FEDERAL DIRECT LOAN PROGRAM

Subsidized and Unsubsidized loans are federal student loans for eligible students to help cover their higher education costs.  A loan is money that is borrowed and must be paid back with interest.  The U.S. Department of Education offers eligible students Direct Subsidized Loans and Direct Unsubsidized Loans.  A FAFSA form is needed to apply for a federal student loan.

Students are required to complete entrance counseling, a tool explaining loan repayment obligations and sign a Master Promissory Note (MPN), agreeing to the loan terms.  Entrance Counseling and MPN can be completed electronically at studentaid.gov.

Beginning with the 2022-2023 school year, student borrowers have the option to complete an Annual Student Loan Acknowledgment (ASLA) each year at studentaid.gov to accept a federal student loan.

By completing the ASLA, new students acknowledge their responsibility to repay the loan.  Returning students who complete the ASLA recognize their understanding of how much they owe and how much more they can borrow.

To be a responsible borrower:

• Keep track of how much you are borrowing.  Think about how your loans will affect your future finances and how much you can afford to repay.  Your student loan payments should be only a small percentage of your salary after you graduate, so it is important not to borrow more than you need for your school-related expenses.
• Research starting salaries in your field. Ask your school for starting salaries of recent graduates in your area of study to get an idea of how much you are likely to earn after you graduate.  You can also visit www.bls.gov/ooh to access the U.S. Department of Labor’s Occupational Outlook Handbook or career search tool to research careers and salaries.
• Understand the terms of your loan and keep copies of your loan documents.  When you sign your promissory note, you agree to repay the loan according to the terms of the note even if you do not complete your education, cannot get a job after you complete the program, or you did not like the education you received.
• Make payments on time.  You must make payments on time even if you don’t receive a bill, repayment notice, or a reminder.  You must pay the total amount required by your repayment plan, as partial payments do not fulfill your obligation to repay your student loan on time.
• Keep in touch with your loan servicer.  Notify your loan servicer when you graduate; withdraw from school; drop below half-time status; transfer to another school; or change your name, address, or Social Security number.  You also should contact your servicer if you’re having trouble making your scheduled loan payments.  Your servicer has several options available to help you keep your loan in good standing.  Borrowers can locate their loan servicer by visiting studentaid.gov.

Direct Subsidized Loan Program

The Direct Subsidized Loan is a need-based loan available to undergraduate dependent and independent degree seeking students enrolled at least halftime (six credits) with demonstrated financial need.  The federal government pays the Subsidized Loan’s interest while the student is enrolled for at least six semester hours (half-time).  Monthly repayment generally begins six months after the student terminates college studies or drops below six credit hours per semester.

Federal Subsidized loans are limited to either one loan per year or grade level.  The maximum subsidized amount to be borrowed for undergraduate studies is $23,000.

Semester hours for progression:

Eligible students are allowed subsidized loans for 150 percent of the published timeframe for their program of study.  Suppose the student is enrolled in a two year associate degree program.  In that case, the maximum period for which a direct subsidized loan is potentially available is three years (150 percent of two years = three years).

Changing a program of study does not restart the clock.  Time already used is subtracted from the maximum time allowed.  Students later seeking a four-year degree must deduct eligibility already used from the six-year limit as well.

A student who reaches the 150 percent limitation, whether seeking a certificate, two-year or four-year degree, could continue to receive Unsubsidized Direct Loans if he or she is otherwise eligible (for example, meeting satisfactory academic progress requirements).

The limitation affects students considered to be new borrowers on or after July 1, 2013.  New borrowers are students with no outstanding loans.  Consequently, the 150 percent limit would include only periods of borrowing that began on or after July 1, 2013.

When a borrower reaches the 150 percent limitation, eligibility for an interest subsidy also ends for all outstanding subsidized loans, even if the student does not complete their program of study.  At that point, interest on the previously borrowed loans will begin to accrue and will be payable in the same manner as interest on unsubsidized loans.

Direct Unsubsidized Loan Program

Unsubsidized Loans are loans available to dependent and independent degree-seeking students at the undergraduate and graduate levels.  Eligibility is not based on financial need.  Dependent borrowers whose parents cannot gain credit approval for a Direct Parent PLUS Loan may receive additional unsubsidized loan funds.

Unsubsidized loans accrue interest while the student is in school.  The interest can be paid monthly or deferred until studies are terminated.

Semester hours for progression for a dependent student:

Semester hours for progression for an independent undergraduate student or a dependent student whose parent was denied the Parent PLU Loan:

Eligible graduate students can borrow up to $20,500 per year in Direct Unsubsidized Loans.

Direct PLUS Loans

PLUS Loans are credit-based loans available to parents of dependent students (Parent PLUS Loan) and graduate students (Graduate PLUS Loan) enrolled at least half-time.  PLUS loans can replace or combine the student’s Federal Direct Loan.  The Direct Parent PLUS Loan and the Graduate PLUS Loan are non-need based, variable interest rate loans.  The loan disbursement is one-half each semester.  Monthly principal and interest payments begin 60 days after the loan is fully disbursed.

