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Federal Direct Stafford Loans

What is a Federal Direct Stafford Loan?

Federal Direct Stafford Loans Eligibility and Regulations

Applying for a Federal Direct Stafford Loan

Processing of a Federal Direct Stafford Loan

Graduating Seniors Loan Amounts

Exit Interviews

Disbursement of a Federal Direct Stafford Loan

Cancellations or Reductions

Borrowing Limits for Federal Direct Stafford Loans

 

What is a Federal Direct Stafford Loan?

Through the Department of Education, students may qualify for Federal Direct Stafford Loans by completing the Free Application for Federal Student Aid (FAFSA). Federal Direct Stafford Loans are available to all dependent and independent undergraduate students (a student's dependency status is determined from information listed on the Free Application for Federal Student Aid, FAFSA) to help pay for their education. There are different Annual Loan Limits that a student can borrow depending on their grade level and dependency status. Federal Direct Stafford Loans are borrowed by a student and do not require a credit check or prior credit history. The Federal Direct Stafford Loans offer:

  • Repayment begins after the one-time 6 month grace period. The grace period begins when a student graduates, leaves school, or drops to less than half-time enrollment, which is 6 credit hours at MSU Denver.

Subsidized Federal Direct Stafford Loan

Eligibility for the Subsidized Federal Direct Stafford Loan is based on your need as determined by the Office of Financial Aid using your FAFSA and Cost of Attendance. If you qualify, the federal government will pay (subsidize) your interest while you are in school and during your 6 month grace period.* Interest will not begin to accrue until repayment begins. If you do not qualify for Subsidized Stafford Loans you may qualify for Unsubsidized Loans. Please see Federal Direct Stafford Loan eligibility and regulations for additional eligibility requirements.

*NOTE: If you received Direct Subsidized Loans that first disbursed between July 1, 2012 and July 1, 2014 interest will accrue on these loans while in your grace period. You will be responsible for paying this interest. If you choose not to pay the interest that will accrue on these loans during your grace period, the interest amount will be added to your principal balance. (Federal Student Aid - Subsidized/Unsubsidized Loans)

Interest Rates on
Federal Direct Stafford Loans by Year
Year Interest Rate
Subsidized Stafford Loans
(Undergraduate Students)
Interest Rate
Unsubsidized Stafford Loans
(Undergraduate Students)
Interest Rate
Unsubsidized Stafford Loans
(Graduate Students)
2007-08 6.8% 6.8% 6.8%
2008-09 6.0% 6.0% 6.8%
2009-10 5.6% 5.6%  6.8% 
2010-11 4.5% 4.5% 6.8%
2011-12 3.4% 3.4%  6.8% 
2012-13 3.4% 3.4%  6.8% 
2013-14 3.86% 3.86% 5.41%
2014-15  4.66% 4.66% 6.21%
2015-16 4.29% 4.29% 5.84%

*Recent legislation has changed student loan interest rates.  Rates will vary annually, with the rate fixed for the lifetime of the loan taken in each particular year.  Every July the interest will change for loans taken in that year with interest rate caps of 8.25% for undergraduates and 9.5% for graduate students.  As long as the federal sequester is in effect, every October 1st loan origination fees will change.

Unsubsidized Federal Direct Stafford Loan

Unsubsidized Loans are not based on financial aid need and are available to all eligible students. The Office of Financial Aid uses your FAFSA and Cost of Attendance to determine the amount of unsubsidized loan for which you qualify. You are responsible for the interest on your unsubsidized loan from the time the loan is disbursed until it is paid in full. You can choose to pay the interest monthly or to have it capitalized (interest added to the principle) against loans borrowed. If your interest is capitalized, it will increase the amount you have to repay. If you choose to pay the interest as it accumulates, you must contact Direct Loan Servicing to make interest payment arrangements. Please see Federal Direct Stafford Loan eligibility and regulations for additional eligibility requirements.

Federal Direct Stafford Loan Origination Fee

For loans with a FIRST disbursement on or after October 1, 2015 the origination fee changes from 1.073% to 1.068%. The loan origination fee is charged and taken off the top of the loan. For example if you borrow $5,500, the amount disbursed is $5441.26 ($5,500 less the $58.74 loan origination fee).

 

Federal Direct Stafford Loans Eligibility and Regulations

The regulations that the Office of Financial Aid determines for Federal Direct Stafford Loans are as follows:

  • Student must be enrolled in a minimum of 6 credit hours (half-time status) and be enrolled in a degree-seeking program.
  • Student must have a complete financial aid file that includes having a Free Application for Federal Student Aid (FAFSA) on file.
  • The Office of Financial Aid determines the loan type and amount of eligibility for Federal Direct Stafford Loans. The loan amounts and types are based on information from the FAFSA and can never exceed the federal annual loan limits or the student's cost of attendance (financial aid budget).
  • There are Federal Direct Stafford Loan Limits regarding the amount a student can borrow based on a student's dependency status (based on FAFSA regulations) and by class status (grade level).

