Frequently Asked Questions
What are the annual Federal Loan Limits?
The loan limits for dependent undergraduate students are:
- $5,500 freshman, no more than $3,500 of which may be subsidized
- $6,500 sophomores, no more than $4,500 of which may be subsidized
- $7,500 juniors and seniors, no more than $5,500 of which may be subsidized
The loan limits for dependent undergraduate students whose parents were denied a Parent PLUS loan and for independent undergraduate students are:
- $9,500 freshmen, no more than $3,500 of which may be subsidized
- $10,500 sophomores, no more than $4,500 of which may be subsidized
- $12,500 juniors and seniors, no more than $5,500 of which may be subsidized
The loan limits for Graduate Students who are fully admitted into a graduate program are:
- $20,500, no more than $8,500 of which may be subsidized
What is the Federal Direct Loan Program?
The U.S. Department of Education offers schools two options for processing Federal Stafford and Federal Parent PLUS Loans. The school can choose to process these federal loans directly through the federal government, which is known as the Federal Direct Loan Program. OR the school can choose to process these federal loans through third party lenders, which is called the Federal Family Education Loan Program (FFELP). Beginning with loans processed for the 2009-10 year (Fall 2009, Spring 2010, and Summer 2010) The University of Texas at Tyler will stop processing through the FFELP Program and switch to processing your loans through the Federal Direct Loan Program.
Why did UT Tyler decide to switch to the Federal Direct Loan Program?
As a result of our research it became evident that utilizing the Federal Direct Loan Program is the best loan fund delivery program for UT Tyler students for a number of reasons, including:
- No Middle Man: The Federal Direct Loan program is funded directly by the Federal Government, eliminating the middle man and the confusion often found in the FFELP Program we currently use.
- Loans are never sold in the Federal Direct Loan Program. Loans through the FFELP Program can be sold multiple times which can be confusing for the borrower.
- Increased Repayment Options: There are more repayment plan options through the Federal Direct Loan Program, such as the Income Contingent Plan. With the Income Contingent Plan, if a student is unable to repay her/his loan in 25 years, the government forgives the balance of the loan.
- Consolidation: Students can consolidate loans borrowed through the FFELP Program into the Federal Direct Loan Program allowing them to take advantage of all the Loan Forgiveness programs, including programs only available with Direct Loan Consolidation. Students can also consolidate their Direct Loans to the FFELP Program, but will not have access to all the repayment and loan forgiveness options.
- Loan Forgiveness Options Increased: Loans consolidated in the Direct Loan Program are able to benefit from all loan forgiveness programs the U.S. Department of Education offers to students.
What types of loans are available through the Direct Loan Program?
The Federal Direct Loan Program offers exactly the same four loan types that you are currently offered, which includes: Federal Subsidized Loans, Federal Unsubsidized Loans, Federal PLUS Loan (Parent Loan for undergraduate dependent sudents) and Grad PLUS Loan (for graduate students who have exhausted Subsidized and Unsubsidized).
How will I get my federal student loan and PLUS loan?
Your Federal Stafford Student Loan and PLUS Loan will come to you the same way it has in the past. The loan funds will be sent to the school and credited to your account. To you it will look exactly the same - the part that is changing is who will actually be sending the money to the school. Currently the money is sent to the school by a lender, but through the Federal Direct Loan Program the money will be sent to the school directly from the U. S. Department of Education.
When will I get my student loan and/or PLUS loan?
You will receive your Federal Stafford Student Loan and/or PLUS Loan just as you are receiving them currently. The school will process your loan when you have completed the financial aid process. Then the Financial Aid Office will request the funds be sent to the school. The funds will disburse to your account and pay against your bill. Any refunds will be processed as they have been in the past.
Will I need to do anything?
Yes. You will need to be enrolled for at least 6 hours to be eligible for loan funds. You will also need to complete a new Direct Loan Master Promissory Note (eMPN) and Direct Loan Entrance Loan Counseling for your Federal Stafford Loan. Parents will also need to complete a new Direct Loan eMPN.
How will I know what to do and when to do it?
When the time comes for you to take action, you will be notified by the Financial Aid office on what, when and where. Keep an eye on your Patriot email account for information.
What is a Master Promissory Note (eMPN)?
The eMPN is an electronic promissory note that must be completed to receive a federal loan. It is your promise to repay your Federal Student Loan. There are two types of eMPNs in the Federal Direct Loan Program: one for the Stafford student loans and one for PLUS loans.
Where else can I get information on the new Direct Lending process for Federal student Stafford Loans and Federal parent PLUS loans?
The Financial Aid Office will be updating our website on an ongoing basis.
Are there any fees associated with using the Federal Direct Loan Program?
Yes. Just as you are currently charged a fee for your Federal Stafford Loan and Federal Plus loan through the FFELP Loan Program, the Direct Loan Program also charges an origination fee. Currently, for all Federal Direct Subsidized Loans and Federal Direct Unsubsidized Loans that are first disbursed on or after July 1, 2008 and before July 1, 2009, the origination fee is 2%. For all Direct PLUS Loans for both parent and graduate/professional student borrowers, the origination fee is 4%, regardless of the first disbursement date. The loan rebate of 1.5% will apply and reduce these fees.
Can I consolidate Loans received through the Federal Direct Loan Program with loans received through the FFELP Program so that I only have one payment once I leave school?
Yes. It is a relatively simple process. You can consolidate through either the FFELP or the Federal Direct Loan Program. You should check with either program when you begin to review your options for consolidation. You will want to investigate which program offers the repayment benefits that work best for you..
Students who have previously borrowed FFELP student loans through a lending institution and who are now borrowing a Federal Direct Loan are encouraged to consolidate all of their student loans into one Federal Direct Consolidation Loan. This will help the borrower avoid the situation of owing two separate loans to two different lenders. Borrowers who are interested in consolidation of all their student loans into one Consolidation Loan can contact the U.S. Department of Education for more information at http://loanconsolidation.ed.gov.
Printable copy of the UT Tyler Direct Loans Flyer |
