steps are required for the loan to link and disburse. Parents must sign in to the website using their own information, not the studentís, in order for the application to be correct. You will see your credit decision immediately. If your loan application is denied, you will be given the choice to let the decision stand and take no action, obtain an endorser (co-signer), or appeal the denial. If you are denied the Plus Loan for credit reasons, and choose to take no further action, the student may be eligible to receive additional Unsubsidized Stafford Loan funds.
Use your award letter as a guide to help you determine how much Plus loan you will need to cover your studentís expenses. The amount of Plus loan listed on your award letter indicates the maximum amount you are eligible to apply for, but you may wish to borrow less depending upon your needs. Be aware that the Parent Plus Loan takes a 4% fee from the loan prior to disbursement, so the amount you receive will be less than the amount on your application. If you borrow more than is needed to cover direct (billable) costs, the remainder of the loan will be refunded to you by the Art Academy Business Office to use toward other indirect costs.
Should you need assistance signing your MPN, the Applicant Services support line is 800-557-7394. You can reach the Art Academy Financial Aid Office at 513-562-8773.
In order to better plan and understand your loans, please refer to the loan calculator tool in the link below. This tool will help you understand the impact education loans will have on student and parent borrowers.