 

Applying for a Federal Direct Stafford Loan

STEP 1:
Complete the Free Application For Federal Student Aid (FAFSA) at www.fafsa.ed.gov. To have your FAFSA sent to the Office of Financial Aid at MSU Denver, include the MSU Denver Title IV School Code of 001360 on your FAFSA. When the Office of Financial Aid receives your FAFSA, you will be notified through your MSU Denver email account, if we need additional information. If we are requesting any additional information, please submit it as soon as possible. Once your financial aid file is complete and have met loan eligibility requirements, you will receive an Award Notice via your MSU Denver email account that includes your offered Federal Direct Stafford Loan eligibility.

STEP 2: 
 ACCEPT YOUR Federal Direct Stafford Loan

  • Under My Services: Select "Registration, Credit Card, Insurance Waiver, Student Records, & Financial Aid Menu".
  • Select "Financial Aid".
  • Select "My Award Information".
  • Select "Accept Award Offer by Aid Year".
  • Select aid year
  • Click on "Accept Full Amount All Awards" to accept the full loan amount. Please note: For both of these options, the dollar amount accepted is for two semesters OR
  • On the line marked "Federal Subsidized Loan Offered" or "Federal Unsubsidized Loan Offered", select "Accept". Then enter the total dollar amount (cannot exceed offered amount) that you would like to accept. Click on "Submit Decision"  

STEP 3: 
COMPLETE ENTRANCE COUNSELING

Before receiving a Federal Direct Stafford Loan, borrowers are required to complete a student loan entrance counseling interview. This quick and easy interactive counseling session provides useful tips and tools to help you develop a budget for managing your educational expenses. It also helps you understand your loan responsibilities when you enter repayment.

STEP 4: 
SIGN A MASTER PROMISSORY NOTE

The Master Promissory Note (MPN) is required to be completed by each borrower. The MPN is a legal contract that binds you to the federal government. Signing this document indicates that you promise to repay the student loan you are taking out. The master promissory note also includes important language about rights and responsibilities as a borrower. Both subsidized and unsubsidized Stafford Loans are covered under the master promissory note. Students must complete their MPN at Direct Loans MPN.

 

Processing of a Federal Direct Stafford Loan

Step 1. The Office of Financial Aid will determine if you are eligible for processing based on the following:

• Complete Financial Aid File

• Enrollment in a minimum of 6 credit hours

• Making the Office of Financial Aid's Satisfactory Academic Progress

• Annual/Aggregate Limits

Students who are not eligible for loans will receive an email in their MSU Denver email account notifying them of their situation.
Once your loan has been processed, you will be emailed a Loan Recommendation Letter via your MSU Denver email account. The Loan Recommendation Letter summarizes your loan amount for each specific loan processed based on your request. If you are a first-time borrower of Federal Direct Stafford Loans at MSU Denver, the letter will also remind you of the Entrance Interview and Master Promissory Note requirements (Steps 2 and 3 of the loan process). If you are a first-time borrower, you will also be sent a reminder email to electronically sign your Master Promissory Note.

Step 2. MSU Denver requires all first-time borrowers to complete an Entrance Interview before you can receive your loan funds (disbursements). You may complete the Entrance Interview online at Direct Loans Counseling Session . Once you have completed the Entrance Interview, Direct Loan Servicing will email the Entrance Interview confirmation to the Office of Financial Aid at MSU Denver.

Step 3. Once your loan request has been processed by the Office of Financial Aid, you may be contacted by Direct Loan Servicing to complete the Federal Direct Stafford Loan Master Promissory Note (MPN). The MPN states all Borrower Responsibilities regarding paying back your student loans. You must notify Direct Loan Servicing of any and all of the following: 1) change in address, 2) name change, 3) if you drop below, at least, half-time enrollment status, 4) if you transfer to another school, and 5) when you graduate.
The MPN requires verification of contact information and two personal references. If you do not sign your MPN, your loan will not be guaranteed and the loan request will be automatically cancelled after 90 days by MSU Denver or cancelled with a written statement to our office.


Graduating Seniors Loan Amounts 

Per federal regulation, we must prorate the loan amounts of graduating seniors who are attending only one semester of an academic year. Please be aware that this federal regulation may affect the eligibility amount of your subsidized and/or unsubsidized Federal Direct Stafford Loan. Prorating limits the amount of subsidized/unsubsidized loan a graduating senior can borrow as a fall only loan. It is best to submit a paper loan application (FSLA) to our office for the fastest and most accurate processing. For more information please see Proration Loan Limits. You may also download the informational form (PDF format): Graduation Proration Letter.

 

Exit Interviews 

When you graduate or withdraw from MSU Denver, you are recommended to complete online Exit Counseling at Direct Loans Exit Counseling. This will help you to review your borrower rights and responsibilities. These are the same borrower rights and responsibilities that you signed on your Master Promissory Note (MPN).

