Direct Loans

The University of the Arts participates in the William D. Ford Federal Direct Loan Program. Student and parent borrowers will receive funding for their student loans directly from the U.S. Department of Education. Even if you have completed an MPN and Loan counseling before, you MUST complete a new MPN and loan counseling this year to qualify for Direct Loans.

To complete entrance counseling and sign your Master Promissory Note, visit the Student Loans website.

You can read more about Direct Loans on the federal Direct Loans website.

The Office of Student Financial Services is committed to providing the best service, information and payment options to students and parents. Direct Lending is a major step in that direction.

If you are interested in Direct PLUS Loans, please visit our Direct PLUS Loans page.

Frequently Asked Questions

  1. What Changes have been made to the William D. Ford Federal Direct Loan Program for 2013-2014?
  2. What Changes have been made to the William D. Ford Federal Direct Loan Program for 2012-2013?
  3. What types of Direct Loans are available?
  4. What are the eligibility requirements?
  5. How do I apply for the DL Program?
  6. Will a new Direct Master Promissory Note (MPN) need to be completed?
  7. Will a new Federal Direct PLUS Master Promissory Note (MPN) need to be completed?
  8. Will I have to complete a new loan entrance counseling session?
  9. Who should I contact about application questions?
  10. What happens if some of my federal student loans are serviced by a lender/guarantor and another part of my loans will be serviced through the Department of Education?
  11. What if my loans are not consolidated?
  12. How does the Federal Direct Consolidation process work?
  13. What type of repayment plans are offered through DL?
  14. Who will service the Direct Loans?
  15. Who do I call about loan repayment questions?
  16. How can I keep track of my Federal Student Loans borrowed?
  17. Where can I find information on Entrance Counseling?
  18. Where can I find information on Exit Counseling?

Decision:

1. What Changes have been made to the William D. Ford Federal Direct Loan Program for 2013-2014?

As of July 1, 2013 the loan fee for Direct Subsidized Loans and Direct Unsubsidized Loans will increase from 1.0 percent to 1.051 percent and the loan fee for Direct PLUS Loans will increased from 4.0 percent to 4.204 percent. 
 

2.
What changes have been made to the William D. Ford Federal Direct Loan (Direct Loan) Program for 2012-2013?

Provisions in the Budget Control Act of 2011 impact federal student loan programs offered at UArts. These changes WILL NOT affect the amount of loan funding available. However, the cost of borrowing loans will change. Here are the key provisions affecting future federal undergraduate student loans: 

I. Graduate and Professional Students Only:

Beginning July 1, 2012, all graduate and professional students will lose the interest subsidy on the Subsidized Stafford loan. The graduate Direct Loan program will become entirely unsubsidized, which means the loan will accrue interest while a student is in school. These changes will not affect the annual and aggregate borrowing limits. The maximum amount a student can borrow will remain at $20,500 per academic year.

II. Loss of interest rate reduction:

The last change is the loss of the .25% interest rate reduction if you pay your loans electronically while in repayment.

III. Grace Period Interest Subsidy:

Public Law 112-74 amended HEA section 428(a)(3)(A)(i)(I) 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 will be effective for new Direct Stafford Loans for which the first disbursement is made on or after July 1, 2012, and before July 1, 2014.

IV. Interest Rates for Direct Loans for 2012-2013

All Subsidized and Unsubsidized Direct Student Loans will be 6.8% for any loans made on or after July 1,2012. (Compared to 2011-2012 Sub Loans were at 3.4%)

3. What types of Direct Loans are available?

Subsidized Direct Loans are for students with financial need as determined by federal regulations. No interest is charged while you are in school at least half-time, during your grace period and during deferment periods. 

Unsubsidized Direct Loans are for students and are not based on financial need. Interest is accruing immediately during in-school, grace period and deferment. Interest accruing during these periods may be paid or capitalized.

Direct PLUS Loans are available to credit-worthy parents of dependent undergraduate students. Parents may borrow the difference between the student's total cost of education and all other aid the student is receiving. 

Direct PLUS Loans for Graduate Students are available to credit-worthy Graduate students. You may borrow the difference between the total cost of education and all other aid received. You are required to first utilize the Direct Stafford Loan Program and complete a FAFSA.  

Consolidation Loans allows students or parents to combine one or more of your federal education loans into a new loan that offers several advantages such as one monthly payment, flexible repayment options, or reduced monthly payments. Before making a decision to consolidate your federal student loans, consider factors such as the affordability of your monthly payments, the number of payments you need to make to multiple lenders, the interest rates on each of your loans, and how much you are willing to pay over the long term. Parent PLUS Loans cannot be consolidated with the student's Stafford Loans. 

4. What are the eligibility requirements?
You must be enrolled at least half-time at a school and you must meet general eligibility requirements for the Federal Student Aid (FSA) programs.

