FEDERAL DIRECT SUBSIDIZED LOAN
Direct Subsidized Loan Q&A
Who is eligible for a federal direct subsidized loan?
You must meet the all the eligibility requirements for federal financial aid as described in the section on Pell. You must also demonstrate financial need for the loan. Financial need is demonstrated when your expected family contribution (EFC), plus the loan amount, plus any other financial aid you are receiving adds up to less than your cost of attendance.
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How much can I borrow in direct subsidized loans?
Dependent Undergraduate Students
First year total $5,500 (maximum $3,500 subsidized)
Second year total $6,500 (maximum $4,500 subsidized)
Third year and beyond $7,500 (maximum $5,000 subsidized)
Independent Undergraduate Students
First year total $9,500 (maximum $3,500 subsidized)
Second year total $10,500 (maximum $4,500 subsidized)
Third year and beyond $12,500 (maximum $5,500 subsidized)
Graduate and Professional Students
Total amount each year $20,500 (maximum subsidized $8,500
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Are there any other limitations on the amount I may borrow?
Yes. You may not borrow more than the cost of attendance at Queens College, minus the EFC and any other financial aid you receive. Before processing your loan request, the Financial Aid Office will calculate the amount of loan assistance you are eligible for.
If your period of enrollment is less than a full academic year, the amount of loan assistance you are entitled to may be lower than the maximum amounts listed above. Furthermore, the federal government may restrict how frequently you may request or receive the maximum loan amount. Finally, the Financial Aid Office may refuse to process your loan request or may otherwise reduce the amount of your loan, if it provides you with a written explanation for its decision.
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When should I apply for a loan?
A student loan is a serious legal and financial obligation. You should apply for a loan only after careful consideration of all other options for financing your education. Think of borrowing as a commitment to pursuing and completing your education successfully. If you find you have to interrupt your studies, you could face having to repay your loan without the education you went into debt to obtain.
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How do I apply for a federal direct loan?
1. Complete a FAFSA application for the academic year.
2. You will need to submit a direct loan electronic master promissory note (DL eMPN) at http://dlenote.ed.gov before you submit direct loan request papers to us. Be sure to bring a copy of that completed DL eMPN when you submit your loan request.
3. Ask in the Financial Aid Office for the direct loan request papers. Complete and submit the request forms and a copy of your completed Queens College DL eMPN in the Financial Aid Office.
4. If you were already approved for a direct loan at another college for the same loan period, be sure to cancel it before filing for a loan through us.
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What happens after I've submitted my loan request to the Financial Aid Office?
Your request will be processed after the direct loan staff has determined that:
a. you have filed a FAFSA for the current academic year;
b. the information you provided on your FAFSA is correct;
c. you have registered for at least 6 credits or the equivalent.
First time borrowers at QC must sign an Electronic Master Promissory Note (eMPN) online. The eMPN is a legal document that lists the terms and conditions under which you are borrowing and agreeing to pay back the money.
If you don't sign the eMPN, a paper MPN will be mailed to you about two weeks after your loan request is processed. Sign and return the paper MPN in the envelope provided. Be aware that utilizing the paper method may delay receipt of your loan funds.
All borrowers also receive a loan disclosure statement. The loan disclosure statement contains information about the type of loan, the approved loan amount, and anticipated dates of disbursement.
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Do I have to sign a new master promissory note each year?
Once you have signed an electronic or paper master promissory note for a federal direct loan, you are not required to sign a new MPN in most instances. The note already on file will be used for subsequent year loan borrowing under the federal direct loan program. You always have the option of re-signing your MPN every time you borrow, but it is not a requirement. Note: If you previously signed an MPN that did not result in a disbursement of direct loan funds, you must re-sign your MPN for subsequent loan requests.
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When do I get my money?
Every attempt is made to have the actual loan disbursement dates coincide with the anticipated disbursement dates on your loan disclosure statement. However, this is not always possible. Your actual loan disbursement date depends on when your MPN is returned and acknowledged by the processor and when this information links up with a scheduled CUNY financial aid payment cycle.
Your disbursement will be either in the form of a check or a direct deposit. If you have elected the direct deposit option for receiving disbursements, your disbursement will be credited to your direct deposit account on the scheduled disbursement date. You will notified by mail when your funds are available.
Before crediting any loan funds toward your tuition or releasing any funds to you, the college will verify that you enrolled on at least a half-time basis.
The Bursar's Office will calculate unpaid tuition and fee balances at the time your loan is disbursed. Deductions from your loan proceeds will be credited to your unpaid charges before you receive the balance of your funds.
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Do I get my money all at once?
No. You will receive your loan money in at least two installments, neither of which will exceed one-half of the loan total. For loans covering the full academic year, the second disbursement will occur approximately 30 days after the start of the spring semester. For loans covering one semester only, the second disbursement will occur about midway through the semester.
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Can I cancel all or part of my loan(s) after it has been disbursed?
If you plan on canceling your loan after it has been disbursed, make sure you contact the Fianncial Aid office as soon as possible.
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What is the interest rate charged on this loan?
It varies. The interest rate for your loan is adjusted each year on July 1 and is calculated according to a federal formula. However, it will never exceed 8.25%. You will be notified as the interest changes throughout the life of the loan.