 

Disbursement of a Federal Direct Stafford Loan

The Student Loan Recommendation will email you with details about the amount, type, lender, and estimated dates of disbursement of funds. To receive your loan funds, your financial aid file must be complete, including the completion of your Entrance Interview and Master Promissory Note, before the school can receive or release any funds. You will also receive a guarantee notice from Direct Loan Servicing via mail. Please keep these documents for your records. Check with the Office of Financial Aid (Student Success Building Area 6, Suite 130, 303-556-8593) if your funds have not been applied to your account.

Remember - Even if your loan funds are guaranteed, they will not arrive at MSU Denver until you meet all loan eligibility requirements such as having a complete file (including Entrance and Satisfactory Academic Progress requirements) and having a minimum of 6 credit hours of enrollment for the loan period for which you are expecting funds. We cannot consider hours for which you are wait listed.

If your loan is submitted late in the semester and your funds are not received by the last day of the semester, we will be required to follow Late Disbursement regulations.

 

Late Disbursements (after semester ends) 

Any Federal Direct Stafford or PLUS Loan funds received after the last day of the semester follow Prior Term Disbursement Regulations. Grades must post to your account to help determine your eligibility for your loan funds. You must have completed 6 credit hours with grades of D or better, have completed all the requirements requested of the file, and must be making Satisfactory Academic Progress with the Office of Financial Aid. Students who complete a late Master Promissory Note fall under these regulations.

 

Cancellations or Reductions

You may request that your loan funds be cancelled or reduced after applying or receiving your Loan Recommendation Letter. You have 30 days after the loan period to make this request. You must submit a written statement to the Office of Financial Aid to cancel the loan. This may be faxed, mailed or dropped off in our office, and please be sure to include your 900 student ID number on all correspondence submitted to our office.

If you have received the loan funds and want to cancel or reduce the loan, you will be asked to return the cancelled or reduced loan funds from the refund (to the Bursar's Office) after submitting the statement to our office. To request any reductions or changes to your loans, you should complete a Financial Aid Loan Rejection Form (REJLN), which is available in our Financial Aid Forms Section of the Website.

 

Borrowing Limits for Federal Direct Stafford Loans

Students are classified as Dependent or Independent by the Free Application for Federal Student Aid (FAFSA). The class levels are determined by the student's number of completed course hours. You may qualify for less than the yearly maximum amounts listed below if you receive other financial aid that is used to cover your Cost of Attendance. The offered loan amounts may be viewed by logging into Student Hub. You are not required to borrow the amount you are eligible to receive. The minimum loan request that we can process is $100.

Annual Limits for Loans Disbursed after July 1, 2008
Annual Loan Limits for Dependent Student
Grade Level by Credits
Subsidized Maximum
Total (Subsidized and Unsubsidized)
Freshman (0-29)
$3,500
$5,500
Sophomore (30-59)
$4,500
$6,500
Junior/Senior (60+)
$5,500
$7,500
Annual Loan Limits for Independent Students
Grade Level by Credits
Subsidized Maximum
Total (Subsidized and Unsubsidized)
Freshman (0-29)
$3,500
$9,500
Sophomore (30-59)
$4,500
$10,500
Junior/Senior (60+)
$5,500
$12,500
Teacher Certification
$5,500
$12,500
Annual Loan Limits for Graduate and Professional Students

Graduate and Professional Studies

$8,500
$20,500
Lifetime Maximum Loan Limits
Dependent students:
Maximum SUB $23,000
$31,000 Total 
Independent Students:
Maximum SUB $23,000
$57,500 Total
Graduate and Professional Students
Maximum SUB $65,500
$138,500 Total

(Dependent students whose parents are unable to borrow a PLUS loan are allowed to borrow as Independent students. Contact the Office of Financial Aid for further details.)

Undergraduate Aggregates (Borrowing Limits)

Dependent students are eligible to borrow $31,000, in a combination of Subsidized and Unsubsidized Loans (with a maximum of $23,000 in Subsidized Loans), while earning their undergraduate degree.

Independent students are eligible to borrow $57,500 in a combination of Subsidized and Unsubsidized Loans (with a maximum of $23,000 in Subsidized Loans) while earning their undergraduate degree.

NOTE: Any student that has had a consolidation will have to have their Aggregate loan limits calculated by hand and have their file manually updated with accurate borrowed loan amounts. Any student that has borrowed graduate loans should submit a statement to the Office of Financial Aid asking us not to include them in the aggregate amounts that are reported by the National Student Loan Database System (NSLDS), www.nslds.ed.gov. Any graduate loans borrowed during the current academic year will be counted toward your annual Federal Direct Stafford Loan limits. Students may visit the National Student Loan Database System, (NSLDS) to view their current loan history.


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