Federal Direct Stafford Loan

The Direct Loan Program is one of the Federal Student Aid programs of the U.S. Department of Education. Generally known as Stafford Loans, the loans can provide you with a simple, convenient, and flexible way to borrow money to pay for your education.

No Banks
If you take out a Federal Direct Loan, you or your family will not be borrowing money from a bank. Direct Loans are loans made with federal capital and owned by the federal government. Loan repayments are made to the government, and Direct Loans are never sold.

Since borrowing is directly from the government, borrowers make loan payments to the Department of Education for the life of their loans. It's "one-stop shopping" from loan application to repayment.

How to Get Started
The process is simple for borrowers. Direct Loan borrowers first need to complete the Free Application for Federal Student Aid (FAFSA).  Based on the information provided on the FAFSA, our office will determine the type and amount of financial aid you are eligible to receive.

There are two kinds of federal Direct Loans:

• Direct Stafford Subsidized Loan: With a subsidized loan, the government pays the interest on this loan while you are attending school at least half-time and during your grace period (six months after you are no longer enrolled on at least a half-time basis).
• Direct Stafford Unsubsidized Loan: You can get this loan regardless of your family's income. This loan is a non-need-based loan, and you must pay the interest on a semiannual basis while you are enrolled in school and during the grace period or the interest will be added to the principal (original amount) of your loan at the time of repayment. To estimate monthly loan payments, use this online loan calculator.

At Ball State, the student borrower will also need to complete a Stafford loan request and indicate the amount of money of which you are eligible that you wish to borrow. So, for example, if you qualified for $5,000 in aid, you may only wish to borrow $2,000.

If you are considered a dependent student, one of your parents may apply for a Federal Direct Parent Loan for Undergraduate Students (PLUS).

Interest Rate

Refer to the table below for the interest rates of an undergraduate Direct Stafford Subsidized Loan.

Fees
For loans made after July 1, 2009, a 1.5 percent loan fee (minus a 1.0 percent rebate) will be deducted from each loan disbursement. This fee helps reduce the government's cost of the loan.

Loan Limits for an Academic Year
Loan limits for undergraduate students vary depending on your class level and your dependency status as determined by the information provided on your FAFSA.

Limits for dependent students are

• $5,500 (for loans first disbursed on or after July 1, 2008) if you're a first-year student enrolled in a program of study that is at least a full academic year. No more than $3,500 of this amount can be in subsidized loans.
• $6,500 (for loans first disbursed on or after July 1, 2008) if you've completed your first year of study and the remainder of your program is at least a full academic year. No more than $4,500 of this amount can be in subsidized loans.
• $7,500 (for loans first disbursed on or after July 1, 2008) if you've completed two years of study and the remainder of your program is at least a full academic year. No more than $5,500 of this amount can be in subsidized loans.

Limits for independent undergraduate students are

• $9,500 (for loans first disbursed on or after July 1, 2008) if you're a first-year student enrolled in a program of study that is at least a full academic year. No more than $3,500 of this amount may be in subsidized loans.
• $10,500 (for loans first disbursed on or after July 1, 2008) if you've completed your first year of study and the remainder of your program is at least a full academic year. No more than $4,500 of this amount may be in subsidized loans.
• $12,500 (for loans first disbursed on or after July 1, 2008) if you've completed two years of study and the remainder of your program is at least a full academic year. No more than $5,500 of this amount may be in subsidized loans.

Students who have earned fewer than 30 semester credits are freshmen. Students who have earned between 30 and 62 credits are sophomores. Students who have earned between 63 and 96 credits are juniors. Students who have earned 96 credits or more are seniors.

Limit for Graduate or Post-baccalaureate students are

• $20,500. No more than $8,500 of this amount may be in subsidized loans.

Students seeking  a second undergraduate degree may borrow only at the undergraduate level. Students seeking teacher certification or licensure may borrow up to $12,500 ($7,000 must be unsubsidized). 

Total Loan Debt
The total Federal Stafford Loan debt you can acquire is

• $31,500 as a dependent undergraduate student. No more than $23,000 of this amount may be in subsidized loans. 
• $57,500 as an independent undergraduate student. No more than $23,000 of this amount may be in subsidized loans. 
• $138,500 as a graduate student (this includes undergraduate loans). No more than $65,000 of this amount may be in subsidized loans.

Method of Payment
Loan proceeds will be credited directly to your student account. Fees, plus housing and dining charges (also known as room and board) will be paid. If the amount of your loan is greater than the amount of these charges or if these charges have already been paid, a refund will be issued to you.

Electronic Master Promissory Note (MPN)
Federal regulations require that first-time borrowers complete a Master Promissory Note. Loan proceeds will not be disbursed until the MPN has been completed. 

If you have borrowed previously but are a new borrower with the Direct Loan Program, you must also complete an MPN.

Entrance and Exit Counseling
If you are a first-time borrower, you must complete an online loan counseling session. Loan proceeds will not be disbursed until the loan counseling requirement has been met.

In addition, if you graduate, drop below half-time, or withdraw from Ball State, you are required to complete an online exit interview with the U.S. Department of Education.

During this session you will receive general information on expected monthly repayments, repayment options, and debt management planning to facilitate repayment.

Repayment
Repayment of your loan begins six months after you graduate, withdraw, or drop below half-time enrollment status. Minimum monthly payments are $40.

You have four repayment plans to select from:

• Standard (10 years) 
• Extended (not to exceed 25 years)
• Graduated (not to exceed 10 years)
• Income Contingent