The Department of Education requires Washington Adventist University to receive written authorization to use Direct Parent PLUS Loan funds for charges other than tuition, fees, and room and board.  To authorize the University to use the Parent PLUS loan for additional costs, the parent borrower must submit a signed Federal Student Aid Miscellaneous Charges Authorization Form for Parents.  The forms are located in the Office of Student Accounts, and completed forms must be returned there.

If the total loan amount a student receives throughout their education reaches the aggregate loan limit, the student is not eligible to receive additional loans.  However, suppose the student repays some of their loans and brings the outstanding debt below the aggregate loan limit.  In that case, the student could once again borrow up to the amount of their remaining eligibility.

Direct Consolidation Loan Program

Consolidation loans are available to students who have federal loans from various federal servicers, including the Perkins Loan, who would like to obtain one loan with one interest rate and repayment schedule.  A borrower must be in the grace period or repayment status on all loans being consolidated.  Federal Consolidation Loans are also available to married students with individual loans.

Students must complete the free Federal Direct Consolidation Loan Application and Promissory Note at studentaid.gov to confirm the loans they want to consolidate and agree to repay the new Direct Consolidation Loan.

Once the consolidation is complete, the student will have a single monthly payment on the new Direct Consolidation Loan.  Students can contact the Student Loan Support Center at 1-800-557-7394 with questions about consolidation.

There is no application fee associated with applying for a federal education loan consolidation.  Please be careful of private companies offering to help students apply for a Direct Consolidation Loan for a fee.  The private companies are not affiliated with the U.S. Department of Education or the department’s consolidation loan servicers.

Master Promissory Note

A student must complete a Master Promissory Note (MPN) before receiving a loan from the Federal Direct Loan Program.  The MPN is a legal document where the borrower promises to repay your federal student loan(s) and any accrued interest and fees.  There is one MPN for Direct Subsidized/ Unsubsidized Loans and a different MPN for Direct PLUS Loans.  The MPN can be completed online at studentaid.gov.

Direct Loans Entrance Counseling Subsidized, Unsubsidized and Graduate PLUS Loans

All students awarded federal Direct Loans including subsidized loans, unsubsidized loans and Graduate PLUS Loans must complete entrance counseling before funds can be disbursed to student’s accounts.  Entrance counseling provides you with information about your rights and responsibilities as a borrower, interest rates, expenses, repayment plans, and other important details about borrowing as well as who to contact with questions about your student loans.  Entrance counseling is required for first time WAU applicants before receiving loan funds.

Direct Loans Exit Counseling

Federal regulations and Washington Adventist University require that students who borrow federal student loans must complete exit counseling before leaving school(graduate), withdraw or drop below half time (6 credits).

This requirement was put in place for students to receive essential information regarding their rights and responsibilities as a student loan borrower.  Students will receive information about the types of loans received, when and where to make payments, what to do if they cannot make their payment and what can happen if they do not make their payments and default on their obligation.

Students who fail to complete exit counseling will have a hold on their records, which restricts university services including registration and releasing diplomas.  Both entrance and exit counseling can be completed online at studentaid.gov.

To assist students with their federal requirements in completing exit counseling, Washington Adventist University has a procedure in place to conduct exit counseling shortly before a student borrower graduates or ceases to be enrolled at least half-time (below 6 credits) study.

The university will start offering exit counseling no earlier than a month prior to student’s graduation date so that they understand and remember the information when they enter their student loan repayment grace period.

When a student ceases to be enrolled at least half-time (below 6 credits), the Financial Aid Office will reach out to the student within 30 days to conduct exit counseling and inform the student of his or her rights and responsibilities each time.

The university will send email containing a URL or hyperlink that will take the student directly to the exit counseling page at studentaid.gov.  The email will be sent to both the student’s school email and personal email if the student is still in school.  In addition, the Financial Aid Office will make follow up phone calls to students to confirm receipt of the exit counseling emails and encourage them to complete it online at studentaid.gov.  For students who did not complete exit counseling prior to graduation the emails will be sent to the personal email address on the student’s record.

Annual Student Loan Acknowledgment

Beginning with the 2022-2023 school year, students are encouraged to complete the Annual Student Loan Acknowledgment (ASLA) each year at studentaid.gov.

By completing the ASLA, new students are acknowledging their responsibility to repay your loan.  Returning students who complete the ASLA acknowledge their understanding of how much they owe and how much more they can borrow.

The ASLA is available now at studentaid.gov.  The Financial Aid Office invites students to familiarize themselves with the tool and advises students to complete the ASLA.

PLUS Credit Counseling

PLUS Credit Counseling helps parent and graduate student borrowers understand the obligations associated with borrowing a PLUS loan.

PLUS Credit Counseling can be completed voluntarily at any time.

However, PLUS Credit Counseling is required if the U.S. Department of Education informs the borrower of adverse credit history and the borrower:

• Obtained an endorser or
• Documented extenuating circumstances to the satisfaction of ED