Application Procedures:

5. How do I apply for the DL Program?
The process is similar to what you have used in the past. You must complete the Free Application for Federal Student Aid (FAFSA) and check on the application that you wish to be considered for a loan. The University of the Arts will then review the application and notify you of the eligibility for the loan and the maximum amount.

6. Will a new Direct Master Promissory Note (MPN) need to be completed?
All current FFELP borrowers and any new borrower will have to sign a new electronic Federal Direct Stafford Loan Application/Master Promissory Note (MPN). 

The Direct Stafford Loan process will be completed online. The MPN will be signed at the U.S. Department of Education Web portal. The MPN will only need to be signed once; it is good for 10years and as loans are requested for subsequent years, the loans will be added to your Master Promissory Note. The MPN explains the terms and conditions of your loan and is your legally binding agreement to repay your loan to the Department of Education. Students will need the Department of Education-issued PIN (used to file the FAFSA) to complete the process. 

7. Will a new Federal Direct PLUS Master Promissory Note (MPN) need to be completed?
Parents of dependent undergraduate students and graduate students who have previously borrowed under FFELP and any new borrower will be required to complete a new electronic Federal Direct PLUS Loan Application/Master Promissory Note (PLUS MPN).

The Direct PLUS Loan should be applied for the academic year. The loan cannot be applied for more than 90 days before the start of the academic year. The Federal Direct PLUS Loan application process involves three steps:

• Complete the application for Federal Direct PLUS Loan
• Complete the Federal Direct PLUS Loan Master Promissory Note (MPN)
• Complete Entrance Counseling if you are applying for a Graduate PLUS Loan

These three items can be accomplished at the Federal Student Loans website.

If your loan application is not approved, you will be contacted by the Federal Servicer (in writing) and given the option of appealing the credit decision or resubmitting the application with a credit-worthy endorser. Questions concerning your credit decision should be directed to the Federal Servicer's Applicant Service at 1-800-557-7394. Each subsequent year, the parent of dependent undergraduate students and graduate students will need to go through a credit check and request the annual loan amount.    

Federal Direct PLUS Loan Master Promissory Note (PLUS Loan MPN) allows parents of dependent undergraduate students and graduate students to borrow for multiple years (up to 10 years) using one note provided you do not require an endorser. You may complete the MPN online very soon.

You must have a Department of Education-issued Personal Identification Number (PIN) before completing and signing the electronic MPN. If you do not have a Federal PIN, or have lost your PIN, you may obtain one at the Federal PIN Web site.

8. Will I have to complete a new loan entrance counseling session?
Yes. Since the Direct Loan program does differ from FFEL in certain ways, we are requiring all Direct Loan student borrowers to complete Direct Loan entrance counseling. The online entrance counseling session takes about 30 minutes to complete. Graduate PLUS Loan borrowers are required to complete Entrance Counseling. Parent PLUS Loan borrowers do not need to complete entrance counseling. Entrance counseling can be completed at the Student Loans Web site.

9. Who should I contact about application questions?
Application questions should be addressed to the Student Financial Services Office. You may email finaid@uarts.edu or call 215-717-6170.

Repayment:

10. What happens if some of my federal student loans are serviced by a lender/guarantor and another part of my loans will be serviced through the Department of Education?
The source of the loan application and funding is semester and year specific. The combination of FFEL Program and DL loans is not unusual. Under FFEL Program, you will repay to a private lender or their designated loan servicer that made the loan. Under DL, payments are made to the Direct Loan Servicing Center. You may take out a federal consolidation loan, which combines both types of loans into a single loan.

11. What if my loans are not consolidated?
Your lender will send information about repayment and notify you of the date repayment will begin. Under FFEL Program, you will repay to a private lender or their designated loan servicer that made the loan. Under DL payments are made to the Direct Loan Servicing Center. You will make separate monthly payments to each servicer. It is recommended that you visit the National Student Loan Data System (NSLDS). NSLDS provides a central database for student aid. You will need your Federal Student Aid PIN to access the Web site.

12. How does the Federal Direct Consolidation process work?
Once you graduate or choose to no longer attend school on a half-time basis, you can contact the DL Program for an application for a Direct Consolidation Loan, which will combine the FFEL Program and DL loans into one type of loan. When it comes time to begin repaying the loans, you will be provided with several options concerning consolidation to be able to choose which one has the greatest advantage. You may visit the U.S. Department of Education Consolidation Department Web site or call 1-800-557-7392 for more information.

13. What type of repayment plans are offered through DL?
The repayment periods for Stafford Loans vary from 10 to 25 years. When it comes time to repay, you can pick a repayment plan that best suits your financial situation. The Direct Loan Program offers four repayment plans with various term selections:

Standard Repayment Plan: Under this plan, you will pay a fixed amount of at least $50 each month for up to 10 years. This plan results in the lowest total interest paid of any repayment plan. If you have not selected a repayment plan by the time repayment begins, your loan(s) will be placed on the Standard Repayment Plan.

