Federal Direct Student Loans - with careful consideration, a viable option for financing education

Each student should carefully evaluate his or her projected financial needs for the academic year and borrow accordingly, without exceeding the limits established by the student budget and the student's own financial need. Once the student receives an award notice, the student can then apply for funds at www.studentloans.gov.  Always read all loan disclosure forms carefully.  Entrance and exit loan counseling is required of all borrowers to be certain they understand the nature and terms of their loans. 

Direct Stafford Loans

Beginning with disbursements made on or after July 1, 2012, only unsubsidized Stafford loans are available. Loans for graduate/professional students are made for up to $20,500 (School of Health Professions Students) and $40,500 (School of Medicine Students). The determination of unsubsidized eligibility is calculated using the following formula: Projected Budget - other grant or lower interest loan assistance = Unsubsidized Stafford eligibility.  The interest rate on the unsubsidized Stafford loan is 6.8 percent. 

Direct Graduate PLUS

A loan for graduate/professional students who have remaining unmet costs after the Stafford loan determination. The determination of graduate PLUS eligibility is calculated using the following formula: Projected Budget - Stafford eligibility - Other financial assistance = unmet costs or Graduate PLUS eligibility.

Students who need additional funds to meet the gap between aid awarded and the cost of attendance may apply for a Direct GradPLUS loan. This loan is based on credit readiness and there is a credit approval process prior to completing the Master Promissory Note.  A cosigner may be required in order to qualify for this loan if the borrower has a poor credit record.

Origination Fees

For both Stafford and Graduate PLUS there is a fee based on the percentage of each Direct Loan received.  The amount will be shown on the disclosure statement that is sent to the student by Direct Loans Program.  The fee is deducted before you receive any loan money. The loan amount you receive,  net amount, is acutally less than the amount you must repay.  Effective July 1, 2010 the Stafford Origination fee is 1% with a .5% rebate. PLUS Origination fee is 4% with a 1.5% rebate.

Special Notice concerning rebate of origination fee:  Once you begin repayment, you must make 12 on-time monthly payments to retain this benefit.

Master Promissory Note

To apply for a Direct Loan you must complete a Master Promissory Note (MPN).  The MPN is a legal agreement to repay the loan to the Department of Education.  The MPN can be used for multiple years at an institution.  This means once enrolled you will only need to complete the MPN one time. For a student borrowing both Stafford and Graduate PLUS the student would complete the MPN for Stafford and the MPN for GradPLUS.  PLUS does have a separate ANNUAL application to complete to confirm credit approval.The web-site to complete the MPN(s) is www.studentloans.gov. Note:  if the student has a legal name change, a new MPN will be required.   

EVMS-administered Loans

Students awarded EVMS-administered loans must complete a separate EVMS Promissory Note (MPN). Students will be notified when to come to the OFA to complete the required MPN for the institutional loan.

Alternative/Private Loans

Students who are not eligible for a Direct Graduate PLUS loan may apply for a private loan to meet the gap between aid awarded and the cost of attendance.

Students must submit the application online. The servicer will contact EVMS when all materials have been received from the student. EVMS will then certify the student's eligibility for the private loan so that funds can be disbursed. Aid received cannot exceed the Projected Cost of Attendance.

To compare Federal and Private Loans visit Federal Aid First