Federal Direct Loans - Subsidized and Unsubsidized
What is a Federal Direct Student Loan?
Federal Direct Student Loans include Direct Subsidized Loans and Direct Unsubsidized Loans. These loans are offered by the U.S. Department of Education to help eligible students pay for college costs at universities, community colleges, and trade or technical schools. (You may also hear these loans called “Stafford Loans,” but that is not the official name.)
After a student completes the FAFSA, eligible loan funds are sent to the school listed on the FAFSA. Both undergraduate and graduate students may receive these loans to help cover their educational expenses. At Arkansas State University, loan funds are disbursed after the loans have been approved, processed, and the student’s classes have begun.
How to apply for a Federal Direct Student Loan?
1. Complete the Free Application for Federal Student Aid (FAFSA) on Federal Student Aid's website at: https://studentaid.gov/h/apply-for-aid/fafsa. Arkansas State University's school code is 001090.
2. Complete the Direct Loan Entrance Counseling on Federal Student Aid's website: https://studentaid.gov/entrance-counseling
3. Complete the Subsidized/Unsubsidized Master Promissory Note on Federal Student Aid's website: https://studentaid.gov/mpn/
4. Loans must be accepted online from your Financial Aid offer page. You can access this page by logging into Banner 9 Student through https://pack.astate.edu/
5. Loans will be disbursed directly to your Arkansas State University Student Account
Note: Students must complete the FAFSA every year to continue to apply for a Federal Direct Student Loan.
The Subsidized Federal Direct Student Loan
Beginning July 1, 2012, only undergraduate students are eligible for Federal Subsidized Loans. Graduate students are no longer eligible to receive this type of loan. Eligibility for subsidized loans is based on financial need as determined by federal guidelines. A loan is called "subsidized" because the government pays interest for the student during:
At least half-time enrollment (6 or more hours) with A-State (Dual Enrollment hours will not count) and the six-month grace period after the student ceases attendance on at least a half-time basis.
The Unsubsidized Federal Direct Student Loan
This type of loan is available to students regardless of income or need. With an unsubsidized loan, you are responsible for all interest that accrues during in school, grace, and deferment periods. You may choose to pay the interest portion only while in school, which would keep your loan balance at principal. If you choose to defer such payments, the interest will be capitalized.
What is a Master Promissory Note?
A master promissory note is a signed agreement promising payment of a sum of money, i.e. by signing a master promissory note for a federal direct loan the student is agreeing to repay their loan proceeds to their designated servicer. Complete your master promissory note here.
Why must a student complete entrance counseling?
The Loan Entrance Counseling provides the student detailed information on the Federal Direct Student Loan Program. It is very important for the student to understand their rights and responsibilities when borrowing money for school. Complete your Loan Entrance Counseling here.
How much can I borrow?
Check out the Federal Student Aid Direct Loan website for information regarding loan amounts at: https://studentaid.gov/
Check on your Federal Loans
Information regarding your federal student loans is located on your Federal Student Aid account at: https://studentaid.gov/
Once you are logged into your Federal Student Aid account you can view your loans by clicking on "My Aid".
When do I begin to repay my Federal Direct Loans?
Each student is given a period of time before loan repayment begins; this is called a “grace period”. The federal direct loan grace period is six months after the student graduates, leaves school, or drops below half-time status. Once a student exceeds their grace period, they must begin loan repayment. Federal direct loans are repaid to the holder of the loan, with 10-25 years to repay, depending on the total amount the student has borrowed.
For additional information, log in to https://studentaid.gov/