Federal LoansFederal Direct Loan | Federal Direct Graduate PLUS LoanThere are two types of Federal Loans Fordham Law students may borrow: the Federal Direct Loan and the Federal Direct Graduate PLUS Loan. Students should borrow the Direct Loan first and, if there is additional unmet need, then borrow the Direct Grad PLUS Loan. There are two types of Federal Direct Loans: Subsidized and Unsubsidized The Federal Direct Subsidized Loan is for students with demonstrated need, as determined by Federal regulations. The maximum a student can borrow in a Federal Direct Subsidized Loan is $8,500 per academic year. No interest is charged on the loan while the student is in school, during the six-month grace period, during periods of deferment and during certain periods under the Income-Based Repayment Plan. In other words, the Federal Government subsidizes the loan. At the end of the grace period, interest begins to accrue on these subsidized loans at the rate of 6.8%. After July 1, 2012, graduate students will no longer be 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 Unsubsidized Loan borrowers. The maximum a student can borrow in a Federal Direct Unsubsidized Loan is $20,500 per academic year, less any amount received as a Direct Subsidized Loan. Interest is charged on the Direct Unsubsidized Loan at a rate of 6.8% per year from the date the loan is disbursed to the student's tuition account. Students may pay the interest that accrues on the Federal Direct Unsubsidized Loan while in school or defer repayment of the interest. Paying the interest while in school would result in a 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% origination fee for all 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 Subsidized/Unsubsidized Loans 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 non-need, credit-based loan available to law students who have an absence of bad credit. Credit approval is based on federally mandated criteria. In order to qualify, you must not have any of the following items on your credit report:
Credit approval is valid for 90 days. Your credit is evaluated every time you request a new loan unless you have had a credit decision within the preceding three months. 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:
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. Students may borrow a Direct Grad PLUS Loan up to the maximum cost of attendance less all other financial aid. Direct Grad PLUS Loans accrue interest from the date of disbursment at a fixed rate of 7.9% and carry an origination fee of 4% which is deducted prior to 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 Loans by requesting a forbearance on repayment. Interest accrued during periods of forbearance will be capitalized. |
