Federal Direct Student Loans

To provide loan capital directly from the Federal government to vocational, undergraduate, and graduate postsecondary school students and their parents.

Agency - Department of Education

The Department of Education ensures equal access to education and promotes educational excellence through coordination, management and accountability in Federal education programs. The Department works to supplement and complement educational efforts on all levels, encouraging increased involvement by the public, parents and students.

Office - See Regional Agency Offices.

See the list of Regional Offices listed in Appendix 5 of the FFEL Catalog.

Selected Recipients for this Program

RecipientAmount Start DateEnd Date
New England $ 493   2005-03-162011-12-31
Central Missouri State Univ $ 10,000,000   2004-03-152011-12-31
University Wisconsin System $ 19,393   2005-03-162011-12-31
State University Of Iowa $ 9,593,863   2005-03-162011-12-31
Denise Nelson $ 332,978   2004-03-152011-12-31
Kaplan Higher Education $ 9,140,105   2004-03-152011-12-31
Vatterott Educational Centers $ 8,672,650   2004-03-152011-12-31
Illinois Schl Of Hlth Careers $ 8,542,798   2004-03-152011-12-31
International Cy Buty College $ 4,350   2005-03-162011-12-31
Hesser Collage $ 7,551,758   2004-03-152011-12-31

Program Accomplishments

Fiscal Year 2016: Funding is expected to provide loans to approximately 9.4 million borrowers. Fiscal Year 2017: Funding is expected to provide loans to approximately 9.5 million borrowers. Fiscal Year 2018: Funding is expected to provide loans to approximately 9.8 million borrowers.

Uses and Use Restrictions

To help defray costs of education at participating institutions.

Repayment on Federal Stafford loans begins six months after the student ceases to carry at least one-half the normal full-time academic workload.

Repayment of principal and interest on PLUS loans generally begins within 60 days of disbursement of the last installment; repayment of a Consolidation loan begins within 60 days after the proceeds of the loan have been used to discharge the liability of the borrower on the loans selected for consolidation.

Deferments and forbearance of payment may be granted for certain authorized periods.

Eligibility Requirements

Applicant Eligibility

The applicant must be a U.S.

citizen, national, or person in the United States for other than a temporary purpose.

A student borrower must be enrolled or accepted for enrollment in a degree or certificate program on at least a half-time basis as an undergraduate, graduate, or professional student at a participating postsecondary institution.

An otherwise eligible student is eligible for loans during a single twelve-month period in which the student is enrolled in a non-degree/non-certificate course of study that the institution has determined is necessary in order for the student to enroll in a program leading to a degree or certificate.

Under the Direct PLUS program, parents may borrow for dependent undergraduate students.

Also, graduate and professional students are eligible to borrow PLUS Loans.

Direct Unsubsidized and PLUS loans are available to eligible borrowers regardless of need.

However, a financial needs test based on family income is required for an undergraduate student to receive a Direct Subsidized loan.

A student that is presently enrolled at a participating institution must be maintaining satisfactory academic progress in the course of study that they are pursuing.

The borrower may not owe a refund on any Title IV grant or be in default on any Title IV loan received for attendance at any institution.

The borrower must also file a Statement of Registration compliance (Selective Service).

Beneficiary Eligibility

Vocational, undergraduate, and graduate postsecondary school students and their parents.


The borrower will need certification of eligibility from the institution and may be required to supply documentation to verify the accuracy of data used in the Direct Subsidized loan need analysis. This program is excluded from coverage under 2 CFR 200, Subpart E - Cost Principles.

Aplication and Award Process

Preapplication Coordination

Preapplication coordination is not applicable.

Environmental impact information is not required for this program.

This program is excluded from coverage under E.O.


Application Procedures

This program is excluded from coverage under 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Applications for the Direct Subsidized and Unsubsidized loans are obtained from the institution. Direct consolidation loan applications are obtained from the Department of Education. To obtain a Direct Subsidized or Unsubsidized loan, a student shall complete and submit a Free Application for Federal Student Aid (FAFSA). All applications (with the exception of PLUS) for Direct Loans are processed by the Central Processor System (CPS) in the initial step to determine a student's Title IV eligibility. Institutions will receive official output from the CPS, and then will be able to assemble a financial aid award package. An institution participating in the Direct Loan program may award Direct Loans as part of the financial aid package. If a Direct Loan is not included in the aid package, a student may contact the institution to request loan information.

Award Procedures

Institutions participate in the Direct Loan program either by originating loans or by using an alternative originator to originate loans. The institution must certify the borrower's eligibility to receive the funds. To obtain a Direct PLUS Loan, the parent completes an application and authorizes a credit check. If the parent does not have an adverse credit history, the loan may be disbursed. Institutions may disburse funds by crediting them directly to the student's account at the institution, issuing a check or cash, or by initiating an electronic funds transfer.


Contact the headquarters or regional office, as appropriate, for application deadlines.


Higher Education Act of 1965, as amended, Title IV, Part D.

