Federal Direct Loans are available to undergraduate and graduate students. Students must be enrolled at least half time to receive a federal Direct Loan. Federal Direct Loans borrowed while enrolled at another institution may impact a student’s loan eligibility at Walden University. Before any funds are disbursed you must read important disclosure information regarding your student loan(s). The Disclosure Statement provides information about the Direct Subsidized Loan and/or Direct Unsubsidized Loan that Walden University plans to disburse (pay out) by crediting your school account, paying you directly, or both. There is also a Plain Language Disclosure that will explain the terms of your loan(s). Both disclosures are available at https://studentloans.gov/myDirectLoan/index.action. Walden encourages students to keep a copy of all disclosures for their records.
All information submitted for the purpose of securing a federal student loan will be submitted to the National Student Loan Data System (NSLDS) and are accessible by authorized agencies, lenders and institutions. The student loan borrower is responsible for knowing the total amount of federal loans borrowed and can see a summary of their federal loan debt via NSLDS.
On August 2, 2011, Congress passed the Budget Control Act of 2011, which put into place automatic federal budget cuts, known as “sequester”. To find out more information, please visit https://studentaid.ed.gov/sa/types/grants-scholarships/teach#sequestration.
Federal Direct Loans
Federal Direct Subsidized Loans are need-based loans available only to undergraduate students. The U.S. Department of Education pays the interest on this loan while the student is enrolled at least half time in school. Students typically have a 6-month repayment grace period for all federal loans.
A grace period is a period of time that generally begins on the day after a borrower graduates, leaves school, or drops below half-time enrollment and usually ends six months later. A borrower is not required to make payments during the grace period for both subsidized and unsubsidized loans made under the Direct Loan program.
Some federal student loans will accrue interest during the grace period, and if the interest is unpaid, it will be added to the principal balance of the loan when the repayment period begins.
Federal Direct Unsubsidized Loans are available to undergraduate and graduate students and are not need-based. The student pays the accruing interest while enrolled in school, unless the student arranges to postpone the interest payment by checking the appropriate box on the Master Promissory Note or contacting their servicer. If you are unsure, you can determine who your servicer is by going to NSLDS. Students should be careful when choosing this option since it means that the interest will be capitalized (the accrued interest will be added to the principal amount), increasing the amount of the debt.
The interest rates for undergraduate subsidized and unsubsidized Direct Loans disbursed on or after July 1, 2017 through June 30, 2018 are fixed at 4.45%.
The interest rates for undergraduate subsidized and unsubsidized Direct Loans disbursed on or after July 1, 2018 through June 30, 2019 are fixed at 5.045%.
The interest rate cap is 8.25%.
The interest rates for graduate unsubsidized Direct Loans disbursed on or after July 1, 2017 through June 30, 2018 are fixed at 6.00%.
The interest rates for graduate unsubsidized Direct Loans disbursed on or after July 1, 2018 through June 30, 2019 are fixed at 6.595%.
The interest rate cap is 9.5%.
Most federal student loans have loan fees that are a percentage of the total loan amount. The loan fee is deducted from each loan disbursement you receive. Even though this means the money you receive will be less than the amount you actually borrowed, you are still responsible for repaying the entire amount of the borrowed loan.
Direct subsidized and unsubsidized loans first disbursed on or after October 1, 2016 and before October 1, 2017 have a 1.069% loan fee.
Direct subsidized and unsubsidized loans first disbursed on or after October 1, 2017 and before October 1, 2018 have a 1.066% loan fee.
Creditworthiness is not a requirement to obtain a Federal Direct Loan (subsidized or unsubsidized). Under this program, students may borrow up to the maximum annual loan limit every award year (i.e., nine months for quarter-based programs, 12 months for semester-based programs). Loan funds can be used to cover direct education costs, such as tuition, 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 2018-2019.
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 federal Direct Loan. Federal Direct Loan counseling is completed online at https://studentloans.gov/myDirectLoan/index.action and will help you understand your rights and obligations as a student loan borrower. Loan counseling is mandatory and 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. Exit counseling is completed online at https://studentloans.gov/myDirectLoan/counselingInstructions.action. To assist you, the U.S. Department of Education has compiled the Exit Counseling Guide for Federal Student Loan Borrowers. This process should be completed under the following circumstances: before you graduate; before transferring to another institution; before you withdraw or take a leave 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.
Students must keep in mind that they are legally responsible for fully repaying all of their loans according to the terms outlined in their Master Promissory Note. Students are required to repay their loans regardless of whether they complete their education, are able to find employment, or are satisfied with their education. Students should make every reasonable attempt to minimize the amount that they borrow by borrowing only what they need to cover educational expenses and what they can afford to repay once they are no longer enrolled in school.
Repayment Estimator is a tool that William D. Ford Federal Direct Loan (Direct Loan) and Federal Family Education Loan (FFEL) program borrowers can use to obtain preliminary repayment plan eligibility information and estimated repayment amounts. This easy-to-use tool offers borrowers the opportunity to obtain preliminary repayment information across all of the repayment plans. Its advantage over repayment plan-specific calculators is that it provides side-by-side results for all plans and information about the total cost of a loan over time.
Federal Loan Deferments
A loan deferment is a postponement of payment on a loan that is allowed under certain conditions and during which interest does not accrue on Direct and Federal Stafford Subsidized Loans. All other federal student loans (except Perkins) will continue to accrue interest. Any unpaid interest that accrued during the deferment period may be added to the principal balance (capitalized) of the loan(s). 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 ensure 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, 7065 Samuel Morse Drive, Columbia, MD 21046; fax: 1-410-209-8044. 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.
Default is a legal term for a borrower’s failure to repay a loan according to the terms agreed to when he or she signed the promissory note. For the Federal Direct Student Loan Program, you’re considered to be in default if you don’t make your scheduled student loan payments for a period of at least 270 days (about nine months).
Consequences of Default
The consequences of default are severe. The lender or agency that holds the student loan and the state and federal government will normally take legal action to recover the money the student owes. Other consequences include but are not limited to:
- The lender can notify national credit bureaus of the student’s default. This may affect the student’s credit rating for as long as seven years. For example, the student might find it difficult to borrow money from a bank to buy a car or a home.
- The Internal Revenue Service can withhold the student’s U.S. Individual Tax Refund and apply it to the amount the student owes.
- The agency holding the loan might ask the student’s employer to deduct payments from his or her paycheck; this is known as wage garnishment.
- The student generally will be liable for loan collection costs.
- The student can no longer receive a deferment or forbearance, and if the student returns to school, he or she generally will not be eligible for additional federal aid.
Additional Loan Resources
Your Federal Student Loans: Learn the Basics and Manage Your Debt
An Overview of Direct Loan and FFEL Program Repayment Plans
Deferment and Forbearance
Cancellation and Consolidation
Do you have questions about financial aid? If you haven’t yet applied to Walden, please contact an enrollment advisor at 855-646-5286 in the United States. If you are a current student, please contact a financial aid advisor at firstname.lastname@example.org or call 1-800-WALDENU (1-800-925-3368).