Answers for Federal Direct Loan FAQ
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Am I eligible for a federal Direct Loan? |
Undergraduate, graduate, and professional students are eligible for the Federal Direct Loan Program if they meet the general eligibility requirements as determined by the FAFSA, are enrolled or expect to be enrolled at least half time as a degree seeking student, meet satisfactory academic progress, and are not currently in default of any previously disbursed federal loan or a owe a refund to a Federal Student Aid Program. |
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How do I apply for a federal Direct Loan? |
In order to be considered for a Federal Direct Loan, students must complete the following steps:
- Submit your FAFSA and complete any additional follow-up paperwork our office may require.
- Read and sign a new Master Promissory Note with the William D. Ford Direct Loan Program.
- If you are a new borrower, read and complete Entrance Counseling.
- Accept or decline your Direct loan on VIP.
For more information, click here. |
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What determines whether the loan I am awarded is subsidized or unsubsidized? |
A subsidized loan is a need based loan that will not accrue interest while the student is enrolled at least half time in an undergraduate degree-seeking program. An unsubsidized loan is non-need based and will accrue interest at a rate of 6.8%. To qualify for a Subsidized Federal Direct Loan, a student must have unmet financial need after all other gift aid is awarded. Financial need is determined as the estimated Cost of Attendance for the award period you are attending minus your Expected Family Contribution for the same period. Gift aid is normally considered to be any assistance program a student may receive as payment toward educational expenses that doesn't require future repayment, such as scholarships and grants. A student who has no remaining financial need may then qualify for an Unsubsidized Federal Direct Loan. Graduate and Professional students are not eligible for subsidized loans. |
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What is the interest on a Federal Direct Loan? |
Currently, the interest rate is fixed at 6.8%.For more information about the interest rate on loans you may have previously borrowed, please contact your lender. |
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Are there any fees to use a Federal Direct Loan? |
Yes, there is a 1.0% origination fee associated with all disbursements of Federal Direct Loans with a .5% automatic rebate.
Please note that prior to disbursement; the loan amount listed on your account does not necessarily reflect loan fees deducted from your disbursement by your lender. For example, if your award is $1,000 and your loan origination fee is 1%, the net disbursement will be $990. |
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How much can I borrow? |
Federal Direct Loan Limits (EFFECTIVE JULY 1, 2008)
|
Freshman
(0-29 credit hours) |
Sophomore
(30-59 credit hours) |
Junior/Senior
(60+ credit hours) |
Aggregate Limit |
Dependent Undergraduate |
$5,500, no more than $3500 of which can be subsidized
|
$6,500, no more than $4500 of which can be subsidized |
$7,500, no more than $5500 of which can be subsidized |
$31,000, no more than $23,000 of which can be subsidized |
Independent Undergraduate(and Dependents with PLUS Denials) |
$9,500, no more than $3500 of which can be subsidized |
$10,500, no more than $4500 of which can be subsidized |
$12,500, no more than $5500 of which can be subsidized |
$57,500, no more than $23,000 of which can be subsidized |
Graduate students may borrow $20,500 annually. The graduate aggregate loan limit is $138,500, no more than $65,500 of which can be subsidized.
Please note that the University of South Carolina encourages students to borrow responsibly. Visit this loan repayment calculator to learn what you may expect your payments to be. |
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I'm a returning student. Who is my lender? |
Beginning with Fall 2010, if you receive a loan at USC, your lender is the U.S. Department of Education through the William D. Ford Direct Loan Program.
If you are a continuing student who has received a loan in the past or you are a transfer student having received a Federal Student at another school, you may review your loans at the student access website for the National Student Loan Data System. |
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What is the Master Promissory Note and how do I sign it? |
The Master Promissory Note is a binding, legal document outlining the terms and conditions of the loan. All students must sign a new promissory note with the William D. Ford Loan Program before you may use the funds to pay your university fees or receive an overage. To learn more, click here. |
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What is Entrance Loan Counseling and do I need to do it? How do I complete it? |
Entrance Loan Counseling is a process that will explain your rights and responsibilities as a new Direct Loan borrower. If this is your first time receiving a Direct Loan, then you may
click here to complete Entrance Loan Counseling. |
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| How will my loan be issued? |
According to federal regulations, your student loan must be issued in multiple disbursements during the academic year. If you plan to enroll for both fall and spring, your loan will be issued in two equal disbursements (one disbursement per term). If you plan to enroll for only one term, either fall or spring, your student loan will be issued to you in one disbursement, the amount to be determined by your eligibility. |
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How do I change my loan amount? |
The University of South Carolina will award your Direct Loan to the maximum of your eligibility. On VIP you may choose to either fully accept or fully decline your loan amount. If you wish to request a lower amount, you must indicate this choice on your award letter, available on VIP, and return it the Financial Aid Office. You may also send your request via e-mail to our office at uscfaid@mailbox.sc.edu. |
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I will only take one class this semester. Can I still get a student loan? |
| To be eligible for a federal Direct Loan, both graduate and undergraduate students must be enrolled in at least six hours in a degree seeking program |
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I graduate in December. What happens to my loans? |
For seniors in their final semester, the federal student loan must be prorated based on enrollment and the spring disbursement cancelled. |
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What will happen if I change class rank during the academic year? |
| If you change rank during the academic year, you may be eligible for additional federal student loan funds. If you change rank from a freshman to a sophomore, from a sophomore to a junior, or from an undergraduate to a graduate student during the academic year, and you wish to be considered for additional loan funds, please contact our office. |
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When do I need to begin paying back my loans? |
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Repayment of the federal Direct Loan program will begin six months after graduation or after dropping below half-time status. |
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Can I consolidate my loans? |
Repayment of your Federal Direct Loan’s will begin six months after you graduate or drop below half time status. An option to combine your separate federal student loans under one repayment exists with the Federal Loan Consolidation Program. There are pros and cons associated with loan consolidation.
Before deciding that consolidation is for you, be sure to consider the cost and weigh the benefits. While it can simplify loan repayment and lower your monthly payment, it can also significantly increase the total cost of repaying your loans. Consolidation offers lower monthly payments by offering you up to 30 years to repay your loans. You’ll make more payments and pay more in interest. In fact, in some situations consolidation can double your total interest expense. If you don’t need monthly payment relief, you should compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidated loan.
Click here for a consolidation loan checklist.
Click here to learn more about consolidation
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