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Am I charged interest while going to school?
No. This loan is called a subsidized loan because the federal government supports or subsidizes the interest payments while you are in school and during any grace or deferment periods. You do not pay interest on a subsidized loan until your loan enters repayment.
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Is there a charge for this loan?
Yes. You'll pay an origination fee of 3 percent and a federal default fee of 1 percent. These will be deducted proportionately from each disbursement. Some of this fee will go to the federal government to help offset the administrative costs of the loan.
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When do I pay back my loan?
You have a six-month grace period after you graduate, leave school, or drop below half-time before you begin repaying your loan. During the grace period, you do not have to make payments on the principal and you are not charged any interest. You can, of course, prepay any portion of your loan at any time without penalty.
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Who manages my loan account?
The U.S. Department of Education's Direct Loan Servicing Center will manage your loan accounts until your loans are paid in full. Its toll-free telephone number is 1-800-848-0979. For general correspondence, the address is:
Borrower Services Department
Direct Loan Servicing Center
P.O. Box 5609
Greenville, TX 75403-5609
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How can I find out how much I have borrowed?
Using your PIN, you can obtain complete information about your direct loan account and even make online payments at Direct Loan Servicing Online.
You may also access information about your student loan borrowing and other types of federal student aid you have received at the National Student Loan Data System (NSLDS).
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Where do I send my loan payments?
You can make direct loan payments electronically at Direct Loan Servicing Online. You may also repay the U.S. Department of Education by sending your loan payments to:
US Department of Education
Direct Loan Payment Center
P.O. Box 530260
Atlanta, GA 30353-0260
You can make payments at any time on your loans. Be sure to include your Social Security number (SSN) on your check. You should check the Direct Loan Servicing Online website for further instructions about mailing your direct loan payments.
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What if I have trouble making my direct loan payments?
The first thing to do is to contact the Direct Loan Servicing Center at 1-800-848-0979. A representative will talk to you about options that may make it easier for you to manage your monthly payment schedule. You may be able to have your monthly payments lowered by changing to a different payment plan.
Under some circumstances, such as returning to school, becoming unemployed, or suffering economic hardship, you may qualify for a deferment. If granted a deferment, you will be able to suspend regular loan payments for a certain time. If your loan was first disbursed after July 1, l993, and you are not in default, refer to the Student Loan Deferment and Cancellation Summary for a list of available deferments.
Being granted a deferment is not automatic. You must submit your request for a deferment in writing and continue to make your regular loan payments until the deferment is granted. You may view the approved conditions for obtaining a deferment and download the appropriate deferment form for your situation at the Direct Loan Servicing Online Deferment Forms page.
If you don't qualify for a deferment, you may be able to request a forbearance. If granted forbearance, you may be permitted to reduce or delay your regular payments for a time.
Being granted forbearance is not automatic. You must submit your request for forbearance in writing and continue to make your regular loan payments until forbearance is granted. If your loan debt burden equals or exceeds 20 percent of your gross income, you have a right to forbearance, renewable annually for up to three years. You may view the approved conditions for obtaining forbearance and download the appropriate forbearance form for your situation at the Direct Loan Servicing Online Forbearance Forms page.
Mail your deferments, forbearances, and other correspondence to the following address:
Direct Loan Servicing Center
Borrower Services Department
P.O. Box 5609
Greenville, TX 75403-5609
Finally, if you have a number of educational loans and have difficulty making payments on all of them, you may qualify for a federal direct consolidated loan. Consolidation allows you to combine multiple loan debts into just one monthly payment and can help lower your monthly repayment amount by extending the repayment period.
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What happens if I don't make my loan payments on time?
If you don't make your loan payments on time and don't contact the Direct Loan Servicing Center about it, you will be considered delinquent in repaying the loan. If you fail to make payments for six months, the loan will go into default. If this happens, the federal government can ask you to repay the entire loan immediately. You can be sued for the amount of the original loan, plus interest, court costs, and other penalties. You will be reported to national credit bureaus and have your credit rating adversely affected. Your income tax refunds may be withheld and up to 15 percent of your wages can be garnisheed to collect the debt. If you are receiving Social Security, the federal government may withhold a portion of your benefits to pay your loan debt. Finally, your school records will be impounded and you will be prohibited from receiving any federal student aid at any school you wish to attend until the default is resolved.
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What can I do if I am notified I am in default?
Contact the Direct Loan Servicing Center. Representatives will inform you under what circumstances you may have the default status rescinded and will discuss the possibilities you have for regaining eligibility for financial aid and rehabilitating your loan. If you have a FFELP loan, you should contact your lender or guaranty agency about similar options available for restoring financial aid eligibility and rehabilitating your loan.
You may regain eligibility for federal financial aid by making satisfactory payment arrangements on your defaulted loan with the loan servicer or guarantee agency handling your account. A satisfactory repayment arrangement is defined as making six consecutive voluntary monthly payments of an amount determined reasonable and affordable based on your financial circumstances.
If you make nine consecutive, voluntary, and on-time monthly payments of a reasonable and affordable amount under an agreement with the loan servicer or guarantee agency, you will qualify for loan rehabilitation. Loan rehabilitation provides you with a second chance by removing your student loan from default status, restoring financial aid eligibility, and reinstating deferment privileges.
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