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Direct Student Loans

Direct Stafford Loans, from the William D. Ford Federal Direct Loan (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 Stafford Loans include the following types of loans:

Direct Subsidized Loans—Direct Subsidized Loans are for students with financial need. Your school will review the results of your Free Application for Federal Student Aid  and determine the amount you can borrow. You are not charged interest while you’re in school at least half-time and during grace periods and deferment periods.

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


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).

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.

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). These limits are shown in the chart in the next section. The actual amount you can borrow each year depends on your year in school, whether you are a dependent or independent student, and other factors, and may be less than the maximum amounts shown in the loan limit chart. Your school will determine what types of loans and how much you may borrow.

Depending on your financial need, you may be eligible to receive a subsidized loan for an amount up to the annual subsidized loan borrowing limit for your level of study. If you have education expenses that have not been met by subsidized loans and other aid, you may also receive an unsubsidized loan so long as you don't exceed the combined subsidized and unsubsidized annual loan limits.

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


 Dependent Students

Independent Students 

 First Year

(0-24 Credits)

 $5500- no more than $3500 of this may be in subsidized loans

 $9500-no more than $3500 may be in subsidized loans

 Second Year


 $6500- no more than $4500 of this may be in subsidized loans  

 $10,500- no more than $4500 may be in subsidized loans

 Third Year and beyond (57+)

 $7500- no more than $5500 of this may be in subsidized loans

 $12,500- no more than $5500 may be in subsidized loans

 Maximum Total

 $31,000- No more than $23,000 of this amount may be in subsidized loans

 $57,500- No more than $23,000 may be in subsidized loans

Note: These annual loan limit amounts are the maximum yearly amounts you can borrow in both subsidized and unsubsidized 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.

The maximum annual and total loan limits include any Stafford Loans you may have received under the FFEL Program.

How will I get the loan money?
You'll be paid through your school, generally in at least two installments. No installment may exceed one-half of your loan amount. Your school will use your loan money first to pay for tuition and fees, room and board, and other school charges. If any loan money remains, you'll receive the funds by check or other means, unless you give the school written authorization to hold the funds until later in the enrollment period.

Generally, if you're a first-year undergraduate student and a first-time borrower, your school cannot disburse your first payment until 30 days after the first day of your enrollment period.

What are the current interest rates?
Direct Subsidized Loans: Undergraduate students
—If the first disbursement of your subsidized loan is between July 1, 2010 and June 30, 2011, the interest rate on your loan is fixed at 4.5%. The interest rate on subsidized loans first disbursed to undergraduate students between July 1, 2011 and June 30, 2012 will be fixed at 3.4%.

Direct Unsubsidized Loans—The interest rate is fixed at 6.8% for all borrowers (undergraduate and graduate).

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.

Other than interest, is there a charge for this loan?
There is a loan fee on all Direct Subsidized and Unsubsidized Loans. The loan fee is a percentage of the amount of each loan you receive. For loans first disbursed between July 1, 2010 and June 30, 2011 the loan fee is 1.0%. We will deduct the loan fee proportionately from each loan disbursement. The specific loan fee that you are charged will be reflected in a disclosure statement that we send to you.

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

When do I begin repaying my loans?
After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you begin repayment. 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.

Repayment Plans—The Direct Loan Program offers several repayment plans that are designed to meet the different needs of individual borrowers. Generally, you’ll have 10 to 25 years to repay your loan, depending on the repayment plan that you choose. You will receive more detailed information on your repayment options during entrance and exit counseling sessions at your school.

What if I have trouble repaying the loan?
Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily stop or lower the payments on your loan.

Can my loan be cancelled (discharged)?
Yes, but only under a few circumstances.

You also may qualify for forgiveness of some or all of your loan balance:
• If you teach full-time for 5 years at a school or educational service agency serving low-income families and meet other requirements, or
• After you have made 120 payments on a Direct Loan while employed in certain public service jobs (additional conditions apply).

Direct Student Loans

Our Nazarene Heritage
Founded in 1899, Southern Nazarene University is a private, Christian, liberal arts university - a service of the Church of the Nazarene. Located on a 40-acre campus just west of Oklahoma City, SNU grew out of several small colleges committed to educating people for lives of service to God, leadership, and reconciliation toward their neighbors and within the global community. More than 32,000 alumni work and serve throughout the United States and the world. Read About Our Heritage

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