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Federal Direct Student Loans

Number: 84.268
Agency: Department of Education
Office: Office of Student Financial Assistance Programs

Program Information 

Program Number/Title (010):
84.268 Federal Direct Student Loans
Federal Agency (030):
Office of Student Financial Assistance Programs, Department of Education
Authorization (040):
Higher Education Act of 1965, as amended, Title IV, Part D.
Objectives (050):
To provide loan capital directly from the Federal government to vocational, undergraduate, and graduate postsecondary school students and their parents.
Types of Assistance (060):
Direct Loans
Uses and Use Restrictions (070):
To help defray costs of education at a participating institutions. Repayment on Federal Stafford loans begins six months after the student ceases to carry at least one-half the normal full-time academic workload. Repayment of principal and interest on PLUS loans generally begins within 60 days of disbursement of the last installment; repayment of a Consolidation loan begins within 60 days after the proceeds of the loan have been used to discharge the liability of the borrower on the loans selected for consolidation. Deferments and forbearance of payment may be granted for certain authorized periods.
Eligibility Requirements (080)
Applicant Eligibility (081):
The applicant must be a U.S. citizen, national, or person in the United States for other than a temporary purpose. A student borrower must be enrolled or accepted for enrollment in a degree or certificate program on at least a half-time basis as an undergraduate, graduate, or professional student at a participating postsecondary institutions. An otherwise eligible student is eligible for loans during a single twelve-month period in which the student is enrolled in a non-degree/non-certificate course of study that the institution has determined is necessary in order for the student to enroll in a program leading to a degree or certificate. Under the Direct PLUS program, parents may borrow for dependent students. Also, graduate and professional students are eligible to borrow PLUS Loans. Direct Unsubsidized and PLUS loans are non-need based programs. In order to receive a Direct Subsidized loan, all borrowers must undergo a financial need analysis to determine eligibility for Federal interest; as of July 1, 2012, only undergraduate students are eligible to borrow Direct Subsidized loans. A student that is presently enrolled at a participating institution must be maintaining satisfactory academic progress in the course of study that they are pursuing. The borrower may not owe a refund on any Title IV grant or be in default on any Title IV loan received for attendance at any institution. The borrower must also file a Statement of Registration compliance (Selective Service).
Beneficiary Eligibility (082):
Vocational, undergraduate, and graduate postsecondary school students and their parents.
Credentials/Documentation (083):
The borrower will need certification of eligibility from the institution and may be required to supply documentation to verify the accuracy of data used in the Direct Subsidized loan need analysis. This program is excluded from coverage under OMB Circular No. A-87.
Application and Award Process (090)
Preapplication Coordination (091):
Preapplication coordination is not applicable. Environmental impact information is not required for this program. This program is excluded from coverage under E.O. 12372.
Application Procedures (092):
This program is excluded from coverage under OMB Circular No. A-102. This program is excluded from coverage under OMB Circular No. A-110. Applications for the Direct Subsidized and Unsubsidized loans are obtained from the institution. Direct consolidation loan applications are obtained from the Department of Education. To obtain a Direct Subsidized or Unsubsidized loan, a student shall complete and submit a Free Application for Federal Student Aid (FAFSA). All applications (with the exception of PLUS) for Direct Loans are processed by the Central Processor System (CPS) in the initial step to determine a student's Title IV eligibility. Institutions will receive official output from the CPS, and then will be able to assemble a financial aid award package. An institution participating in the Direct Loan program may award Direct Loans as part of the financial aid package. If a Direct Loan is not included in the aid package, a student may contact the institution to request loan information.
Award Procedure (093):
Institutions participate in the Direct Loan program either by originating loans or by using an alternative originator to originate loans. The institution must certify the borrower's eligibility to receive the funds. To obtain a Direct PLUS Loan, the parent completes an application and authorizes a credit check. If the parent does not have an adverse credit history the loan maybe disbursed. Institutions may disburse funds by crediting them directly to the student's account at the institution, issuing a check or cash, or by initiating an electronic fund transfer.
Deadlines (094):
Contact the headquarters or regional office, as appropriate, for application deadlines.
Range of Approval/Disapproval Time (095):
Not Applicable.
Appeals (096):
Not Applicable.
Renewals (097):
Not Applicable.
Assistance Consideration (100)
Formula and Matching Requirements (101):
This program has no statutory formula.
This program has no matching requirements.
This program does not have MOE requirements.
