Federal Direct Loan Program: In March 2010, the Health Care and Education Reconciliation Act of 2010 was signed into law. This act mandates the elimination of the Federal Family Education Loan (FFEL) program (including Subsidized and Unsubsidized Stafford, Grad PLUS and Parent PLUS) and requires that all Federal student loans disbursed after July 1, 2010 be made under the William D. Ford Direct Loan Program. SDSM&T began transitioning to the Direct Loan Program during the spring 2010 semester. Effective with the summer 2010 semester, all Subsidized and Unsubsidized loans will be processed through the Direct Loan Program. If you have been awarded a Direct Loan, your award letter will include information on finalizing your loan.
You do not need to choose a lender for a Direct Loan. Direct Loan funds are disbursed directly from the Federal Government, and like any loan, must be repaid. Subsidized Direct Loans for undergraduate borrowers with a first disbursement on or after July 1, 2009 (but before July 1, 2010) have a fixed interest rate of 5.6%. Subsidized Direct Loans for undergraduate borrowers with a first disbursement on or after July 1, 2010 (but before July 1, 2011) have a fixed interest rate of 4.5%. Subsidized Direct Loans for graduate borrowers and Unsubsidized Direct Loans for all borrowers have a fixed interest rate of 6.8%. While you are in school, the Federal Government pays interest on the Subsidized Direct Loan for you; however, you are responsible to pay the interest on the Unsubsidized Direct Loan.
Your award letter shows the eligible loan program and the maximum amount you are able to receive based on your grade level, Estimated Cost of Attendance, Expected Family Contribution and other financial aid you are receiving. You are under no obligation to accept a student loan and should do so only after considering the long-term implications of borrowing more than you really need to attend college.
Repayment will be according to the provisions of your Direct Loan Master Promissory Note. You are expected to contact your Direct Loan servicer when you graduate or cease to be enrolled on at least a half time basis.
First-time Direct Loan borrowers must complete a Master Promissory Note (MPN) and Loan Entrance Counseling.
