The Federal Direct loans are loans borrowed by the student. Funding for the loan comes from the U.S. Department of Education. Direct loans are divided into two types: subsidized and unsubsidized.
Qualification for the Direct Subsidized Loan is based on financial need as determined by the FAFSA. The federal government pays the interest on this loan during periods of half-time attendance or more, and for periods of authorized deferment. Beginning July 1, 2012, subsidized loans will be available to undergraduates only and the loans will not be subsidized during the six month grace period.
Direct Unsubsidized Loans are not based on need, but the amount for which you are eligible may vary depending on the results of the FAFSA and the amount of your other aid. Interest starts accruing from the first disbursement and continues until the loan is paid in full. Interest payments are not required while the student is in school at least half-time, but can be paid by choice without penalty. Interest is capitalized (added to the principal balance) and is included in your monthly payment once one or more of the following occur: enrollment ceases, the grace period expires. and/or a deferment period ends.
To be eligible for Direct Loans, you must meet the following requirements:
The U.S. Department of Education charges a 1% origination fee on all Direct Loans.
For 2012-2013, the interest rates on Direct Loans are as follows:Undergraduate
These rates are fixed until the loan is paid in full or is consolidated.
The annual limits for dependent students are:
The annual limits for independent students are:
The annual limits for graduate students are:$20,500 unsubsidized
The aggregate (lifetime) limits are:
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