Federal Direct Student Loan
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. Information from the FAFSA will determine whether the student is eligible for subsidized or unsubsidized loans. Subsidized loans do not accrue interest until loan repayment begins, whereas unsubsidized loans accrue interest from when the loan is disbursed. With all Direct Student Loans, repayment begins six (6) months after the student ceases half-time status.
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Borrowing a Direct Student Loan
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To begin the process of getting a Direct Student Loan, the student must complete the FAFSA. After the student submits the FAFSA and completes any additional federal requirements, the Office of Financial Aid will automatically award the student the maximum amount of student loans eligible. This award can be seen on CougarTrail. Students that have not borrowed from Direct Loans before must complete Entrance Counseling and a Federal Direct Loan Electronic Master Promissory Note (MPN) before loan money can be disbursed. The results of both will be sent electronically to the College of Charleston, and should be received within 2 weeks of the completion date. Students that have borrowed from Direct Loans do not need to complete these requirements again; the loans will disburse automatically on the disbursement dates.
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Entrance Counseling
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The federal government requires a student to participate in loan counseling prior to receiving a Federal Direct Loan. Entrance Counseling will explain various aspects of student loans, such as repayment and interest, and ends with a 15-question quiz.
Entrance Counseling can be completed at www.dl.ed.gov. After the student completes Entrance Counseling the results will be sent electronically to the College of Charleston, although the student may wish to print a copy of the rights and responsibility page for personal records.
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Master Promissory Note On-Line
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Students who have not borrowed from Direct Loans before must complete a Federal Direct Loan Electronic Master Promissory Note (MPN) before loan money can be disbursed. The Electronic MPN site allows you to complete and sign both the student and parent MPN over the web using a Department of Education PIN.
The Electronic MPN can be completed at dlenote.ed.gov.
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Loan Limits
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The federal government sets limits on the amount of money a student can borrow. The College of Charleston will award a student who has submitted a FAFSA the maximum amount eligible under such limits. The annual limit applies to the most a student can borrow in one academic year, while the aggregate limit applies to the maximum a student can borrow in a lifetime. Independent students and dependent students whose parents are unable to borrow a PLUS loan are eligible for an unsubsidized loan in addition to the initial loan eligibility.
| Grade in School | Annual Loan Limits | Aggregate Loan Limits |
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| | Initial Eligibility | Additional Unsubsidized | Initial Eligibility | Additional Unsubsidized |
| Undergraduate | | | $ 23,000 | $ 46,000 |
| First Year | $ 3,500 | $ 4,000 | | |
| Second Year | $ 4,500 | $ 4,000 | | |
| Third Year and beyond | $ 5,500 | $ 5,000 | | |
| Graduate | $ 8,500 | $ 12,000 | $ 65,500 | $ 138,500 |
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Interest and Fees
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Federal Direct Student Loans for the 2008-2009 year have a fixed interest rate based on the type of student loan and student status.
The 2008-2009 rates are:
• 6.0% Direct Subsidized Loan for Undergraduate Students
• 6.8% Direct Subsidized Loan for Graduate Students
• 6.8% Direct Unsubsidized Loans to all eligible students
Subsidized loans do not accrue interest until loan repayment begins, whereas unsubsidized loans accrue interest from when the loan is disbursed.
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.
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Exit Counseling
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The federal government requires that students participate in loan counseling prior to leaving or graduating from the school at which they received a Federal Direct Loan. To complete the Exit Counseling, go to www.dl.ed.gov. You will need your Department of Education PIN to get into this website. The Perkins Loan Page contains information about Perkins loan exit counseling.
During Exit Counseling the student will learn about additional deferment and forbearance and how to get the necessary forms. Even though students have a six month grace period, the exit counseling will help the student set up a repayment plan, a direct withdrawal and a payment date. The Direct Loan Servicer, who handles all Direct Loan repayments, hosts Exit counseling. Visit them online at www.dl.ed.gov or call them at (800) 848-0979, TTY (800) 848-0983.
For College of Charleston undergraduate students graduating between June 2006 and May 2007, the average loan indebtedness is approximately $15,200. The average anticipated monthly loan payment is $175.05 (based on a standard plan at 6.8% interest for 120 months).
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Additional Information
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Below are a list of websites and phone numbers that may prove useful in receiving, planning and repaying a Direct Student Loan.
Direct Loan Repayment Calculator
Calculate your Federal Student Loan monthly payments.
National Student Loan Data System
Current info on loan history. (800) 433-3243
TTY Users (800) 730-8913
8:a.m. to Midnight (Eastern Time) - seven days a week
Ombudsman for Federal Student Aid
Assists borrowers having problems with federal loans. (877) 557-2575
TTY Users - use the same number for Relay Call Services
Repayment Options for Teachers (Cancellation/Deferment)
Teachers serving in low-income or subject-matter shortage areas may have an opportunity to cancel or defer their student loans.
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