Direct Stafford Loans

Subsidized and Unsubsidized Stafford Loans
The Federal Stafford Loan program consists of two types of loans, which are Subsidized and Unsubsidized. Your eligibility for the two types of Stafford Loans is evaluated based on a complete current year Free Application for Federal Student Aid (FAFSA) and school information. Students may receive both types of Stafford Loans, but are subject to annual and career limits.

A Subsidized Stafford Loan is awarded on the basis of federal financial need. You are not charged any interest before you begin repayment or during authorized periods of deferment. The Unsubsidized Stafford loan accrues interest from the time of the first disbursement. You are not required to pay this monthly interest on your Unsubsidized Stafford Loan while you attend at least half-time in a degree program. However, unpaid interest on the Unsubsidized Stafford Loan is capitalized by the lender onto the principal of your loan.

Unsubsidized Stafford Loans that disburse on or after July 1, 2006 are set at a fixed interest rate of 6.8%. For the Unsubsidized Stafford Loan interest begins to accrue on the date of disbursement. A 1.0% origination fee is charged at disbursement. The government pays 0.5% of the origination fee at disbursement, commonly called the loan rebate benefit.  This benefit is retained by the borrower if the first 12 monthly payments are made on time. This ultimately results in only 0.5% in fees being deducted for the loan proceeds at the time of disbursement. Please note, if you fail to make 12 on-time monthly payments, the up-front rebate is added to the borrower's principal loan balance.

If you have a Stafford Loan that disbursed prior to that date, it may still be at a variable interest rate. You can view your student loan history on the National Student Loan Database System (NSLDS) by going to www.nslds.ed.gov.

Repayment for both loans does not begin until 6 months after you graduate or cease to be enrolled at least half-time in a degree-seeking status for a period of 6 months. However, you can elect to begin repayment sooner if desired.

Direct Graduate/Professional PLUS

Direct Graduate/Professional PLUS Loan
The Direct Graduate PLUS Loan is designed to assist graduate students enrolled at least half-time in meeting their educational expenses. There are no income restrictions that affect eligibility for this loan; however, the borrower must pass a credit check. You may borrow up to the full cost of your education for expenses including tuition and fees, room and board, books and supplies, transportation and living allowance, less any other financial aid you receive.

Repayment, Interest Rates and Fees: Interest is charged on the loan from the date the first disbursement is made until the loan is paid in full. Repayment begins within 60 days after the final loan disbursement. However, a student may apply for an in-school deferment by contacting the Direct Loan Servicing Center at 800-848- 0979 while the student is attending at least half-time in a degree program.

For Direct PLUS Loans disbursed between July 1, 2009 and June 30, 2010, the fixed interest rate is 7.9%. Interest begins to accrue on the date of disbursement. A 4% origination fee is charged at disbursement. The government pays 1.5% of the origination fee at disbursement, commonly called the loan rebate benefit. This benefit is retained by the borrower if the first 12 monthly payments are made on time. This ultimately results in only 2.5% in fees being deducted for the loan proceeds at the time of disbursement.  Please note, if you fail to make 12 on-time monthly payments, the up-front rebate is added to the borrower's principal balance.

Pat Peace, Director of Financial Services
LMU-DCOM Financial Services Office
6965 Cumberland Gap Parkway
Harrogate, TN 37752
Email: pat.peace@lmunet.edu
Office: 423.869.7107; 800.325.0900, ext. 7107
Fax: 423.869.7172