Important Changes Regarding Federal Direct Loans
Beginning with the 2012-2013 academic year, the US Department of Education has made some important changes regarding Federal Direct Loans for both undergraduate and graduate students.
- Graduate and professional students are no longer eligible to receive Federal Direct Subsidized Loans. The annual loan limit for graduate and professional students remains unchanged at $20,500, but this amount will now be limited to Direct Unsubsidized Loans.
- Undergraduate Direct Subsidized Loan interest rates will increase to 6.8%. The interest rate for Federal Direct Subsidized Loans will change from 3.4 percent to 6.8 percent beginning July 1, 2012. Unsubsidized Loans will remain at a fixed 6.8 percent rate.
- Interest subsidy is eliminated. The interest subsidy during the six-month grace period is eliminated for new Direct Loans made on or after July 1, 2012. The repayment period still begins 6 months after the student is no longer enrolled at least half-time, but interest that accrues during those six months will be payable by the student rather than be subsidized by the federal government.
- Origination fee rebate is eliminated. The origination fee rebate has been eliminated on all Federal Direct Loans first disbursed on or after July 1, 2012. This change will result in an increase of the origination fee for all Direct Subsidized and Unsubsidized Loan borrowers from 0.5% to 1%. The origination fee for all Parent PLUS and Graduate PLUS Loans will increase from 2.5% to 4%.
For more information about Federal Direct Loans visit http://finaid.eku.edu/federal-direct-loans.