Federal Direct Student Loans - Fast Facts

• The Federal Direct Loan is a low-interest loan in the student's name.
• The interest rate for the loan is fixed, and is determined annually by the U.S. Department of Education.
• No repayment is due on any federal loan until six months after the student ceases attending college full-time.
• The federal government will cover, or subsidize, the interest on the Federal Direct Subsidized Loan while the student is in school.
• Unsubsidized loans are also available. The federal government does not cover the interest on these loans while the student is in school or during the six month grace period.
• The amount a student can borrow is limited based on the number of hours they have earned.
• Centenary uses the FAFSA to determine if a student is eligible for a subsidized or unsubsidized amount.
• Students who borrow under the Federal Direct Loan Program for the first time are required to complete entrance counseling and a master promissory note before their loan proceeds can be released. This process is completed at studentloans.gov.

 

Parent Loans

The Federal Direct Parent Loan Program is a credit-based loan available to assist parents and legal guardians with financing their student's educational expenses. This loan allows a parent to borrow up to the total cost of education less the amount of financial aid that has been awarded to the student.  If a parent is denied due to negative credit, a student may borrow an additional $4,000 per year in the Federal Direct Unsubsidized Loan.

Things to Know:

• Funds are delivered electronically to the student's school account. A 4.228% origination fee is deducted from each disbursement.
• Interest begins accruing from the date of the first disbursement (fall semester) and repayment begins 60 days from the final annual disbursement (spring semester).
• The 2023-24 interest rate is fixed at 8.05%.
• The loan payments may be deferred while the student is enrolled.

Parents can initiate the credit approval process after April 1 at studentaid.gov. The parent should sign in using the parent FSA ID and click "Start PLUS Application Process." Once approved, the parent will be given the option to complete and e-sign the master promissory note (MPN).  If the parent is denied, the student may borrow an additional $4,000 Federal Unsubsidized Student Loan for the year.

Loan Limits

The combination of subsidized and unsubsidized Federal Direct Loans can only exceed the limits shown below when a parent applies for a Parent Loan and is denied. In that case, a dependent student can borrow an additional unsubsidized loan in the amount of $4,000 per year for freshmen and sophomores and $5,000 per year for juniors and seniors.

Independent students are not required to go through the parent denial process.

Status	Amount per Year
Freshman	$5,500
Sophomore	$6,500
Junior	$7,500
Senior	$7,500
Graduate/Professional	$20,500

Alternative Loans

Federal Direct Loans are the best loan choice for a student, but alternative, or private, loans are also available. Alternative loans may be a solution if you still find a gap between your financial aid package and your direct cost to the College.

Alternative loans do not require the FAFSA. The student is the borrower, but the loan requires a credit-worthy co-signer. The interest rates are usually variable, but some lenders are offering fixed interest rates based on the credit-worthiness of the co-signer.

In most cases, there is no origination fee and repayment is deferred while the student is in school. Interest accrues during in-school and repayment periods.

FastChoice is a comparison tool for alternative loans, providing online access to reputable private lenders that Centenary students have used within the last three years. Using this tool will help you find the most competitive interest rates and repayment options if you are interested in applying for an alternative loan. You are more than welcome to use a lender that isn't represented on this tool.  Just let us know if you decide on another lender.