Federal Direct Loans are available to undergraduate and graduate students. Students must be enrolled at least half time to receive a federal Direct Loan. The U.S. Department of Education will send a federal loan Disclosure Statement to students, either before or at the same time as disbursement, which provides information about the Federal Direct Loans Walden University plans to disburse (pay out) by crediting your school account, paying you directly, or both. For subsequent disbursements, students will also receive a Plain Language Disclosure from the U.S. Department of Education that will summarize the terms and conditions of your loan(s). 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 U.S. Department of Education 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 StudentAid.gov.

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 StudentAid.gov.

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 six-month 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 subsidized loans made under the Direct Loan program.

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. Interest payments may be deferred for six months after graduation. If you are unsure, you can determine who your servicer is by logging in to StudentAid.gov. A student is responsible for paying the interest on their Direct Unsubsidized loan during all periods (including the grace period). If a student chooses not to pay the interest while they are in school and during the grace, deferment, or forbearance periods, the interest will accrue (accumulate) and be capitalized. In other words, the interest will be added to the principal amount owed on the loan.

Interest Rates:

  • Undergraduate subsidized and unsubsidized Direct Loans first disbursed on or after July 1, 2019 and before July 1, 2020 are fixed at 4.53%.
  • Undergraduate subsidized and unsubsidized Direct Loans first disbursed on or after July 1, 2020 and before July 1, 2021 are fixed at 2.75%.
    • The interest rate cap for these loans is 8.25%.
  • Graduate unsubsidized Direct Loans first disbursed on or after July 1, 2019 and before July 1, 2020 are fixed at 6.08%.
  • Graduate unsubsidized Direct Loans first disbursed on or after July 1, 2020 and before July 1, 2021 are fixed at 4.30%.
    • The interest rate cap is 9.5%.

Loan Fees:

Most federal student loans have loan fees which 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, 2019 and before October 1, 2020 have a 1.059% loan fee.
  • Direct subsidized and unsubsidized loans first disbursed on or after October 1, 2020 and before October 1, 2021 have a 1.057% 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.

Federal Loan Counseling Requirements

First-time borrowers are required to complete Direct Loan Entrance Counseling prior to receiving the first disbursement of a Federal Direct Loan. Federal Direct Loan Entrance Counseling is completed online at StudentAid.gov 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 manage your loans after graduation and to understand the responsibilities and repayment obligations for your student loans. You are required to complete exit counseling after graduating, leaving school or dropping below half-time enrollment. Exit counseling is completed online at StudentAid.gov. To assist you, the U.S. Department of Education has compiled the Exit Counseling Guide for Federal Student Loan Borrowers.

The timing to complete Exit Counseling is:

  • You are graduating
  • You are on a leave of absence (Course-based program)
  • You did not return from a leave of absence (Tempo program)
  • You are not enrolled at least half time (6 credits undergraduate or 3 credits graduate)
  • You have not completed all the courses you were scheduled to complete in your current term/payment period

Federal Loan Limits

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

Loan Repayment Plans

The federal government offers several repayment plan options. Some of the options carry a lower monthly payment than standard repayment, but choosing these other options extends the term of the loan and increases the total amount of interest paid during the life of the loan.

Before you choose a repayment plan, you can use the Loan Simulator to determine which plans you may be eligible for and see estimates on how much you would pay monthly and overall.

For Washington State residents seeking information and resources about student loan repayment or seeking to submit a complaint relating to your student loans or student loan servicer, please visit www.wsac.wa.gov/loan-advocacy or contact the Student Loan Advocate at [email protected].

Federal Loan Deferments

Under certain circumstances, an enrolled borrower is entitled to have the repayment of a loan deferred. During deferment, the borrower is not required to pay loan principal, and interest on subsidized loans does not accrue. After the in-school deferment, the borrower is entitled to one grace period of six consecutive months. The date that the deferment starts may affect the length of the grace period.  

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.

Walden’s Loan Deferment Policy

Students 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. Students must get the forms from their lender(s) and the form 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

The U.S. Department of Education will not accept incomplete deferment forms. Please make sure to complete the required borrower information section as it appears on the deferment form. If a student has more than one loan holder, they must complete a separate deferment form for each lender/servicer.

Note: Any deferment paperwork sent to Walden’s Office of the Registrar for enrollment verification is forwarded to the NSC on a weekly basis.

Loan Default

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, default occurs when a borrower fails to make a payment for 270 days under the normal monthly repayment plan.

Avoiding Default

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.

Do you have questions about financial aid? If you haven’t yet applied to Walden, please contact an enrollment specialist at 855-646-5286 in the United States. If you are a current student, please contact a financial aid advisor at [email protected] or call 1-800-WALDENU (1-800-925-3368).

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