Federal Direct Loans
While loans are a source of financial assistance that allows you to spread the cost of education over time, students should borrow only what is needed and remember that loans must be repaid. Federal Direct Student Loans are a form of financial aid where students borrow money for college from the federal government. We urge all first-time borrowers to spend some extra time learning about the loan process so that they can make informed choices throughout their education.
Federal Direct Loan Annual Limits:
| Dependent | Subsidized | Unsubsidized | Total |
|---|---|---|---|
| Freshman (0-29 credits) | $3,500 | $2,000 | $5,500 |
| Sophomore (30+ credits) | $4,500 | $2,000 | $6,500 |
| Independent | Subsidized | Unsubsidized | Total |
|---|---|---|---|
| Freshman (0-29 credits) | $3,500 | $6,000 | $9,500 |
| Sophomore (30+ credits) | $4,500 | $6,000 | $10,500 |
Before submitting the request for a Federal Direct Student Loan, sign in to www.studentaid.gov and complete Entrance Counseling and Master Promissory Note (MPN).
Once complete, you can find and submit the Federal Direct Loan Request Form on the Financial Aid Forms and Worksheets Page.
- Entrance Counseling is required by federal law for all students who wish to borrow through the Federal Stafford Student Loan Program. Entrance Counseling will help you understand your rights and responsibilities as a borrower.
- The MPN is an agreement between you and the lender. You and the lender agree to the terms of the loan and you promise to repay the loan.
- Remember to print out a copy of both your Entrance Counseling confirmation page and your completed MPN.
- You need to be enrolled for a minimum of 6 credits (per semester) to be eligible for a Federal Direct Student loan. Students who are enrolled for only one term will only be eligible to receive half of the total yearly limit.
- Your loan can be cancelled any time before the loan is disbursed or within 14 days of disbursement. You are notified electronically on the date of disbursement of your loan and it can monitored by checking Self-Service.
| Loan Type | General Information | Interest Rate | Origination Fee * |
|---|---|---|---|
| Subsidized Loan | You are not responsible for paying the interest on the loan while you are in school at least half-time and during deferment periods. Interest will accrue on this loan during the grace period. | 3.76% | 1.069% |
| Unsubsidized Loan | You are responsible for paying interest that accrues on the loan from the time the loan is disbursed until it is paid in full. | 3.76% | 1.069% |
* Origination Fee – A loan processing fee is charged as a percentage of the amount of each loan you receive. The Direct Loan program will deduct the loan origination fee at the time of disbursement.
Parent PLUS Loan:
The parent of a dependent student can apply for a parent PLUS loan, with an interest rate of 6.31%, for the remaining cost of the student’s education. The parent applies for the loan at studentaid.gov. Once the parent has been approved for the loan, the student can submit the loan request form and a copy of the parent PLUS loan MPN via the Financial Aid Forms Page. If a parent is not approved for the Parent PLUS loan, then a dependent student may be able to borrow additional funds under the unsubsidized loan program.
Repayment of Your Loan:
In most cases, you must begin making payments six months after you graduate, leave school, or drop below half-time enrollment. Depending on the type of loan you have, the six-month period is called a grace period or a deferment period. Your loan servicer handles the billing, customer service, and other administrative tasks on your loan. For most types of loans, interest will accrue while you are in school and during the six-month period.
Servicer of Your Loan:
You will make payments to your loan servicer. Each servicer has its own payment process, so check with your servicer if you aren’t sure how or when to make a payment. If you don’t know the loan servicer for your loan, you can find that information via the National Student Loan Database System (NSLDS). Your payment depends on the type of loan you received, how much money you borrowed, the interest rate on your loan, and the repayment plan you choose. If you can’t make your loan payments, contact your loan servicer immediately. Don’t ignore bills. You have options, including a change in repayment plan, request a deferment, request a forbearance, or apply for forgiveness, cancellation or discharge.
NJCLASS:
The program offers supplemental student loans designed to help bridge the gap between financial aid and the cost of education. NJCLASS is available to:
- New Jersey residents attending an approved institution, whether in-state or out-of-state.
- Out-of-state residents enrolled in an approved New Jersey-based institution.
Both students and parents can apply as the primary borrower, offering flexibility to meet individual financial needs.
For more details and to explore how NJCLASS can support your educational goals, visit HESAA’s NJCLASS page.