Loans: Federal Direct Stafford Loan
Beginning in Fall 2008, IU will become a participant in the William D. Ford Federal Direct Loan program.
The Federal Direct Stafford Loan is awarded to all eligible students at Indiana University Bloomington, up to the annual maximum loan limit.
There are two types of the Federal Direct Stafford Loan:
- Subsidized: a need-based loan, on which the government pays the interest while the student is enrolled at least half time.
- Unsubsidized: a non-need-based loan, on which interest begins accruing immediately upon the loan's first disbursement.
2008-2009 ACADEMIC YEAR
Borrower Benefits
- Federal Direct Loans come through the U.S. Department of Education using funds obtained from the U.S. Treasury. This ensures that the borrower will have a reliable and predictable source of funding.
- Interest rate reduction of .25 percent for borrowers who make their payments using the Electronic Debit Account (EDA) program.
Details
- Students apply for the Federal Direct Stafford Loan by annually filing the Free Application for Federal Student Aid (FAFSA).
- Interest rates:
- For loans disbursed on or after July 1, 2006: fixed interest rate of 6.8%.
- For subsidized loans offered to undergraduate students disbursed on or after July 1, 2008: fixed interest rate of 6.0%.
- Origination fee of .5% assessed by the Direct Loan servicer.
- To be eligible, the student must:
- Meet all regular eligibility requirements (including satisfactory academic progress), and
- be enrolled at least half time towards an undergraduate or graduate degree.
- Master promissory note (MPN):
- A signed MPN must be on file for Federal Direct Stafford Loan funds to be disbursed.
- Students will receive an e-mail from our office with instructions on how to complete the MPN online.
- After a student signs the Federal Direct Stafford MPN for IUB, the MPN remains valid for ten years; thus, in subsequent years, the full Federal Direct Stafford Loan will credit automatically, unless the student contacts us with a request to reduce or cancel the loan.
- Federal Direct Stafford Loans cannot be processed after the final day of the term for which the student was enrolled. Students are strongly encouraged to complete the FAFSA and clear any holds that they may have on their financial aid accounts well in advance of the end of the term to ensure adequate processing time.
- Repayment does not begin until six months after the student graduates or drops below half time enrollment.
- Federal Direct Stafford Loan eligibility is limited by federal aggregates.
| Dependent Student | Independent Student | |||
|---|---|---|---|---|
| Base Amount* | Additional Unsubsidized | Base Amount* | Additional Unsubsidized | |
| 1st-year undergraduate | $3,500 |
$2,000 |
$3,500
| $6,000 |
| 2nd-year undergraduate | $4,500 |
$2,000 |
$4,500
| $6,000 |
| 3rd- and 4th-year undergraduate | $5,500 |
$2,000 |
$5,500 |
$7,000 |
| Graduate/professional | N/A |
N/A |
$8,500 |
$12,000 |
| *Up to the base amount may be subsidized, if eligible. | ||||
| Amount | |
|---|---|
| Dependent Undergraduate | $31,000 (no more than $23,000 subsidized) |
| Independent Undergraduate | $57,500 (no more than $23,000 subsidized) |
| Graduate/Professional | $138,500 (no more than $65,500 subsidized) |
| Doctoral Optometry | $224,000 (no more than $65,500 subsidized) |