Federal Direct Loans

There are two types of Federal Direct Loans:

•  Federal Direct Subsidized Student Loans – These are need-based loans. The federal government pays the interest that accrues on the loan while you are enrolled in at least 6 credits and you won’t be charged any interest during your six-month grace period. New for 2012-13, graduate students are not eligible for subsidized loan funds.
• Federal Direct Unsubsidized Student Loans – These are non-need based loans, and are available regardless of financial need; interest begins to accrue as soon as you receive your loan. Students may choose to pay the interest that accumulates or have it capitalized – meaning, the interest will be added to the principal amount of your loan and additional interest will be based upon the higher amount. Paying the interest as it accumulates will reduce the amount of interest that must be repaid.

For 2012-13, Federal subsidized loans have an interest rate of 3.4%; unsubsidized loans have an interest rate of 6.8%.  The loan origination fee is 1%. You will pay back 100% of what you borrow (plus interest); however, only 99% of the gross loan will be disbursed to the account.

NOTE:  for loans with a first disbursement on or after July 1, 2013, the origination fee increases from 1% to 1.051%.

Repayment of both types of loans begins six months after graduation or if you fall below 6 credits. The passage of the Consolidated Appropriations Act has temporarily eliminated the interest subsidy provided on Direct Subsidized loans during the six- month grace period provided to students when they are no longer enrolled in at least 6 credits. This change is effective for new Direct Loans for which the first disbursement is made on or after July 1, 2012 and before July 1, 2014.

Direct Loan Servicing provides online access using your federally-assigned PIN to information on your existing Direct Loan(s). You may access your account information, view your loan balance, change your address, download deferment, forbearance and Electronic Debit forms, and complete the Online Exit Counseling Session. Enhancements include the ability to view your payment history, change your payment due date and to select a different repayment plan using the new repayment estimator that provides payment amounts using your actual Direct Loan balances in the system.

How to Apply

The Free Application for Federal Student Aid (FAFSA) is the standard application used to apply for any type of financial aid including loans. Once we receive your FAFSA we will send you a financial aid offer letter which will describe your aid eligibility. Students must be enrolled in at least 6 credits to receive federal loan funds.

Accepting your loans

Once you have received and reviewed your award offer you must log in to BU BRAIN at http://bubrain.binghamton.edu to accept or decline your loan(s). At the Main Menu, click on the Financial Aid tab. Select Award and appropriate aid year. Go to Award Overview to VIEW and/or PRINT your award offer.

 *First-time borrowers must complete an electronic Master Promissory Note (eMPN) and Entrance Counseling before the loan will be disbursed.

Undergraduate Student Annual Loan Limit

Undergraduate student loan limits range from $5,500 to $12,500 per year depending on certain factors, including the student's year in college and other aid received.

Graduate Student Annual Loan Limit

Graduate students can borrow up to $20,500 each year, and can apply for additional funding under the Graduate PLUS Loan program. Beginning July 1, 2012, subsidized loan funds are no longer available for graduate students due to the Budget Control Act of 2011.

Total Aggregate Loan Limit

An aggregate loan limit is the total amount of money a student is allowed to borrow during his/her undergraduate or graduate education.

Dependent Undergraduate Student: $31,000 (no more than $23,000 can be subsidized)

Independent Undergraduate Student: $57,500 (no more than $23,000 can be subsidized)

Graduate Student: $138,500 (no more than $65,500 can be subsidized)

Federal Direct Loan Repayment

Repayment begins 6 months after graduation, withdrawal or enrollment less than half-time. Students may select from one of four repayment options:

1. Standard Repayment Plan
   • Fixed annual repayment amount.
   • Paid over a fixed period of time.
2. Extended Repayment Plan
   • Fixed annual repayment amount.
   • Paid over an extended period of time.
   • Must repay minimum amount as determined by the U.S. Department of Education
3. Graduated Repayment Plan
   • Annual repayment amount.
   • Established at two or more graduate levels.
   • Paid over a fixed or extended period of time.
   • Scheduled payments shall not be less than 50%, or more than 150% of what the amortized payment on the amount owed would be if the loan were repaid under the standard repayment plan.
4. Income Contingent Repayment Plan
   • Each year the monthly payment is based on your annual income and amount borrowed.
   • Maximum repayment period is 25 years.
5. Income-Based Repayment Plan (partial financial hardship)
   • Annual amount due on a 10-year repayment plan limited to 15% of the amount by which the Adjusted Gross Income exceeds 150% of the poverty line based on family size.
   • The annual amount due will be divided by 12 to calculate monthly payments.
   • May change repayment at any time.
   • Must reapply every year.

The U.S. Department of Education will provide the borrower with an opportunity to select a repayment plan. If the borrower does not select a plan, the department will provide the borrower assigned the standard repayment plan. The U.S. Department of Education will issue a repayment schedule that provides payment amounts and due dates. The Education Department may grant the borrower forbearance to eliminate a delinquency. The borrower may prepay all or any part of the unpaid balance on the loans at any time without penalty.

For additional information on understanding loans or repayment issues, visit The Student Loan Borrower Assistance website – a resource for borrowers, their families and advocates.