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Federal Direct Student Loan Program

 

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If you are interested in the Federal Direct Student Loan Program,
PLEASE READ THIS
ENTIRE DOCUMENT CAREFULLY.

 

 

WHAT IS A FEDERAL DIRECT STUDENT LOAN?

Since July 1, 2010, all new federal education loans have been originated through the Federal Direct Student Loan Program (FDSLP). The loans are administered through “Direct Lending Schools” and are provided/serviced by the U.S. government directly to students.

These loans have low interest rates Interest Rate 2012-2013: Subsidized – 3.4% fixed
Unsubsidized – 6.8% fixed

Interest Rate 2013-2014: Subsidized – 3.86% fixed
Unsubsidized – 3.86% fixed
and do not require credit checks or collateral. Student loans also provide a variety of deferment options and extended repayment terms. Loan funds are subject to a 1.072% loan fee which is deducted from each disbursement check. Repayment begins six months after the student graduates or drops below half-time enrollment. Average loan indebtedness at Allegany College of Maryland is currently $9,144 per graduate.

The main federal loan for students is called the Stafford Loan and has two variations:

Subsidized Loan –  is awarded on the basis of need. If a borrower qualifies for a subsidized loan, the federal government pays the interest while you are in school and during periods of deferment.

Unsubsidized Loan – is not awarded on the basis of need. With this type of loan you pay all the interest, although you can have the payments deferred until after graduation.

Federal Direct Loans may be processed as subsidized or unsubsidized depending on the borrower’s eligibility. The types of loans a borrower is eligible for will depend on the student’s Free Application for Federal Student Aid (FAFSA) results. (www.fafsa.gov)



HOW MUCH CAN I BORROW?
The following chart illustrates the annual and aggregate loan limits for the subsidized and unsubsidized Stafford Loans first disbursed on or after July 1, 2008.  

*ACM can only originate loans through the sophomore level.

 

ANNUAL LOAN LIMITS

Dependent Students
(whose parents were not denied a PLUS loan)

Combined Base Limit for Subsidized and Unsubsidized Loans

Additional Limit for Unsubsidized Loans

Total Limit for Unsubsidized Loans (minus subsidized amounts)

First-Year Undergraduate (Freshman - 0-27 credit hours earned)

$3,500

$2,000

$5,500

Second-Year Undergraduate (Sophomore - 28+ credit hours earned)

$4,500

$2,000

$6,500



ANNUAL LOAN LIMITS

Independent Students
(and dependent students whose parents were denied a PLUS loan)

Combined Base Limit for Subsidized and Unsubsidized Loans

Additional Limit for Unsubsidized Loans

Total Limit for Unsubsidized Loans (minus subsidized amounts)

First-Year Undergraduate (Freshman - 0-27 credit hours earned)

$3,500

$6,000

$9,500

Second-Year Undergraduate (Sophomore - 28+ credit hours earned)

$4,500

$6,000

$10,500



AGGREGATE LOAN LIMITS
 

Combined Base Limit for Subsidized and Unsubsidized Loans

Additional Limit for Unsubsidized Loans

Total Limit for Unsubsidized Loans (minus subsidized amounts)

Dependent Undergraduate Students (whose parents were not denied a PLUS loan)

$23,000

$8,000

$31,000

Independent Undergraduate Students (and dependent students whose parents were denied a PLUS loan)

$23,000

$34,500

$57,500




HOW DO I APPLY FOR A FEDERAL DIRECT STUDENT LOAN?

Students must complete the FAFSA and have a complete financial aid file for the academic year before the Federal Direct Loan will be awarded. Eligibility for loan funds will be listed on the Award Notification Letter mailed from the Student Financial Aid Office. The approved amounts will be pending until receipt of the Loan Acceptance Form also included with the Award Notification Letter.

Students must attend a minimum of six credit hours per semester in order to be eligible for a Federal Direct Loan.
A completed file includes:

  • FAFSA results
  • Either completion of the IRS Data Retrieval process OR official IRS Federal Tax Return Transcript
  • Non-tax filing statement, if applicable
  • Verification Worksheet
  • Final High School transcript or copy of GED on file in the Admissions Office
  • Authorization to Pay Expenses from Financial Aid Form

New/Transfer Borrowers:

  • Cancel all loan(s) and other aid at prior institution that cover the same period of enrollment desired at Allegany College of Maryland.
  • ACM will notify previous lender(s) and/or servicer of your current enrollment status through the National Student Clearinghouse as well as the new anticipated graduation date from Allegany College of Maryland.
  • First-time federal student loan borrowers will be required to complete Entrance Counseling and sign a Master Promissory Note (MPN) online at www.studentloans.gov .

NOTE: A school can refuse to certify a loan or can certify a loan for an amount less than requested if the school documents the reason in writing. The school's decision is final and cannot be appealed to the U.S. Department of Education.

 

 

WHAT IS A MASTER PROMISSORY NOTE (MPN)?

The Master Promissory Note (MPN) is a legal document in which one promises to repay loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s). Students can borrow additional Federal Direct Loans on a single MPN for up to 10 years. 

Click here to sign your MPN 

 

 


HOW WILL FUNDS BE DISBURSED?

ACM will disburse Federal Direct Loan money by crediting the net amount to the student's account to pay tuition, fees, and other authorized charges. If the loan disbursement amount exceeds the student's school charges, ACM will mail a credit refund check to the borrower at the address listed in the Admission/Registration Office.

The Federal Direct Loan will be disbursed in at least two payments; no payment may exceed one-half of the total loan amount. 

NOTES:

  • All First-year, First-time borrowers at Allegany College of Maryland will have the first disbursement held until 30 days from the first day of the semester.
  • If enrolled in a one-semester certificate program, your loan(s) will disburse in two equal installments.
  • If credits in B-term or late start classes are part of your 6 credit hour minimum, loan funds will not disburse until after these classes have started.
  • After your payment has been credited to your account, the Business Office has up to 14 days to issue credit balances or refunds.

 

 

HOW DO I CANCEL OR REDUCE APPROVED LOAN AMOUNTS?

Students have the right to cancel or change their requested loan amount at any time during the academic year.
Click here to cancel or change your loan now.

 

 

WHEN DO I BEGIN REPAYING MY LOAN?

You don’t have to begin repaying most federal student loans until after you leave college or drop below half-time enrollment. At that time, you will enter a 6 month grace period.
The grace period is a set period of time after you graduate, leave school, or drop below half-time enrollment before you must begin repayment on your loan. The grace period gives you time to get financially settled and to select your repayment plan.

When your grace period expires, your loan servicer or lender must provide you with a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment. The standard repayment term is 10 years, although one can get access to alternate repayment terms (extended, graduated and income contingent repayment) by consolidating the loans. 

 

 

HOW DO I MAKE MY PAYMENTS?

The U.S. Department of Education (ED) uses several loan servicers to handle the billing and other services on loans for the William D. Ford Federal Direct Loan (Direct Loan) Program and for loans that were made under the Federal Family Education Loan (FFEL) Program and that ED later purchased. You’ll tell your loan servicer which repayment plan you’d like to choose.


Click here for a sample repayment schedule estimator


Please contact ACM Student Financial Aid Office at 301-784-5213 with any questions.

 

Other useful resources:
www.nslds.ed.gov
www.studentaid.ed.gov
www.finaid.org