Important Information About Subsidized Loans

Budget Control Act of 2011 - Direct Loan Provision 

Graduate students will not be eligible to receive Federal Direct Subsidized loans for periods of enrollment beginning on or after July 1, 2012.  Therefore, Graduate students will not be eligible for a Stafford Subsidized loan for the 2012-13 academic year.  

All Stafford loans for 2011-12 must be processed and disbursed prior to July 1, 2012 to ensure the subsidized portion is retained.  This includes loans for Summer Session 2012.  

Terms and conditions of Direct Subsidized loans received for loan periods beginning before July 1, 2012, for either graduate or undergraduate study, are not affected by this change.  

Annual Direct Loan limit remains at $20,500 for graduate students.  

Aggregate Direct Loan limit for Graduate students remains at $138,500.  Not more than $65,500 of this may be in subsidized loans (including loans borrowed as an undergraduate).

Up front interest rebates will no longer be offered on any Direct Loans with a first disbursement date that is on or after July 1, 2012.  
 

  • Federal Direct Subsidized and Unsubsidized loans:  Currently, the origination fee is 1% and the up-front rebate is .5% of the amount borrowed.  This means that only .5% of the loan was withheld at the time of disbursement.  It is important to note that to keep this up-front rebate, the borrower must make their first 12 payments on time once entering repayment.  After July 1, 2012, the entire origination fee (1%) will be taken out of the loan prior to disbursement.  
  • Federal Graduate PLUS loans:  Currently, the origination fee is 4% and the up-front rebate is 1.5% of the amount borrowed.  This means that only 2.5% of the loan was withheld at the time of disbursement.  It is important to note that to keep this up-front rebate, the borrower must make their first 12 payments on time once entering repayment.  After July 1, 2012, the entire origination fee (4%) will be taken out of the loan prior to disbursement.