Graduated Repayment Plan: Under this plan, you will pay a minimum payment amount at least equal to the amount of interest accrued monthly for up to 10 years. Your payments start out low and then increase every two years. Generally, the amount you will repay over the term of your loan will be higher under the Graduated Repayment Plan than under the Standard Repayment Plan. This plan may be beneficial if your income is low now but is likely to steadily increase.

Extended Repayment Plan: There are two options.
Fixed Monthly Payment Option: Under this plan, you will pay a fixed amount of at least $50 each month for up to 25 years. To be eligible for this plan, your Direct Loan balance must be greater than $30,000. Repayment under this plan will result in lower total interest paid when compared to graduated plans with similar terms.

Graduated Monthly Payment Option: Under this plan, you will pay a minimum amount of at least $50 or the amount of interest accrued monthly, whichever is greater, for up to 25 years. Your payments start out low and then increase every two years. To be eligible for this plan, your Direct Loan balance must be greater than $30,000. Repayment under this plan may provide lower initial monthly payments, although the total interest paid may be greater when compared to plans with similar terms with fixed payments. This plan may be beneficial if your income is low now but is likely to steadily increase.
** Extended repayment terms are available to Direct Loan borrowers with no outstanding principal or interest balances as of October 7, 1998 and with more than $30,000 in Direct Loans.

Income Contingent Repayment (ICR) Plan:  A repayment plan that bases your monthly payment on your yearly income, family size, and loan amount. As your income increases or decreases, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven.

The ICR Plan is NOT available if you have a Direct PLUS Consolidation Loan(s) made before July 1, 2006 and/or a Direct PLUS Loan(s). However, you are eligible to repay any Direct Consolidation Loan(s) made on/after July 1, 2006 under the ICR Plan even if it includes a PLUS Loan(s).

Each year your monthly payment will be based on your family size, annual Adjusted Gross Income (AGI) as reported on your federal tax return, and the total amount of your Direct Loan(s). To participate in the ICR Plan you must authorize the U.S. Internal Revenue Service (IRS) to inform the U.S. Department of Education (ED) of the amount of your income. This information will be used to calculate your repayment amount, which will be adjusted annually to reflect changes in your AGI. If you select the ICR Plan, you will be billed for only the interest amount that accrues on your loan(s) each month, until the required documentation is received by the Direct Loan Servicing Center.     

For more information, visit the Direct Loan Servicing Web site and click on Question Center. The chart below lists repayment plans.

 

 Non-Consolidation Loans 

 Consolidation Loans

Standard Repayment Plan    * Repayment up to 10 years  
* Lowest total interest paid 
* Automatic payment plan if payment plan is not chosen  
* Repayment up to 10 to 30 years based on total education indebtedness
Graduated Repayment Plan   * Repayment up to 10 years 
* Payments start out low, then increase every two years
* Beneficial if income is low now, but may steadily increase 
* Repayment up to 10 to 30 years based on total education indebtedness
* Payments start out low, then increase every two years
* Beneficial if income is low now, but may steadily increase
Extended Repayment Plan   * Repayment up to 25 years  
* Must have more than $30,000 in Direct Loans 
* Monthly payment will be lower than Standard Repayment 
* Will pay more on loan because of the interest that accumulated during the longer repayment period
 N/A
Income Contingent Repayment * Repayment up to 25 years  
* Monthly payments based on annual income, family size and total amount of Direct Loans  
* Unpaid portion of loan is forgiven, but you may have to pay income tax on the amount that is forgiven  
 N/A

14. Who will service the Direct Loans?
All Direct Stafford and PLUS Loans will be serviced by the Direct Loan Servicing Center. 

15. Who do I call about loan repayment questions?
Direct Loan Servicing Center Customer Service Representatives are available to answer borrower phone calls at 1-800-848-0979 Monday through Friday 8 a.m. EST to 8:30 p.m. EST or visit the Direct Loan Servicing Center online.

16. How can I keep track of my Federal Student Loans borrowed?
Knowing who is servicing your federal student loans is critical in shaping your financial future. It is recommended that you visit the National Student Loan Data System (NSLDS). Student Access website at NSLDS provides a central database for student aid and allows students access to view information from schools, guaranty agencies, the Direct Loan program, as well as other programs; which is a valuable tool in managing your federal student loan information.

You will need your Federal Student Aid PIN to access the Web site; you have used the PIN when electronically signing your loans or when completing your FAFSA. You can request a duplicate PIN be sent to you at the Federal Student Aid PIN Web site

Managing your debt is your responsibility and the NSLDS Web site is a critical tool in assisting you. Keeping track of your financial obligations allows you to create a better financial future.

17. Where can I find information on Entrance Counseling?

To help you understand this process the U.S. Department of Education has created two guides titled Direct Loan Basics and Entrance Counseling for Graduate and Professional Student Direct PLUS Loan Borrowers and Entrance Counseling for Direct Loan Borrowers.

18. Where can I find information on Exit Counseling?

To help you understand this process the U.S. Department of Education has created a guide titled Exit Counseling Guide for Direct Loan Borrowers.