What is the Federal Direct Lending Program?

Students who apply for financial aid are reviewed for all types of aid for which they may be eligible. One of the largest federal aid programs is the William D. Ford Federal Direct Lending Program. It is comprised of loans such as the Federal Direct Stafford, Direct Unsubsidized Stafford, and Direct Graduate PLUS loans. These loans were previously processed under a program called the Federal Family Education Loan program, which required a student to select a private lender; the lender funded the federal loan for the student.

Beginning July 1, 2010 at NYU, the lender for these federal loan programs will no longer be a private lending institution. Rather, the funds will come from the U.S. federal government as supported by the U.S. Treasury.

Domestic students (U.S. citizens and U.S. permanent residents) who are enrolled at least half-time may be eligible to borrow up to $10,250 in Federal Direct Stafford loans per semester. Federal Direct Stafford Loans are low-interest education loans which do not require credit approval. The loan terms and repayment options are regulated by the federal government.

William D. Ford Federal Direct Students Loans

	Federal Direct Subsidized Stafford Loan	Federal Direct Unsubsidized Stafford Loan	Federal Direct Graduate Plus Loan
Interest Rate	6.8% fixed	6.8% fixed	7.9% fixed
Origination Fee	0.5%	0.5%	2.5%
Eligibility	Need-based. Eligibility for a need-based Federal Direct loan is determined by the data submitted to the government through completion of the FAFSA.	Not need-based.	Loan approval contingent upon a credit check.
In-School Interest	No in-school interest. The government pays the interest while the student is enrolled in school for at least six credits and during the six-month grace period.	In-school interest. Interest begins to accrue at disbursement. The student may defer the principal and the interest may be capitalized.	In-school interest. Interest begins to accrue at disbursement. The student may defer the principal and the interest may be capitalized.
Maximum Borrowing Amount	Maximum of $4,250 per semester, if the student demonstrates financial need.	Maximum of $10,250 per semester, less the amount of Federal Direct Subsidized Stafford Loan funds.	Generous loan limits. Students can borrow up to the full cost of attendance, less the amount of other financial aid received.

Direct Loan Eligibility

Be a U.S. citizen or a U.S. permanent resident (with a green card).
Have a valid Social Security Number.
File a FAFSA (Free Application for Federal Student Aid) each academic year.
Be enrolled at least half time (a minimum of six paying credits per semester). If you take less than six credits, you will not be eligible to apply for federal loans and additionally, any previous loans you borrowed will be placed into their grace period.
Meet satisfactory academic progress as defined in the Stern Bulletin.
Comply with Selective Service Registration, if required.
Must not be in default on a federal student loan.
Be below the aggregate borrowing limit ($65,500 subsidized, $138,500 combined)

Selective Service

As noted above, selective service registration is a requirement for federal aid. It is a way for the U.S. government to keep a list of names of men from which to draw in case of a national emergency requiring rapid expansion of our Armed Forces. All male U.S. citizens, and male aliens living in the U.S., who are 18 through 25, are required to register with selective service.

If you have been asked by FAFSA to provide proof of registration (or exemption), please visit www.sss.gov to apply for a Status Information Letter. Be sure to include your name, date of birth, Social Security Number, and current mailing address. As you await the arrival of the Status Information Letter, please submit the following to our office:

1. A copy of your green card (front and back) if you are a permanent resident.

2. Evidence of when you first entered the United States. (Usually demonstrated with a copy of visa stamp in passport).

3. Written explanation of your status from the time you entered the United States until you became a permanent resident.

Procedure

File the FAFSA (Free Application for Federal Student Aid) at www.fafsa.ed.gov and include NYU's school code 002785. The information you report is used to determine your eligibility for subsidized/unsubsidized Federal Direct Stafford loans and Federal Direct Graduate Plus loans.
Officially accept the loans on NYU Albert, the university-wide system. You will first receive instructions on how to secure your loans via your Stern e-mail account.
Electronically sign your Master Promissory Note (MPN) at studentloans.gov. There is a separate MPN for the Federal Direct Stafford loan and the Direct Graduate Plus loan.
Complete ONE on-line entrance counseling session at studentloans.gov. This includes information regarding both Stafford and Graduate Plus loans.
Renew the FAFSA for each academic year in which you wish to receive federal aid. The MPNs for all federal loans are valid for 10 years. However, if a student applies for the Federal Direct Graduate Plus loan with an endorser, he/she must sign a new MPN for each additional Graduate Plus loan desired.
Track your federal loans on the National Student Loan Data System. NSLDS displays information on loan amounts, balances, statuses, servicers and disbursements. Please note that loans are reported to NSLDS within 30 days of receipt of funds. If you have been making payments on a loan, the outstanding principal balance listed by NSLDS may be as much as 120 days old. You should contact the loan servicer for more up-to-date balance information.

Direct Loan Contact Information

General Federal Student Aid Information Center
(general inquiries)
(800) 433-7327
COD School Relations-Applicant Services
(Master Promissory Note assistance)
(800) 557-7394
Direct Loan Servicing Center
(entrance counseling and deferment questions)
(800) 848-0979
Direct Loan Consolidation Center
(consolidation inquiries)
(800) 557-7392
Federal Student Aid Ombudsman
(student loan issues)
(877) 557-2575