Direct Loans FAQs

Direct Stafford Loans

  • Direct Unsubsidized Loans - You are not required to demonstrate financial need to receive a Direct Unsubsidized Loan. Your school will determine the amount you can borrow. Interest accrues (accumulates) on an unsubsidized loan from the time it’s first paid out. You can pay the interest while you are in school and during grace periods and deferment or forbearance periods, or you can allow it to accrue and be capitalized (that is, added to the principal amount of your loan). If you choose not to pay the interest as it accrues, this will increase the total amount you have to repay because you will be charged interest on a higher principal amount.

Additional loan types provided under the Direct Loan Program include Direct PLUS Loans (graduate and professional degree students) and Direct Consolidation Loans (to combine federal education loan debts into a single loan).

How do I apply for a Stafford Loan?

As with all federal student aid, you must complete the Free Application for Federal Student Aid (FAFSA). Most students use FAFSA on the Web to complete their application. Schools use the information from your FAFSA to determine how much student aid you will receive. Stafford Loans are generally included as part of your award package, which may contain other types of aid to help meet the costs of going to college or career school.

Master Promissory Note - When you receive a Stafford Loan for the first time, you must complete a Master Promissory Note (MPN). The MPN is a legal document in which you promise to repay your loan and any accrued interest and fees to the Department. It also explains the terms and conditions of your loan. In most cases, one MPN can be used for loans that you receive over several years of study. If you previously signed an MPN to receive a FFEL Program loan, you will need to sign a new MPN for a Direct Loan.

Complete the MPN online at

How much can I borrow?

There are limits on the maximum amount you are eligible to receive each academic year (annual loan limit) and in total (aggregate loan limits). The aggregate loan limit for graduate students is $138,500 this includes any pre-existing, undergraduate loans. Your school will determine what types of loans and how much you may borrow.

Direct Unsubsidized Loans - The interest rate is a variable fixed at 5.41%.

Prior Federal Loans and Financial Aid History - If you currently have a Stafford Loan and would like to check the interest rate, servicer information, and other financial aid history, go to the National Student Loan Data System.

Interest rate cap for military members - If you qualify under the Service Members Civil Relief Act, the interest rate on loans you obtained before entering military service may be capped at 6% during your military service. You must contact your loan servicer to request this benefit.

In addition, we do not charge interest (for a period of no more than 60 months) on Direct Loans first disbursed on or after October 1, 2008, while a borrower is serving on active duty or performing qualifying National Guard duty during a war or other military operation or other emergency, and serving in an area of hostilities qualifying for special pay.

Other than interest, is there a charge for this loan?

There is a loan fee on all Unsubsidized Loans and Grad PLUS loans. The loan fee is a percentage of the amount of each loan you receive. For the Unsubsidized loans first disbursed on or after July 1, 2012, the loan origination fee is 1.051%%. The Grad PLUS loans origination fee is 4.204%. After graduation you have a choice to make individual payment to your previous lender(s) and to the Department of Education for your Direct Loans, or you can consolidate your loans into none payment with the Department of Education. Visit the Department of Education’s website for more information about Loan Consolidation.

Do I have to complete another Master Promissory Note?

You will need to have your Federal PIN number that was used to complete your FAFSA in order to electronically sign the MPN. Go to

How and when do I complete a Direct Loan Master Promissory Note?

If you plan to borrow a Stafford Loan please complete your MPN as soon as possible. The Grad PLUS loan requires a credit approval, and the approval is only valid for 90 days. Please begin the application for the Grad PLUS after July 1st at

What is the interest rate and fees charged in Direct Loans?

Interest rates and fee for 2013-2014 are:

Direct Loan Program Interest Fees
Unsubsidized Federal Direct Loan 5.41% 1.051%
Federal Direct PLUS or Graduate PLUS Loan 6.41% 4.204%

The Unsubsidized Federal Direct loans have a 1.051% origination fee.

The Federal Direct PLUS loan has a 4.204% origination fee

Direct Loan repayment options:

There are five repayment options available for Direct Loans:

  • Standard
  • Extended
  • Graduated
  • Income Contingent Repayment
  • Income Based Repayment

How do I contact the Direct Loan Program?

The U.S. Department of Education Direct Loan Program Customer Service phone number is 800-848-0979.

Direct Loan Program Websites:

General Direct Student Loan Information:

Master Promissory Note:

General Direct PLUS Loan Information:

How do I pay back my loans?

When you receive your first Direct Loan, you will be contacted by the servicer for that loan (you repay your loan to the loan servicer). Your loan servicer will provide regular updates on the status of your Direct Loan, and any additional Direct Loans that you receive. If you’re not sure who your loan servicer is, you can look it up on