2013-14 Direct Stafford Loan Changes

Frequently Asked Questions

How do changes to Direct Stafford Loans impact graduate and professional students?
There have been two major changes to the Direct Loan program. A provision in the Budget Control Act of 2011 made graduate and professional students no longer eligible for Subsidized Stafford loans. This means the available loans for the graduate and professional students are the Un Subsidized loan and the Grad PLUS loan. Interest accrues on Unsubsidized and Grad PLUS loans while still in school. Second, borrower repayment incentives have ended. As a result, no up-front interest rebates will be offered. The Consolidation Appropriations Act of 2012 eliminated the grace period benefit for loans made in academic years 2012-2013 and 2013-2014.

When does the graduate loan subsidy change begin?
The change applies to loans made for graduate and professionals students for periods of enrollment beginning on or after July 1, 2012.

How will this affect my overall loan limits, both annually and aggregately?
The annual Stafford Loan limit for graduate and professional students remains $20,500. The aggregate Stafford Loan limit also stands unchanged at $138,500. The Graduate PLUS Loan will still be offered up to the cost of attendance for students who qualify for the loan.

What is the current interest rate on the Un Subsidized loan?
The Unsubsidized Direct Loan has a variable fixed interest rate for the 2013-2014 academic year of 5.41 %. Because interest begins to accrue upon loan disbursement and while the student is still in school, the total loan will increase by the time a student starts repayment. The amount of the increase depends upon the total amount borrowed and the length of the student’s graduate or professional program.

What is the current interest rate on the Grad PLUS loan?
The Grad PLUS Loan has a variable fixed interest rate for the 2013-2014 academic year in the amount of 6.41%.

Does the Budget Control Act of 2011 change when I have to start repaying the loan?
Although interest begins to accrue immediately, graduate and professional students still have the options of deferring payment of their loans until after graduation. In most cases, students do not have to begin repayment of their loans until six months after graduating or until ceasing to be enrolled at least half time. We encourage our students to make quarterly interest payments as an effective strategy to decrease the total loan debt by the time of repayment.