Student Financial Services
Direct Subsidized and Unsubsidized Loans

NSLDS
Baylor University is required to report the federal loans you borrow to the National Student Loan Data System (NSLDS). The information is accessible by guaranty agencies, lenders, and schools authorized to use the data system. You are able to review your federal loan history by visiting www.nslds.ed.gov.

Limitation on Direct Subsidized Loan Eligibility
New federal regulations are effective for students who receive their first Direct Loan on or after July 1, 2013. The new regulations limit the timeframe for borrowing Direct Subsidized Loans to 150% of the published program length. This is a significant change for students who change programs or transfer from a two-year institution. Please click here for a detailed explanation provided by the Department of Education.

The Direct Subsidized and Unsubsidized Loans, from the William D. Ford Federal Direct Loan Program, are low-interest loans for eligible students to help cover the cost of higher education. Eligible students borrow directly from the U.S. Department of Education.

Direct Subsidized Loans—Direct Subsidized Loans are for students with financial need. (Effective for loan periods of enrollment beginning on or after July 1, 2012, graduate students are no longer able to borrow subsidized loans.) Baylor will review the results of your Free Application for Federal Student Aid (FAFSA) and determine the amount you can borrow. You are not charged interest while you’re in school at least half-time and during deferment periods. You will be charged interest during the six-month grace period for subsidized loans for which the first disbursement is made on or after July 1, 2012, and before July 1, 2014. For loans disbursed prior to this timeframe and after this timeframe, interest will not accrue during the grace period.

Direct Unsubsidized Loans—You are not required to demonstrate financial need to receive a Direct Unsubsidized Loan. Like subsidized loans, the amount you can borrow will be determined by Baylor. Interest accrues (accumulates) on an unsubsidized loan from the time it’s first disbursed. 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.

Annual and Aggregate Loan Limits
The following chart provides maximum annual and aggregate (total) loan limits for Direct Subsidized and Unsubsidized Loans.

Year 

Dependent Undergraduate Student (except whose parents are unable to obtain PLUS Loans) 

Independent Undergraduate Student (and dependent students whose parents are unable to obtain PLUS Loans) 

Graduate and Professional Degree Student 

First Year (0-29 credit hours)  $5,500-No more than $3,500 of this amount may be in subsidized loans.  $9,500-No more than $3,500 of this amount may be in subsidized loans.  $20,500-No more than $8,500 of this amount may be in subsidized loans. (Effective July 1, 2012, the entire $20,500 maximum must be unsubsidized.) 
Second Year (31-59 credit hours)  $6,500-No more than $4,500 of this amount may be in subsidized loans.  $10,500-No more than $4,500 of this amount may be in subsidized loans.  $20,500-No more than $8,500 of this amount may be in subsidized loans. (Effective July 1, 2012, the entire $20,500 maximum must be unsubsidized.)  
Third and Beyond (60 + credit hours, amounts each year)  $7,500-No more than $5,500 of this amount may be in subsidized loans.  $12,500-No more than $5,500 of this amount may be in subsidized loans.  $20,500-No more than $8,500 of this amount may be in subsidized loans. (Effective July 1, 2012, the entire $20,500 maximum must be unsubsidized.)  
Maximum Total Debt When You Graduate (aggregate loan limits)  $31,000-No more than $23,000 of this amount may be in subsidized loans.  $57,500-No more than $23,000 of this amount may be in subsidized loans.  $138,500-No more than $65,500 of this amount may be in subsidized loans.  The graduate debt limit includes Stafford Loans received for undergraduate study. 

Note: These annual loan limit amounts are the maximum yearly amounts you can borrow in both Subsidized and Unsubsidized Direct Loans. You can have one type of loan or a combination of both. Because you can't borrow more than your cost of attendance minus any other financial aid you'll get, you may receive less than the annual maximum amounts. Also, the annual loan limits assume that your program of study is at least a full academic year. You should only borrow the amount you need to meet your expenses. Remember, you can borrow less than you are offered each year. If you have advanced a grade level by the end of the spring (freshman to sophomore or sophomore to junior), you may be eligible to borrow an additional $1000 for the summer. Please keep the annual and aggregate limits in mind as you borrow each year. If you borrow the maximum allowed each year for four years, but then find you need a fifth year of study you will reach the aggregate limit and will be limited in the amount you can borrow during your fifth year. With careful planning allowing you to graduate on time or early, you will not reach the aggregate limit.  Click here to view a sample loan disclosure statement. You will receive a statement specific to your loan before your loan is disbursed.

