Federal Direct Loans

Federal Direct Loans—either subsidized or unsubsidized—are available to graduate and undergraduate students. Students must be enrolled at least half time to receive a Direct Loan. Students may be eligible for one or the other, or a combination of both loan types. Federal Direct Loans borrowed while enrolled at another institution may impact a student’s loan eligibility at Walden University.

Federal Direct Subsidized Loans are need-based. The federal government pays the interest on this loan while the student is enrolled at least half time in school. For subsidized loans first disbursed on or after July 1, 2011, the interest rates are 3.4% for undergraduates and 6.8% for graduate students.

Federal Direct Unsubsidized Loans require that the student pays the interest while enrolled, unless the student arranges to postpone the interest payment by checking the appropriate box on the Master Promissory Note. Students should be careful when choosing this option: It means that the interest will be capitalized (the accrued interest will be added to the principal amount), increasing the amount of the debt. For unsubsidized loans, the interest rate is 6.8% for undergraduate and graduate students.

Both the subsidized and unsubsidized loans have processing fees deducted from each disbursement of the loan. For loans first disbursed after July 1, 2011, a 1% fee will be deducted.

Students have a six-month repayment grace period after graduating, leaving school, or dropping below half-time status. After this time, payments must be made. During the grace period, interest is not charged on subsidized loans but continues to be charged on unsubsidized loans. Payments are usually due on a monthly basis.

Creditworthiness is not a requirement to obtain a Direct Loan. Under this program, students may borrow up to the maximum loan limit every award year (i.e., nine months for quarter-based, 12 months for semester-based). Loan funds can be used to cover direct education costs, such as tuition and fees and room and board as well as indirect costs, such as books and other education-related expenses.

Read important federal financial aid changes for 2012–2013.

Federal Loan Counseling Requirements

If you are a first-time borrower, you are required to complete Direct Loan entrance counseling prior to receiving the first disbursement of a Direct Loan. Counseling is completed online at www.studentloans.gov and will help you understand your rights and obligations as a student loan borrower. Loan counseling must be completed before you can receive loan funds.

Federal regulations also require that you complete exit counseling to help you to understand the responsibilities and repayment obligations for your student loans. To assist you, the U.S. Department of Education has compiled the Exit Counseling Guide for Federal Student Loan Borrowers; you can also visit the National Student Loan Data System at http://www.nslds.ed.gov/nslds_SA/. This process should be completed: before you graduate; before transferring to another institution; before withdrawals and leaves of absence; or if you are enrolled less than half time.

Federal Loan Limits

The federal government limits the total and annual amount of Federal Direct Loans that you can borrow. Learn more.

Federal Loan Deferments

Under certain circumstances, a repayment of a federal loan may be deferred. During deferment, you are not required to pay loan principal, and interest on subsidized loans does not accrue. After the in-school deferment, you are entitled to one grace period of six consecutive months. The length of the grace period is determined by the date the grace period begins.

Students who have a valid Social Security number on file at Walden will have their enrollment here reported and updated monthly with the National Student Clearinghouse (NSC). The NSC communicates electronically with the federal and non-federal loan servicers to insure that students who remain enrolled maintain the in-school deferments for which they are eligible. Borrowers who seek to defer repayment of their prior student loans and do not want to rely on the electronic exchange with the NSC must fill out forms to have their enrollment status verified. Forms from their lender(s) should be sent directly to Walden University, Office of the Registrar, Attn: Loan Deferment, 650 S. Exeter Street, Baltimore, MD 21202; fax: 1-410-843-6416. At the top of the form, students should include their enrollment start date and the term for which they are requesting an in-school deferment. Any deferment paperwork sent to Walden’s Office of the Registrar for enrollment verification is forwarded to the NSC on a weekly basis.

Do you have questions about financial aid? If you haven’t yet applied to Walden, please contact an enrollment advisor at 1-866-492-5336 in the United States. If you are a current student, please contact a financial aid advisor at finaid@waldenu.edu or call 1-800-WALDENU (1-800-925-3368).