What is the difference between a Direct Subsidized and a Direct Unsubsidized Stafford Loan?

The Federal Government pays the interest for Direct Subsidized Loans while the student is in college or while the loan is in deferment. Interest begins accruing for Direct Unsubsidized Loans as soon as the loan is taken out.

How much can I borrow?

For subsidized loans, the maximum is $3,500 for freshmen, $4,500 for sophomores, and $5,500 for juniors and seniors. Undergraduates who are not eligible for Direct Subsidized Loans may borrow an identical amount in a Direct Unsubsidized Loan. Undergraduates may also borrow an additional $2,000 in a Direct Unsubsidized Loan after they have exhausted their initial subsidized/unsubsidized eligibility. Graduate students may borrow a Direct Unsubsidized Loan for up to $20,500.

Undergraduates may not borrow subsidized loans in excess of their financial need (the difference between the cost of attending Drew and our estimate of your contribution to you or your child’s education). No student may borrow unsubsidized loans in excess of his/her cost of attendance.

What are the interest rates?

2012-2013 Direct Loan Interest Rates and Fees
(for loans with a first disbursement date on or after July 1, 2012)

Direct Loan Program Interest Rate Fee*
Subsidized Federal Direct Loan
(for undergraduates only)		 3.4% 1.0%, without rebate*0.5%, with rebate*
Unsubsidized Federal Direct
Loan		 6.8% 1.0%, without rebate*0.5%, with rebate*

*Direct Loan Fee Rebate: The Subsidized and Unsubsidized Federal Direct Stafford Loans have a 1.0% origination fee and a 0.5% up-front interest rebate (for 2012-2013 academic year loans) on the origination fee – resulting in a net fee of 0.5%, which will be deducted from the gross amount of the loan borrowed.

When are the payments due?

Repayment begins six months after leaving college, payments are made monthly, and you have ten years to repay the loan.

How do I apply?

  • Fill out a FAFSA and indicate you are interested in a Direct Student Loan. Your FAFSA is your loan application.
  • Once Drew receives your FAFSA and other required financial aid forms, your financial aid counselor will determine your eligibility for Direct loan funds and will award them to you accordingly.
  • A Financial Aid Award Agreement will be sent to you. Be sure to sign and date the top, indicate in the columns at the bottom the amount of the loan funds you want or do not want, then return this form to the Office of Financial Assistance at Drew.
  • Once we receive your Financial Aid Award Agreement, you will be sent information on how to apply for your Direct Stafford Loan. You will be directed to a website where you will be provided with instructions how to electronically fill out your master promissory note. Students only need to fill this form out once in ten years, so they will not be required to complete it again while at Drew. After you’ve filled out a Master Promissory Note, in subsequent years, you only need to continue filling out the FAFSA form and returning the Financial Aid Award Agreement to Drew to receive Stafford loan funds.
  • The Department of Education will transmit your funds electronically to Drew’s business office, who will then credit the funds to your account.
  • If you have a credit on your account after receiving loan funds, and are not on any payment plan, the business office can usually mail you a check for the credit on your account 7-10 days after you call them with your request (973-408-3114).