Loan Entrance Counseling

FFEL Loan Borrowers

For FFEL loan entrance counseling, please contact your loan provider for more information. Don't know who your lender is? Use the NSLDS to find out.

Direct Loan Borrowers

About Direct Loans

Direct Loans are made to students attending school at least half time. The U.S. Department of Education is the lender, and you receive the loan money through your school. You may receive a Direct Subsidized Loan, a Direct Unsubsidized Loan, or both for the same academic year. A student qualifies for a Direct Subsidized Loan based on financial need, as determined under federal regulations. A student's need is not a factor in determining eligibility for a Direct Unsubsidized Loan.

Most of the provisions below apply to both the FFEL and Direct Loan programs.

Borrow Only What You Need

When your school determined your federal financial aid award, it used a standard budget to estimate the expenses you would incur while attending school. This expense estimate is referred to as your cost of attendance (COA). If you can reduce your expenses to an amount less than the school's estimated COA, you might not need to borrow as much as the school has awarded.

Interest Rates

The interest rate for both Subsidized and Unsubsidized Loans made before July 1, 2006 is variable and is adjusted each year on July 1. Loans made on or after July I, 2006 are fixed at 6.8 percent. Note, however, that subsidized loans for undergraduate borrowers made on or after July 1, 2009 through June 30, 2010 will be fixed at 5.60 percent. The interest on a Subsidized Loan is paid by the federal government while you are enrolled in school at least half time, or during grace or deferment periods. If you have a Direct Unsubsidized Loan, you are responsible for the interest from the day the loan is paid to you until you pay off the loan.

For PLUS Loans disbursed on or after July 1, 2006, the interest rate is fixed (at 7.90 for Direct PLUS Loans and 8.50 percent for FFEL PLUS Loans). For PLUS Loans disbursed between July 1, 1998 and June 30, 2006, the interest rate is variable and is determined on July 1 of every year. Interest is charged on a PLUS Loan from the date of the first disbursement until the loan is paid in full.

Click here for more detailed information on the 2009-2010 FFEL and Direct Loan interest rates.

Loan Fee

The loan fee is another expense of borrowing a loan. For all Direct Subsidized and Direct Unsubsidized Stafford Loans disbursed on or after July 1, 2009 and before July 1, 2010, the fee will be 1.5 percent. The Direct PLUS loan fee is 4 percent for Direct PLUS Loans made to both parent and graduate and professional degree student borrowers.

The loan fee of 4 percent will be deducted proportionately each time a loan disbursement is made. For a FFEL PLUS Loan, a portion of this fee goes to the federal government, and a portion goes to the guaranty agency (the organization that administers the PLUS Loan Program in your state) to help reduce the cost of the loans. For a Direct PLUS Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, PLUS Loan borrowers may be charged collection costs and late fees if they don't make their loan payments when scheduled.

Promissory Note

Before you receive your loan funds, you must sign a promissory note. In past years, borrowers completed a separate promissory note for each new loan borrowed. Now, if you attend a four-year school or graduate school, in most cases, you will sign only one promissory note that will be used for all of your loans at a single school. This new note is called a Master Promissory Note (MPN) . Direct Loan borrowers can now complete the promissory note online. FFEL borrowers should contact their private lender for promissory note guidance.

When you sign the Master Promissory Note, you are confirming your understanding that your school may make new loans for you for the duration of your education (up to 10 years) without having you sign another promissory note. You are also agreeing to repay your lender, the U.S. Department of Education, all loans made to you under the terms of the MPN. Therefore, it is very important that you completely read and understand all of the information on the MPN before you sign it.

You are not required to accept the amount that your school awards you. You should notify your school if you want to borrow a lower amount than the school has awarded you.

Your school must notify you in writing or electronically whenever it makes a loan disbursement. The notice must tell you the date and the amount of the loan disbursement, which loan funds are subsidized and which are unsubsidized, information about your right to cancel all or a portion of the loan, including the current loan disbursement, and procedures for canceling the loan.