Federal Direct Loans
The William D. Ford Federal Direct Student Loan Program, sponsored by the U.S. Department of Education, offers low interest rates, easy repayment terms, and is geared toward those entering or re-entering the workforce. The loan is not credit based and only requires that students meet specific eligibility requirements. All students must file a Free Application for Federal Student Aid (FAFSA) in order for the Office of Financial Aid to determine eligibility for a Federal Direct Loan. Depending on enrollment status, FAFSA results, cost of attendance, and other factors, an amount and type of Federal Direct Loan (Subsidized or Unsubsidized) will be offered to eligible students. The federal government is the lender for student or parent loans received through the Federal Direct Loan Program.
The Department of Education developed a process that all Federal Direct Loan borrowers (subsidized, unsubsidized, graduate PLUS, and parent PLUS loans) are encouraged to complete each year called the Annual Student Loan Acknowledgement (ASLA). The ASLA (formerly known as the Informed Borrowing Confirmation process) is intended to better assist borrowers in understanding the financial responsibility of funding their education and provide current information on a borrower's cumulative loan balance. As part of the Master Promissory Note (MPN) confirmation process, the ASLA allows student and parent borrowers to view how much they currently owe in federal student loans, and to acknowledge that they have seen these amounts before borrowing new loans each award year. The ASLA can be completed online at studentaid.gov/asla and becomes available in April each year.
Public Law 112-74 amended the Higher Education Act (HEA) to temporarily eliminate the interest subsidy provided on Direct Subsidized Loans during the six-month grace period provided to students when they are no longer enrolled on at least a half-time basis. This change was effective for new Direct Loans for which the first disbursement was made on or after July 1, 2012, and before July 1, 2014. The federal government will continue to pay interest that accrues on the Direct Subsidized Loan during in-school and other eligible deferment periods.* The federal government does not pay interest on Direct Unsubsidized Loans at all. Students have the option to pay interest on the unsubsidized portion of a Direct Loan while in school, during other eligible periods of deferment, or let interest accrue until repayment begins. Deferred interest payments on Direct Unsubsidized Loans will be added to the principal loan amount and capitalized by the lender (meaning accrued interest will be added to the principal amount borrowed at repayment).
Applicants must be enrolled at least half-time to be eligible for a Federal Direct Loan and to maintain eligibility for in-school deferments (minimum six credits per semester, with all credits applicable to the degree program of study).
The following charts describe annual and aggregate maximum eligibility for the Federal Direct Loan Program, based on dependency status and grade level.
Annual and Aggregate Federal Direct Loan Limits
Dependent Undergraduate Students
|Total Direct Loans||$5,500||$6,500||$7,500||$7,500||$31,000|
Independent Undergraduate/Dependent Undergraduate Students with PLUS Denial
Undergraduate students whose parents have been denied the Direct PLUS loan (based on credit), may apply for an additional $4,000 (first-year and second-year students) or $5,000 (third-year students and beyond) Direct Unsubsidized Loan (described under the subheading for Federal Direct Loans).
|Total Direct Loans||$9,500||$10,500||$12,500||$12,500||$57,500|
Ineligible for subsidized loans first disbursed on or after July 1, 2012.
|Graduate Limit||Aggregate Limit|
Through the possible combination of Subsidized and Unsubsidized Direct Loans, every student meeting all academic and eligibility requirements should be able to participate in the Federal Direct Loan Program. Information about the William D. Ford Direct Loan Program can be found at the Office of Financial Aid and studentaid.gov.
Regulations also require the Office of Financial Aid to offer financial aid based on the results of the needs analysis calculated by the federal government from the Free Application for Federal Student Aid (FAFSA) and to perform an eligibility file review for every student applying for the Federal Direct Loan. The Office of Financial Aid must review each application and will recommend an amount according to the number of credits attempted, number of credits completed, grade level, cost of attendance, outside resources available to each student, and the Expected Family Contribution (EFC) as derived from the FAFSA. Loan repayment will not be required while the student maintains at least half-time attendance (minimum six credits per semester), with all credits applicable to the degree program of study. Repayment of principal and interest begins six months after the student leaves school or drops below half-time attendance.