How to Apply for a Direct Subsidized or Unsubsidized Loan
File the Free Application for Federal Student Aid (FAFSA. We will notify you of your eligibility. Direct Loans are administered by the federal government.

Once you complete entrance counseling and a Master Promissory Note (MPN) the first time you borrow a Direct Subsidized and/or Unsubsidized Loan, you will only need to file the Free Application for Federal Student Aid and accept the loans offered to you on BearWeb each year to receive the loan funding for which you are eligible. Go to www.studentloans.gov and sign in with your PIN to complete entrance counseling and your MPN the first time you borrow.

Loan Fees
The total origination fee for Subsidized and Unsubsidized Loans is 1.720% of the amount borrowed for loans disbursed after December 1, 2013. The interest rate for undergraduates on Direct Subsidized and Unsubsidized Loans borrowed on or after July 1, 2013 and before July 1, 2014, is 3.86%. The interest rate for graduate students on Direct Unsubsidized Loans borrowed on or after July 1, 2013 and before July 1, 2014 is 5.41%. (Graduate students are no longer eligible for Direct Subsidized Loans.) New rates will be established each June for the upcoming year. The interest rate for a loan will apply for the life of the loan (fixed-rate). As a result, it is likely you will have a set of fixed-rate loans, each with a different interest rate.

Right to Decline Loans
You have the right to decline any financial aid that you are offered. You have a number of rights and responsibilities pertaining to borrowing student loans. Click here for a list of important rights and responsibilites of which you should be aware.

Repayment
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 www.nslds.ed.gov. After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you begin repayment. The interest subsidy provided during the six-month grace period for subsidized loans for which the first disbursement is made on or after July 1, 2012, and before July 1, 2014, has been eliminated. If you receive a subsidized loan during this timeframe, you will be responsible for the interest that accrues while your loan is in the grace period. You do not have to make payments during the grace period (unless you choose to) but the interest will be added (capitalized) to the principal amount of your loan when the grace period ends. During this period, you'll receive repayment information from your loan servicer, and you'll be notified of your first payment due date. Payments are usually due monthly. For a sample repayment schedule, click here.

Difference between Direct Loans and Stafford Loans
While the loan limits and eligibility are the same, with Direct Loans, the Department of Education is the lender for all students. You do not choose a participating lender. With Stafford Loans, you chose a participating bank, credit union, or other financial institution to be your lender. This is no longer an option. Before July 1, 2010, Stafford, PLUS, and Consolidation Loans were also made by private lenders under the Federal Family Education Loan (FFEL) Program. As a result of the SAFRA Act, which was part of the Health Care and Education Reconciliation Act, no further loans can be made under the FFEL Program beginning July 1, 2010. All Stafford, PLUS, and Consolidation Loans come directly from the U.S. Department of Education under the Direct Loan Program.

Status of Loans Borrowed from Other Lenders
After graduation, you have a choice. You can either make individual payments to your previous lender(s) and to the Department of Education for your Direct Loans, or you can consolidate your loans into one simple payment. You may either consolidate all your loans with your previous lender, or with the Department of Education. However, many private lenders have discontinued their consolidation services and may have sold your loans to the Department of Education. Check on www.nslds.ed.gov if you are unsure of the status of your previous loan.

Master Promissory Note(MPN)
You must sign a Direct Loan Master Promissory Note. This will be the only promissory note you will have to sign as long as you continue to attend Baylor. Your Federal PIN is required in order to eSign. Go to  www.studentloans.gov and log in with your PIN to sign the MPN.

Entrance Counseling
Complete Direct Loan entrance counseling one time after you have been offered a Direct Subsidized or Unsubsidized Loan and accepted the offer. Go to www.studentloans.gov and sign in with your PIN to complete entrance counseling.

Exit Counseling
Exit counseling is required when you cease to be enrolled at least half-time. If you drop below half-time hours, withdraw, graduate, or stop attending, you are required to complete exit counseling by logging in with your PIN at www.studentloans.gov.