The William D. Ford Direct Loan Program

Federal direct loan programs consist of low-interest loans and are available to both our undergraduate and graduate students. The loan interest rate is variable (capped at 8.25 percent) and adjusted annually.

An origination fee of 1.5 percent is deducted automatically from amounts borrowed. In addition, borrowers will be given an up-front rebate that is approximately equal to 1 percent of the loan amount approved. To keep the interest rebate, you must make your first 12 required monthly payments on time. If you do not make all 12 payments on time, the federal government will add the rebate amount back to your loan account.

Federal Direct Subsidized Loans

Effective July 1, 2012, subsidized graduate loans will not be offered for the 2012–13 academic period.

Federal Direct Unsubsidized Loans

Interest accrues while the student is enrolled in school at least half-time, or interest payments can be made on a monthly basis.

You are advised to participate in the Entrance Interview for the William D. Ford Direct Loan.

You may download the Direct Loan Application (Subsidized and Unsubsidized), or you may pick one up from the Office of Financial Aid.

We encourage students to submit only one application that estimates the total loan needs for the academic year. Direct loan applications are submitted to the Office of Financial Aid and processed based on the student's federal eligibility.

Federal Direct PLUS Loan for Graduate Students (Graduate PLUS Loan)

Recent legislation now allows graduate students to borrow through the Federal Direct PLUS Loan program. Formerly, this program was only available to the parents of undergraduate, dependent students. The Graduate PLUS program is a non-need-based federal loan that allows graduate students to borrow up to the full cost of attendance, minus any other financial aid they are receiving. This program may be of interest to students who have little or no eligibility for need-based financial aid programs and need additional assistance to pay college costs after other forms of aid have been awarded.

Federal Direct Loan Consolidation

The U.S. Department of Education offers a Federal Direct Loan Consolidation Program. The program allows Federal Direct Loan, as well as Federal Family Education Loan (Stafford, PLUS), borrowers to combine one or more federal loans into one new loan.

  • Federal loan programs may be consolidated under the Federal Direct Consolidation Program.
  • Interest is calculated on the weighted average of the interest rates on the loans being consolidated, rounded to the nearest higher 1/8 of 1 percent (not to exceed 8.25 percent). This rate is not variable and applies for the life of the loan.
  • The program extends repayment period up to 30 years.
  • There is no prepayment penalty.

For further information or to apply, contact the U.S. Department of Education Federal Direct Loan Consolidation Program.

What Is the Interest Rate?

Stafford Loans have a fixed interest rate of 6.8 percent for loans with a first disbursement after July 1, 2006. (Previously, Stafford Loans had variable interest rates (based on 91-day T-bill rate + 1.7 percent during school with an additional 0.6 percent increase upon graduation) capped at 8.25 percent or less, depending on yearly adjustments.)

The College Cost Reduction and Access Act of 2007 reduced the interest rates on subsidized Stafford Loans for undergraduate students starting July 1, 2008. These reductions are available only to undergraduate students, not graduate students, and only for subsidized Stafford Loans, not unsubsidized Stafford Loans. The interest rates are illustrated in the following table.

Phased-in Cuts in Interest Rates on Subsidized Stafford Loans for Graduate Students

Interest Rate For 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13  2013–14
Other Stafford Loans (Graduate or Unsubsidized) 6.8% 6.8% 6.8% 6.8% 6.8% 6.8%  5.41%

Interest rates for Direct PLUS Loans first disbursed on or after July 1, 2006, have a fixed interest rate of 7.9 percent.

How Much Can I Borrow?

Graduate and Professional Studies

  Graduate or Professional Studies
Unsubsidized Base Amount $8,500*
Additional Unsubsidized Loan Amount Unchanged at $12,000*
 Annual Total
$20,500

* Maximum eligibility is dependent upon factors that include, but are not limited to, the taxable and nontaxable income provided on the FAFSA, number of credits enrolled and existing financial aid awards.

Aggregate Loan Limits (Effective July 1, 2008)

Graduate and professional students: currently $138,500 (no more than $65,500 of which can be subsidized).

How Do I Know if I Meet the Requirements for a Direct Loan?

In order to qualify for a Direct Loan(s), a student must first have filed a FAFSA application and their SAR must be complete for the academic year.

In addition, the student:

  • must be matriculated,
  • must be registered for at least six credits for the semester(s) of the loan(s),
  • cannot be in default of any loans,
  • cannot be over the aggregate limit (exceed annual award limit), and
  • must meet program pursuit and academic progress guidelines.

What Is the Process After I Complete and Submit My Direct Loan Application?

If you meet all requirements, the Direct Loan department will process the application and place a temporary loan deferment against your tuition. (This temporary loan deferment can and will be deleted if your SAR and/or loan application remains incomplete.) Once the loan is processed, you will receive a disclosure statement from the federal government explaining the type of loan, loan amount and anticipated disbursement dates of the loan. Please note that anticipated disbursement dates are not actual disbursement dates. You may be required to sign a Master Promissory Note (MPN). To sign an MPN you will need to have a PIN number. If you do not have a PIN, you must apply for a PIN online. Once you are assigned a PIN, you must sign a Master Promissory Note.

In order to successfully sign your MPN you will need to have the following browser(s) for Windows: MS Internet Explorer 5.x or Netscape Navigator 4.x (Netscape Navigator 6.0 is not supported at this time) with Acrobat Reader settings for Netscape Navigator or MS Internet Explorer.  Please note that all students who previously borrowed Direct Loans from Brooklyn College may not be required to sign an MPN because their previous MPN is good for up to 10 years. If you are uncertain whether you must sign a promissory note, consult the Office of Financial Aid, Direct Loan Department.

All first-time direct loan borrowers will need to sign a Master Promissory Note and should follow the instructions above.

What Can I Do if I Am Unable to Sign a Master Promissory Note Online?

Please follow these steps:

  • Contact Direct Loan Servicing, 800.848.0979. 
  • Once you receive the MPN, you will be required to indicate two references who reside at different addresses within the United States.
  • Make a copy of one of the following documents: driver's license, Social Security card or green card. Any one of these counts as proof of signature.
  • Sign and date the MPN, using black or blue ink.
  • Mail the MPN and proof of signature as directed.

How Long Will It Take to Get My Check?

Once your Direct Loan application process is completed, the Direct Loan department will notify you of the availability date of your loan check(s). This notification is sent only if there is an excess of funds after your tuition has been paid. Disbursement of any loan check(s) usually takes three to four weeks after the federal government has received and accepted your Master Promissory Note. Please note that present and future disbursements of Direct Loan check(s) will no longer be available at the Enrollment Services Center (Check Distribution). It is strongly advised that you enroll in Direct Deposit if you elect not to have your check mailed.

What Can I Do if I Need to Increase, Decrease or Cancel My Direct Loan?

You must complete and submit a Direct Loan increase/decrease/cancellation form. Contact the Office of Financial Aid, Direct Loan Department for further instructions.

If you have further specific questions, contact the Enrollment Service Center.

When Do I Pay Back Direct Loans?

After you graduate, leave school, or drop below half-time enrollment, you have six months before you begin repayment. This period of time is called a grace period.

During the grace period on a subsidized loan, you do not have to pay any principal, and you will not be charged interest. During the grace period on an unsubsidized loan, you do not have to pay any principal, but you will be charged interest. You can either pay the interest or it will be capitalized to the original loan amount.

After you leave school or drop below half-time enrollment, your lender will send you information about repayment and you will be notified of the date repayment begins. However, you are responsible for beginning repayment on time, even if you do not receive this information. Failing to make payments on your loan is likely to have a negative effect on your credit rating.