Effective for Federal Direct Loans first disbursed on or after July 1, 2006, the interest rate is fixed. Prior to this date, Federal Direct Loan interest rates were variable. Federal Direct Loan interest rates change from year to year (in July), and may also change specifically for one type or the other; Subsidized, Unsubsidized, or Graduate or Parent PLUS. The interest rate for undergraduate subsidized and unsubsidized loans disbursed between July 1, 2022 – June 30, 2023 is 4.99 percent. Students who received loans prior to the aforementioned dates and who still have balances outstanding on those loans will continue with the interest rate rules in effect at the time of their original loans. Borrowers will also be charged an origination fee. The origination fee represents the lender's (the federal government) fee for making the loan. For loans disbursed after October 1, 2022 and before October 1, 2023, the origination fee is 1.057 percent.
SULA (subsidized usage loan limit restriction) was removed effective August 13, 2021, "Specifically, the Secretary removes the subsidized usage loan limit restriction (SULA) for any borrower who receives a Federal Direct Subsidized Loan first disbursed on or after July 1, 2021, regardless of the award year associated with the loan. In addition, all subsidy benefits will be reinstated retroactively to the date on which the loss of subsidy was applied for all Federal Direct Subsidized Loans with an outstanding balance on July 1, 2021, and for all award years since the 2013–2014 award year. The Secretary also removes regulations related to the subsidized usage loan limit restriction and makes other technical changes."
Information about the William D. Ford Federal Direct Loan Program can be found at studentaid.gov or by visiting Financial Aid – Federal Loan Limits.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) became law and provided emergency COVID-19 relief measures on federal student loans owned by the Department of Education. The relief measures include suspension of loan payments, stopped collections on defaulted loans, and a 0 percent interest rate. On November 22, 2022, the student loan payment pause and 0 percent interest rate were extended until 60 days after the federal debt relief program is implemented or litigation is resolved. Payments will resume 60 days after June 30, 2023 if the debt relief program is not implemented and the litigation has not been resolved. The Department of Education will notify borrowers before repayments restart. More information is available at studentaid.gov.
Borrower-Based Academic Years and Federal Loans: "Seasonal Loans"
A standard academic year for New York Institute of Technology is two semesters, fall and spring. However, a Borrower-Based Academic Year (BBAY), or Seasonal Loan, is specific to the period of study the student is attending and looking to borrow federal loans. For example, a summer/fall academic year (two semesters) or a spring/summer academic year (two semesters) represents a BBAY or Seasonal Loan period. Seasonal Loans are available upon request for those students who wish to receive federal student loans for borrower-based academic years.
Students who are enrolled at least half-time (six credits) during the summer session may request to be reviewed for Federal Direct Loan eligibility for the summer term. The Office of Financial Aid will determine the student's eligibility for federal and/or private loans for this period of enrollment based on FAFSA information and financial aid history. A student will be offered federal loans for a borrower-based year consisting of two terms, either summer/fall or spring/summer, unless the student is graduating or changing enrollment status.
In order to offer aid to a student, the Office of Financial Aid must have a valid FAFSA on file for the appropriate academic year. Students borrowing loans for a BBAY, i.e., summer/fall or spring/summer, should also submit a Seasonal Loan Request form, which the Office of Financial Aid will use to determine the cost of attendance and budget for the terms being awarded. Students must complete the form in full with information for both terms, otherwise it will not be processed.
Students should understand that Federal Direct Loans taken during summer sessions still count towards aggregate loan limits and may result in exhausting eligibility more quickly than with a traditional two-semester year (fall/spring). Students should also be aware that most institutional scholarships and grants are only offered during the fall and spring semesters.
We strongly recommend that students speak with a Financial Aid Advisor when completing and submitting the Seasonal Loan Request form to the Office of Financial Aid, as they may have pertinent questions that can be answered in advance to avoid processing delays.