Federal direct student loan (FDSL)
"Federal direct student loan (FDSL)" submitted by SchoolGrantsfor Editorial Team and last updated on Monday 9th January 2012
The FDSL Program is similar to the Federal Family Education Loan (FFEL) Program. The funds for these loans are provided by the US government directly to students and their parents through their schools. The FDSLP includes the Federal Direct Stafford Loan (Subsidized and Unsubsidized) and the Federal Direct Parent Loan for Undergraduate Students (PLUS). Benefits of the program include a faster turnaround time and less bureaucracy than the bank loan program.
Most students are eligible for federal Stafford student loans through the William D. Ford Federal Direct Loan Program. Because Direct Loans come straight from the Department of Education, the student does not need an outside lender. Like all federal aid, Direct Loans require that the student complete the FAFSA.
The Federal Direct Student Loan (FDSL) is a low-interest loan designed to help meet the costs of postsecondary education. Students who are U.S. citizens or permanent residents and have filed a Free Application for Federal Student Aid (FAFSA) are eligible, including those who do not qualify for need-based aid. Students who do not qualify for need-based aid are ineligible for the interest subsidy from the federal government. Borrowers of unsubsidized Direct Loans can either pay the interest quarterly or choose to have the interest accrue while they are enrolled in college.
The U.S. Department of Education is the lender. Direct Loans are either subsidized or unsubsidized. A subsidized loan is awarded on the basis of financial need. Borrowers are not charged interest during full-time enrollment, grace periods, or authorized periods of deferment. The federal government "subsidizes" the interest during these periods.
Subsidized FDSL are awarded based on financial need. The school determines your financial need, in part, from the information you provide on your financial aid application. With a subsidized Direct Loan, the federal government does not charge you interest before you begin repayment or during authorized periods of deferment (postponement of repayment). Repayment of principal and interest begins six months after a student graduates or ceases being enrolled at least half time.
Unsubsidized FDSL are not awarded on the basis of need. If you are an eligible student, you may request an unsubsidized FDSL up to the maximum annual amount. The federal government charges you interest from the time the loan is paid out to you, until you pay the loan in full. However, there is an option to defer payment of interest during school. Please note that interest is capitalized at repayment, which means it is added to the principal.
The net FDSL amount will be credited in late August and again in late January.
Federal direct student loan (FDSL) Limits:
|Student Grade Level||Subsidized FDSL||Additional Unsubsidized FDSL|
FDSL Rebate Calculation:
|2014||$3,500||$1,750 - 0.5% =$1,741 fall $1,750 - 0.5% =$1,741 spring|
|2013||$4,500||$2,250 - 0.5% = $2,238 per semester|
|2012 2011||$5,500||$2,750 - 0.5% = $2736 per semester|
Note: The loan amount borrowed is subject to a 1.% origination fee at disbursement. This is offset by a 1.0% rebate for the first 12 on-time, consecutive payments made during repayment.
How is the Assessed Fee computed?
In addition to interest, all federal direct student loans have a 2.0% origination fee. But students receive a 1.5% rebate at the time of origination based on paying their first 12 monthly payments on time, so the assessed fee is only 0.5%. This fee reduces the amount that disburses to a students account. For example, if a student borrows $ 2,000, only $ 1,990 will disburse to the student's account.
Federal Direct Student Loan interest rates for 2010-2011:
- 4.5% Direct Subsidized Loan for Undergraduate Students
- 6.8% Direct Subsidized Loan for Graduate Students
- 6.8% Direct Unsubsidized Loans to all eligible students
Fee: 0.5% Assessed to Student
Federal direct student loan (FDSL) Application Process
Students typically apply for Direct Loans during the summer, and must complete the following steps in order to obtain a loan:
- File a FAFSA so that eligibility for any subsidized loan amount can be established.
- Provide copies of student and parent 2009 federal tax returns and W-2 forms to Student Financial Services.
- Complete a Direct Student Loan Authorization
- Complete an Electronic Master Promissory Note (eMPN) at www.studentloans.gov
- First-time borrowers must complete loan entrance counseling at www.studentloans.gov
Please note that for 2010-2011, all borrowers, even those with prior Stafford loans, must sign a new master promissory note with the Direct Loan program.
- Direct Lending
- Direct Loan Program Is More Than Twice as Expensive as FFELP
- Deferment Options for Stafford (Direct and FFEL) and Perkins Loans
- Side-by-Side Comparison of All Federal Student Aid (Loans & Grants) Program
- Federal Loan Consolidation Program
- Graduate/Professional Entrance and Exit Loan Counseling