Length and Time Phasing of Assistance (102):
Applicants may apply for a loan for any year of attendance at a postsecondary institution. The interest rate on new Stafford Loans starting July 1, 2013 is fixed at a rate equal to the 10-year Treasury note plus 2.05 percent (capped at 8.25 percent). As of July 1, 20013, Unsubsidized Stafford loans have a fixed interest rate equal to the 10-year Treasury note plus 3.6 percent (capped at 9.5 percent), and Direct PLUS loans have a fixed interest rate equal to the 10-year Treasury note plus 4.6 percent (capped at 10.5 percent). There are four repayment plans that are available for Direct Loan borrowers: (1) A standard repayment plan with a fixed monthly payment amount over a period of up to 10 years; (2) an extended repayment plan with a fixed monthly payment amount paid over a period of 12 to 30 years, depending on the amount owed; (3) a graduated repayment plan with a monthly payment that will increase generally every 2 years. The repayment period varies from 12 to 30 years, depending on the amount owed; and (4) except for Direct PLUS Loan borrowers, an income contingent repayment (ICR) plan with a monthly payment that is adjusted annually based on the income of the borrower and paid over a extended period of time not to exceed 25 years. Any unpaid balance remaining after 25 years in the ICR plan is forgiven by the Secretary of Education. However, under current IRS rules, the amount written off is considered taxable income to the borrower in the year it is written off. In 2007, a new income-based repayment plan was created for those borrowers meeting a standard of "partial financial hardship" based on their annual repayment amount in relation to their adjusted gross income. Generally a borrower would not have to repay on a monthly basis more than 15 percent of their discretionary income, and any outstanding balance would be forgiven after 25 years of repayment. For new borrowers on or after July 1, 2014, these limits have been lowered to 10 percent of discretionary income and forgiveness after 20 years. Beginning December 21, 2012, the Pay As You Earn plan, an income-sensitive repayment plan, also became an option for eligible borrowers: those who meet the “partial financial hardship” standard, were a new borrower as of October 1, 2007, and who received a Direct Loan disbursement on or after October 1, 2011. Borrowers in this plan have to repay on a monthly basis no more than 10 percent of their discretionary income, and receive forgiveness on their remaining loan balances after 20 years of repayment. Direct Loan borrowers who work in public service are eligible for forgiveness during a 10-year period while they are repaying their loans. If these borrowers, during repayment, have an outstanding loan balance after 10 years of working in public service, the Federal Government will forgive the remaining balance on behalf of the borrower. Public service may include a variety of public disciplines such as education, health, law, military service and public safety. See the following for information on how assistance is awarded/released: Electronic transfer.
Post Assistance Requirements (110)
Reports (111):
The Department will produce a variety of management information system accounting, and financial management reports. Institutions must submit all reports required by 34 CFR 685 and 34 CFR 668. Cash reports are not applicable. Progress reports are not applicable. Expenditure reports are not applicable. Performance monitoring is not applicable.
Audits (112):
This program is excluded from coverage under OMB Circular No. A-133. Institutions are subject to examination and program review by the Department of Education. Program reviews are performed on a fiscal year basis.
Records (113):
Institutions must maintain proper administrative and fiscal procedures and all necessary records as set forth in the regulations in 34 CFR 685 and 34 CFR 668. Institutions must keep all records involved in any loan, claim, or expenditure questioned by a Federal audit until resolution of any audit questions. In addition to records required by 34 CFR 668, for each Direct Loan received under 34 CFR 685 by or on behalf of this student, an institution shall maintain a copy of the loan application and data electronically submitted to the Secretary.
Financial Information (120)
Obligations (122):
(Direct Loans) FY 12 $105,351,419,000; FY 13 est $106,433,658; and FY 14 est $112,061,759 - (Figures represent Gross Loan volume, without Consolidations). (Direct Loans) FY 12 $35,964,152,000; FY 13 est $27,049,105,000; and FY 14 est $27,938,030,000 - Figures represent DL Gross Consolidation volume.
Range and Average of Financial Assistance (123):
N/A.
Program Accomplishments (130):
Fiscal Year 2013: No Current Data Available Fiscal Year 2014: No Current Data Available Fiscal Year 2015: No Current Data Available
Regulations, Guidelines, and Literature (140):
Student Loan Reform Act of 1993, Public Law 103-66, 34 CFR 685.
Information Contacts (150)
Regional or Local Office (151) :
See Regional Agency Offices. See the list of Regional Offices listed in Appendix 5 of the FFEL Catalog.
Headquarters Office (152):
Federal Student Aid Information Center Federal Student Aid (FSA), Department of Education, 400 Maryland Avenue, S.W., Washington, District of Columbia 20202 Phone: 800-433-3243
Website Address (153):
http://www.ifap.ed.gov/.
Examples of Funded Projects (170):
Not Applicable.
Criteria for Selecting Proposals (180):
Not Applicable.