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Federal Loans

Federal Direct Unsubsidized Loan | Federal Direct Graduate PLUS Loan

There are two types of Federal Loans Fordham Law students may borrow:  the Federal Direct Unsubsidized Loan and the Federal Direct Graduate PLUS Loan. Students should borrow the Direct Unsubsidized Loan first and, if there is additional unmet need, then borrow the Direct Graduate PLUS Loan.

(As of July 1, 2012, graduate students were no longer eligible to borrow the Federal Direct Subsidized Loan.) 

The Federal Direct Unsubsidized Loan is not need based.  There is no credit check performed for Direct Loan borrowers.  The maximum a student can borrow in a Federal Direct Loan is $20,500 per academic year. As of July 1, 2014, Direct Loans will have a fixed interest rate of 6.21% for the life of the loan.  In the future, the interest rate may fluctuate depending on the academic year but will remain fixed on the particular loan.  Thus, loans borrowed at Fordham Law School may have interest rates that differ from each other.  Interest will be charged from the date the loan is disbursed to the student's tuition account. Students may pay the interest that accrues on the Federal Direct Loan while in school or defer repayment of the interest.  Paying the interest while in school would result in considerable savings over the life of the loan.  If unpaid, the interest will be capitalized, i.e., added to principal, at repayment, and future interest will accrue on this higher principal balance. 

The U.S. Department of Education charges a 1.072% origination fee for all of its Direct Loans, and the fees are deducted prior to disbursement.  Direct Loans are disbursed in two equal installments:  one-half at the beginning of the fall semester, and the remaining half at the beginning of the spring semester. 

There is a six-month grace period on the Direct Loan which begins the day after you graduate, leave school, or drop below half-time enrollment.  Repayment begins at the end of the grace period.  Generally, you will have 10-25 years to repay your Direct Loans, depending on the repayment plan you choose.

The Federal Direct Graduate PLUS Loan, usually referred to as the Grad PLUS Loan, has the same eligibility requirements as the Direct Loan; however, this loan is a credit-based loan available to law students who have an absence of adverse credit.  As of July 1, 2014, Grad PLUS loans will have a fixed interest rate of 7.21% for the life of the loan.  In the future, the interest rate may fluctuate depending on the academic year but will remain fixed on the particular loan.  Grad PLUS Loans accrue interest from the date the loan is disbursed to the student's tuition account and carry an origination fee of 4.292% which is deducted at disbursement.  Accrued interest can be paid while you are in school or it will be capitalized, i.e., added to principal at repayment.  Loan repayments can be deferred while in school at least half time.  These loans do not have a grace period.  Repayment will begin within 30-60 days after graduation, and you will have 10-25 years to repay these loans, depending on the repayment plan you choose. Repayment of your Direct Grad PLUS Loan may be aligned with repayment of your Federal Direct Loan by requesting a forbearance on repayment.  Interest accrued during periods of forbearance will be capitalized.

Credit approval is based on federally mandated criteria. Please note that the Department of Education recently changed its credit criteria.  The recent changes are listed in bold below.  In order to qualify, you must not have any of the following items on your credit report:

  • Bankruptcy (Chapters 7, 11 or 12 within the past 5 years);
  • Voluntary surrender within the last 5 years;
  • Repossession within the last 5 years;
  • Foreclosure proceedings started;
  • Foreclosure within the last 5 years;
  • Deed in lieu of foreclosure;
  • Accounts currently 90 days or more delinquent;
            (a) Unpaid collection accounts;
            (b) Charge offs/write offs;
  • Wage garnishment within the last 5 years;
  • Defaulted loan that has been claim paid;
  • Lease or contract terminated by default; or
  • County/State/Federal tax lien within the past 5 years.

Credit approval is valid for 90 days.  Your credit is evaluated each time you request a new loan unless you have had a credit decision within the preceding 90 days.  If you think you may have adverse credit, you may want to obtain your credit report in advance of applying for a Direct Grad PLUS Loan.

If you are denied credit, your options are to:

  • Apply for the loan with an endorser, who is a credit worthy loan co-signer
  • Reapply after you correct any invalid information on your credit report
  • Appeal, based on extenuating circumstances, with Applicant Services at: 1-800-557-7394 (or 1-8770461-7010 TDD)  Monday - Friday 8:00 a.m. to  8:00 p.m.  The appeal process requires an applicant to document, to the satisfaction of the Department of Education, that either (1) the information causing the adverse credit decision is incorrect or has been corrected OR (2) there are extenuating circumstances relating to the adverse credit history. 

Correspondence will be sent to Direct Grad PLUS Loan applicants who receive an adverse credit determination.  Instructions regarding the denial of your application and securing an endorser for the loan will be included.  Please note that while we are glad to guide you through the process, our office has no control over credit decisions determined by the Department of Education.