IONA

Federal William D. Ford Direct Loans

What are Federal Direct Loans?
Federal Direct loans can be subsidized or unsubsidized and are processed through the U.S. Government. Students can receive both a subsidized loan and an unsubsidized loan for the same enrollment period. Repayment begins six months after graduation or six months after the borrower's enrollment status is less than half time (five or fewer credits).

A subsidized loan is awarded on the basis of financial need. Financial need is calculated by subtracting the Expected Family Contribution (EFC) from the Cost of Attendance (COA.) The EFC is determined by the Department of Education and is calculated from data provided on the Free Application for Federal Student Aid (FAFSA). The COA is determined by the College. Interest on this loan is not charged while you are in school enrolled for six or more credits and during your six month grace period. The federal government "subsidizes" the interest for you during these periods.

An unsubsidized loan is non-need based. Borrowers are charged interest from the time the loan is disbursed until repayment is complete. Interest can be deferred while the borrowers are enrolled at least half-time or during other non-payment periods, however, it will accrue and then be capitalized. Deferred and capitalized interest will be added to the principal amount of the loan and additional interest will be based on that higher amount.

How much can I borrow?
The amounts students can borrow is dependent on the grade level in school and on the borrowers' classification: dependent undergraduate, independent undergraduate (or a dependent undergraduate whose parents are unable to get a PLUS Loan), or graduate student.

Effective July 1, 2012, graduate students are no longer eligible to borrow Federal Direct Subsidized Loans. The annual loan limits for graduate students will remain unchanged at $20,500 but this amount will now be limited to Direct Unsubsidized Loans.

Annual Loan Limits for Subsidized and Unsubsidized Loans First Disbursed on or after July 1, 2008:
  Dependent Undergraduate Student Independent Undergraduate Student Graduate/Professional Student
1st Year $5,500 - No more than $3,500 of this amount may be in subsidized loans. $9,500 - No more than $3,500 of this amount may be in subsidized loans. $20,500 - Effective July 1, 2012, graduate students are no longer eligible for interest subsidies.
2nd Year $6,500 - No more than $4,500 of this amount may be in subsidized loans. $10,500 - No more than $4,500 of this amount may be in subsidized loans.
3rd and 4th Years (each $7,500 - No more than $5,500 of this amount may be in subsidized loans. $12,500 - No more than $5,500 of this amount must be in subsidized loans.
Maximum Total Debt from Loans When You Graduate $31,000 - No more than $23,000 of this amount may be in subsidized loans. $57,500 - No more than $23,000 of this amount may be in subsidized loans. $138,500 - No more than $65,500 of this amount may be in subsidized loans. The graduate debt limit includes Loans received for undergraduate study.

How do I apply for a Federal Direct Loan?
Students must submit the FAFSA. The Student Financial Services Office will then notify students of their eligibility for a Federal Direct Loan. If accepting the loan, students must complete both the Entrance Counseling and the Master Promissory Note (MPN).

How do I receive my loan funds?
Loan funds are disbursed in two or more disbursements directly to Iona College student accounts. The Federal Government deducts a 1.051% origination fee from the loan proceeds prior to disbursement.

What are the interest rates?
Federal Direct Loans disbursed between July 1, 2013 and June 30, 2014 will have the following interest rates:
Subsidized - 6.8%
Unsubsidized - 6.8%