Range of Approval/Disapproval Time

Not Applicable.


Not Applicable.


Not Applicable.

Assistance Considerations

Formula and Matching Requirements

This program has no statutory formula. This program has no matching requirements. This program does not have MOE requirements.

Length and Time Phasing of Assistance

Applicants may apply for a loan for any year of attendance at a postsecondary institution. Starting July 1, 2013, the interest rate on new Stafford Loans is fixed at a rate equal to the 10-year Treasury note plus 2.05 percent (capped at 8.25 percent); new Unsubsidized Stafford loans have a fixed interest rate equal to the 10-year Treasury note plus 3.6 percent (capped at 9.5 percent); and Direct PLUS loans have a fixed interest rate equal to the 10-year Treasury note plus 4.6 percent (capped at 10.5 percent). Generally, there are four types of repayment plans that are available to Direct Loan borrowers: (1) A standard repayment plan with a fixed monthly payment amount over a period of up to 10 years; (2) an extended repayment plan with a fixed monthly payment amount paid over a period of 12 to 30 years, depending on the amount owed; (3) a graduated repayment plan with a monthly payment that will increase generally every 2 years. The repayment period varies from 12 to 30 years, depending on the amount owed; and (4) except for Direct PLUS Loan borrowers, income-driven repayment plans such as the income contingent repayment (ICR) plan with a monthly payment that is adjusted annually based on the income of the borrower and paid over an extended period of time not to exceed 25 years. Any unpaid balance remaining after 25 years in the ICR plan is forgiven by the Secretary of Education. However, under current IRS rules, the amount written off is considered taxable income to the borrower in the year it is written off. In 2007, a new income-based repayment plan was created for those borrowers meeting a standard of 'partial financial hardship' based on their annual repayment amount in relation to their adjusted gross income. Generally a borrower would not have to repay on a monthly basis more than 15 percent of their discretionary income, and any outstanding balance would be forgiven after 25 years of repayment. For new borrowers on or after July 1, 2014, these limits have been lowered to 10 percent of discretionary income and forgiveness after 20 years of repayment. Additionally, two new income-driven repayment plans extended those benefits to all qualified student borrowers. First, as of December 21, 2012, the Pay As You Earn (PAYE) plan, is an option for those who meet the ?partial financial hardship? standard, were a new borrower as of October 1, 2007, and who received a Direct Loan disbursement on or after October 1, 2011. Second, as of December 17, 2015, the Revised Pay As You Earn (REPAYE) plan became available to all qualified student borrowers regardless of when they borrowed and did not require a partial financial hardship for reduced payments. Direct Loan borrowers who work in public service are eligible for forgiveness during a 10-year period while they are repaying their loans. If these borrowers, during repayment, have an outstanding loan balance after 10 years of working in public service, the Federal Government will forgive the remaining balance on behalf of the borrower. Public service may include a variety of public disciplines such as education, health, law, military service and public safety. See the following for information on how assistance is awarded/released: Electronic transfer.

Post Assistance Requirements


The Department will produce a variety of management information system accounting, and financial management reports.

Institutions must submit all reports required by 34 CFR 685 and 34 CFR 668.

Cash reports are not applicable.

Progress reports are not applicable.

Expenditure reports are not applicable.

Performance monitoring is not applicable.


In accordance with the provisions of 2 CFR 200, Subpart F - Audit Requirements, non-Federal entities that expend financial assistance of $750,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. Non-Federal entities that expend less than $750,000 a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in 2 CFR 200.503. Institutions are subject to examination and program review by the Department of Education. Program reviews are performed on a fiscal year basis.


Institutions must maintain proper administrative and fiscal procedures and all necessary records as set forth in the regulations in 34 CFR 685 and 34 CFR 668. Institutions must keep all records involved in any loan, claim, or expenditure questioned by a Federal audit until resolution of any audit questions. In addition to records required by 34 CFR 668, for each Direct Loan received under 34 CFR 685 by or on behalf of this student, an institution shall maintain a copy of the loan application and data electronically submitted to the Secretary.

Financial Information

Account Identification



(Direct Loans) FY 16 $95,462,059,000; FY 17 est $97,449,052,000; and FY 18 est $104,760,678 - Figures represent Net Commitment Loan volume, without Consolidation. (Direct Loans) FY 16 $45,633,297,000; FY 17 est $46,927,103,000; and FY 18 est $48,200,819,000 - (Figures represent Net Commitment Consolidation volume).

Range and Average of Financial Assistance


Regulations, Guidelines, and Literature

Student Loan Reform Act of 1993, Public Law 103-66, 34 CFR 685.

Information Contacts

Regional or Local Office

See Regional Agency Offices. See the list of Regional Offices listed in Appendix 5 of the FFEL Catalog.

Headquarters Office

Federal Student Aid Information Center Federal Student Aid (FSA), Department of Education, P.O. Box 84, Washington, District of Columbia 20044-0084 Phone: 800-433-3243

Criteria for Selecting Proposals

Not Applicable.

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Edited by: Michael Saunders

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