Learn About Federal Direct Loans

What are the Types of Undergraduate Federal Direct Loans?

The Federal Direct Loan program has several different types of loans available for undergraduate borrowers. These are loans issued directly by the U.S. government, not a private lender. Click the links below to learn more about each loan type:

Note: PLUS loans are available only to a parent of a dependent (as defined by the FAFSA) undergraduate student. Parents of independent undergraduate students are not eligible for this loan.

What are the Interest Rates, and How is Interest Calculated?

Interest rates for the Federal Direct Loan program are published for the academic year, usually in July, on the Federal Student Aid website.

Are there Loan Fees?

Yes. Loan origination fees (which are fees for creating the loan) are deducted from all the loan types listed above prior to disbursement of the loan. The loan fee may be different for the type of loan. Learn about current loan fees on the Federal Student Aid website.

How Do I Know if I Meet the Requirements for a Federal Direct Loan?

In order to qualify for a Federal Direct Loan, a student must first have filed a FAFSA for the current academic year. All processes related to the FAFSA must  be completed before a loan can be disbursed.

To be eligible, a student must:

  • meet all of the basic eligibility criteria of the FAFSA,
  • be matriculated in a degree-granting program,
  • maintain enrollment of at least six credits for the semester(s) of the loan(s),
  • not be over the aggregate limit or annual award limit for the Federal Loan program,
  • meet Satisfactory Academic Progress (SAP) for federal aid programs,
  • not have aid in excess of the Cost of Attendance,
  • complete Federal Direct Loan entrance counseling,
  • complete the Annual Student Loan Acknowledgment, and
  • have a signed and active Master Promissory Note on file.

What is Federal Direct Loan Entrance Counseling?

Entrance counseling ensures you understand the terms and conditions of your loan and your rights and responsibilities. You’ll learn what a loan is, how interest works, your options for repayment, and how to avoid delinquency and default. You can complete the process on the Federal Student Aid Website.

What is the Annual Student Loan Acknowledgment (ASLA)?

The Annual Student Loan Acknowledgment is an additional component of the loan process that should be completed once each academic year that a student borrows. The purpose is to guide you in understanding the implications of initial and continued borrowing before you request a Federal Direct loan.

What is a Master Promissory Note (MPN)?

A Master Promissory Note (MPN) is the contract that a borrower (in this case the student and/or parent) has with a lender (in this case the U.S. Government) that states the terms of the loan and that the loan must be repaid. You should carefully read the MPN before you sign it.

A student must sign an electronic MPN for the subsidized or unsubsidized loan before the loan can be disbursed. Once a student has signed an MPN, it is valid for 10 years from the date it was signed and can be used for loans in future academic years that are within the 10-year period.

A parent must sign an electronic PLUS loan Master Promissory Note if he or she is borrowing a parent PLUS loan.

How Much Can I Borrow?

Annual Loan Limits for Direct Subsidized Loans and Direct Unsubsidized Loans

Student Type Dependent Undergraduate Students Independent Undergraduate Students
First Year (freshman) $5,500 (maximum $3,500 subsidized) $9,500 (maximum $3,500 subsidized)
Second Year (sophomore) $6,500 (maximum $4,500 subsidized) $10,500 (maximum $4,500 subsidized)
Third Year (junior) and Beyond $7,500 (maximum $5,500 subsidized) $12,500 (maximum $5,500 subsidized)

Aggregate Loan Limits: Maximum Total Outstanding Loan Debt

Student Type Dependent Undergraduate Students Independent Undergraduate Students
Undergraduate $31,000 (maximum $23,000 subsidized) $57,500 (maximum $23,000 subsidized)

Federal regulations require that when a student is enrolled in a program that is one academic year or more in length, but is in a remaining period of study that is shorter than a full academic year, the loan must be prorated. Students who graduate in the summer session or fall term will have their loans prorated.

Loan Proration Formula

Loan Proration Formula

How Do I submit a Federal Direct Loan Request?

 Federal Direct Loan requests are submitted using our online electronic Dynamic Form.

What Is the Process After I Complete and Submit My Direct Loan Application?

The Brooklyn College loan processing unit will review your request for completeness and to determine if you meet all of the eligibility criteria. If you do, then a loan will be posted to CUNYfirst. If additional steps are needed, you will be notified by e-mail to address them before the loan will be posted.

After the loan has been posted to CUNYfirst, it is then originated (created) within the federal aid origination system. The origination, entrance counseling, Annual Student Aid Acknowledgment, and MPN must be confirmed within CUNYfirst before the loan can disbursed to your CUNYfirst account.

How Long Will It Take to Receive a refund?

Federal Direct Loans follow the same refund procedures as other types of financial aid. You can learn more on the bursar’s refunds webpage.

What Can I Do if I Need to Increase, Decrease or Cancel My Direct Loan?

You can request an increase, decrease, or cancel a not-yet disbursed direct loan by using the Federal Direct Loan Status Change Form on the financial aid forms webpage.

What Should I Do if I Have Already Applied for a Direct Loan and Plan to Drop or Withdraw Below Six Credits or Completely?

If your enrollment drops below six credits, your eligibility for disbursement and your loan repayment grace period will be affected. We recommend you speak with a financial aid representative or financial aid adviser before making changes to enrollment that will affect loan eligibility.

When Do I Pay Back Direct Loans?

Visit the Federal Student Aid Portal Repayment page for information on loan repayment requirements, to access the loan simulator, and to learn about repayment plan options.

What Should I Do if I Have Forgotten the Type of Federal Student Loan(s) I Have Borrowed?

To view your Federal Direct Loan borrowing history, log in to the Federal Student Aid Portal.

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