Direct Stafford Loans

New! Graduate students no longer qualify to receive Subsidized Stafford Loans for loan periods that begin on or after July 1, 2012. The Budget Control Act of 2011 eliminated the subsidy for graduate students effective July 1, 2012. As a result, Summer 2012 is the last term graduate students may be eligible to receive Subsidized Loans.

New! Borrowers will begin to accrue interest on new Subsidized Loans during the six-month grace period. The Consolidated Appropriations Act of 2012 temporarily eliminates the interest subsidy on Subsidized Stafford Loans during the grace period. This applies to Subsidized Stafford Loans first disbursed July 1, 2012, through June 30, 2014.

New! All Federal Direct Loans first disbursed on or after July 1, 2012, will have an increased Origination Fee. The Budget Control Act of 2011 eliminated the up-front rebate for all federal direct loans. Until June 30, 2012, there was an up-front interest rebate which borrowers retained if they made their first 12 monthly payments on time. Starting July 1, 2012, Subsidized and Unsubsidized loan disbursements will have a 1% origination fee and PLUS loan disbursements will have a 4% origination fee.

Federal Direct Stafford Loans

The Federal Direct Stafford loan program allows students to borrow low-cost educational loans from the federal government. To be eligible for a Direct Stafford loan, students must be enrolled in a degree-seeking program at least half-time. Repayment of these loans begins 6 months after students leave school or fall below half-time enrollment. There are 2 types of Federal Direct Stafford loans: subsidized and unsubsidized. For detailed information about Direct Stafford loans, visit the U.S. Department of Education.

Subsidized Loan

The Subsidized Stafford Loan is need-based. Students must demonstrate need for this loan by completing the FAFSA (Free Application for Federal Student Aid). Students who qualify for Direct Subsidized loans are not charged interest while attending school at least half-time, during the six-month grace period (for loans first disbursed prior to July 1, 2012), and during deferments.

Unsubsidized Loan

Unsubsidized loan amounts are intended to help students that do not qualify for need-based aid or for whom need-based aid is not sufficient to meet educational expenses. For this loan, interest starts to accrue from the date of the disbursement.

*Many students receive both a Subsidized and an Unsubsidized Stafford Loan for the same period. The total of your combined Stafford Loans may not exceed the annual loan limit. For more information go to Student Aid on the Web.

Interest Rates

For Subsidized loans first disbursed to undergraduate students on or after July 1, 2011, the interest rate is fixed at 3.4%. For all other Stafford Loans, the interest rate is fixed at 6.8%.

Origination Fee and Up-Front Rebate

Direct Subsidized and Unsubsidized Loans disbursed prior to June 30, 2012, are charged an origination fee of 1.0% with a 0.5% up-front rebate. The result is that your net loan amount will be 0.5% less than your gross loan amount. For example, if you borrow $1,000 in Direct Stafford loans, you will receive a net disbursement of $995. For loans disbursed after June 30, 2012, there is a 1% origination fee with no up-front rebate. The result is that your net loan amount will be 1% less than your gross loan amount. For example, if you borrow $1,000 in Direct Stafford Loans, you will receive a net disbursement of $990.

The up-front rebate on Direct loans is an incentive to promote on-time loan payments.  To retain the up-front rebate, borrowers who are in loan repayment must make the initial 12 consecutive monthly payments on time.  If the borrower does not make the first 12 monthly payments on time, the borrower will lose the rebate and the rebate amount will be added to the principal balance, which will increase the amount that must be repaid on the loan.

Entrance Counseling

All students must complete Entrance Counseling. This is a preliminary step in the loan acceptance process that will help you understand your responsibilities regarding your loan before formally accepting terms and conditions for repayment in the Master Promissory Note (MPN) stated below. To complete Entrance Counseling please visit this website and complete this counseling online here.

*Please be advised both Entrance Counseling and the Direct Loan Master Promissory Note (MPN) must be complete, otherwise your Direct loan will not disburse.

Master Promissory Note (MPN)

Please note, as a result of this transition all students will need to sign a new Direct Loan Master Promissory Note (MPN). Those students who have previously completed an MPN with a lender will still need to complete a new MPN with the Direct Loan Program. To complete a new Direct Loan MPN, please visit this website complete the MPN online here. It is possible for you to begin this process prior to receiving your financial aid award letter.  You will still be able to accept loans when you receive your award notice.  Additional instructions and Frequently Asked Questions (FAQ) can be found under the “Loans” section of your program’s financial aid page.  As always, the NLU Student Finance Office can assist you with any questions.

*Please be advised both Entrance Counseling and the Direct Loan Master Promissory Note (MPN) must be complete, otherwise your Direct loan will not disburse.