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Types of Loans

Direct Loan Program (Federal aid for students)

Direct Loans are low-interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the U.S. Department of Education rather than a bank or other financial institution.

With Direct Loans, you:

  • Borrow directly from the federal government and have a single contact - the Direct Loans Servicing Center - for everything related to the repayment of your loans, even if you receive Direct Loans at different schools.
  • Have online access to your Direct Loan account information 24 hours a day, 7 days a week at Direct Loans on the web.
  • Can choose from several repayment plans that are designed to meet the needs of almost any borrower, and you can switch repayment plans if your needs change.

Fact: There are Limits to What You May Borrow!

  • The maximum amount you can borrow each year in Direct Subsidized and Unsubsidized Loans depends on your grade level and on whether you are a dependent student or an independent student. The following table shows the maximum amount of money you may borrow each academic year in Direct Subsidized and Unsubsidized Loans:

    Annual Limits Dependent Student (1) Independent Student(2)

    1ST-YEAR UNDERGRADUATE

    $5,500 (maximum $3,500 subsidized) $9,500 ($3,500) (3)

    2ND-YEAR UNDERGRADUATE

    $6,500 ($4,500) $10,500 ($4,500)

    3RD- AND 4TH-YEAR UNDERGRADUATE

    $7,500 ($5,500) $12,500 ($5,500)

    GRADUATE/PROFESSIONAL

    NA (All graduate and professional students are considered independent.) $20,500

    (1) Except those whose parents are unable to borrow a PLUS loan.
    (2) These limits also apply to dependent students whose parents are unable to borrow a PLUS loan.
    (3) The numbers in parentheses represent the maximum amount that may be subsidized.

    The actual loan amount you are eligible to receive for an academic year is determined by your school and may be less than the maximum annual amounts shown in the chart above.

    Maximum Lifetime Limits (Aggregates)

    BELOW ARE THE AGGREGATE (TOTAL) LIMITS FOR DIRECT SUBSIDIZED AND UNSUBSIDIZED LOANS:

    • $31,000 for dependent undergraduate students excluding those whose parents are unable to borrow a PLUS Loan (no more than $23,000 may be subsidized)
    • $57,500 for independent undergraduate students and dependent undergraduates whose parents are unable to borrow a PLUS loan (no more than $23,000 may be subsidized)
    • $138,500 for graduate or professional students (no more than $65,500 may be subsidized; includes loans for undergraduate study)

    These aggregate limits include both Direct Subsidized and Unsubsidized Loans and any subsidized and unsubsidized Federal Stafford Loans received through the Federal Family Education Loan (FFEL) Program.

    NSLDS, as mentioned above, is a government web site where students can track and monitor all of their government student loans.

    With a Direct PLUS Loan, a graduate/professional student or the parent of a dependent student can borrow up to the cost of the student's attendance minus other financial aid the student receives.

    Smart borrowing means limiting your borrowing so that you do not reach your aggregates prior to graduating with your intended degree. It also means graduating with minimal debt. Talk with your advisor or financial aid counselor to establish a plan for minimizing the debt you take on while attending Davenport.

Comparison of Federal Loans

Various loan options exist. The Federal Direct Student Loans, PLUS and Grad PLUS are all federal loan programs. In addition, there are private (sometimes called “alternative”) loan options available to you. The federal loans often have the best interest rates, deferment options, and repayment plans. You should maximize your eligibility especially for the Direct Loan program prior to considering other loans.

Subsidized vs. Unsubsidized

During in-school periods (enrolled at least half-time) and in grace periods*, no interest accrues on Federal Subsidized Direct Loans. Repayment of principle on Unsubsidized Direct Loans also begins six months after the student graduates or ceases to be enrolled at least half time, but there is no interest subsidy (meaning the student is responsible for paying the interest that accrues during in-school and grace periods, as well as in repayment). Students can begin repayment while still in school. Beginning repayment early may reduce some of the overall interest charged on a loan. Students should update all their demographic information as it changes to all of their lenders in order to receive important information regarding their loans.

Beginning July 1, 2013, new student borrowers awarded a Federal Subsidized Direct Loan will have a usage limit of their Subsidized Loans. Please review this page for more information.

*Effective July 1, 2012 any new subsidized loan disbursed on or after July 1, 2012 and before July 1, 2014 will have interest accrued during grace period. 

Parent PLUS Loans (Federal aid for parents of dependent students only)

The Direct Parent Loan for Undergraduate Students (PLUS) is available to credit-worthy parents of dependent, undergraduate students. PLUS loans are not subsidized and parents are responsible for all interest that accrues on the loan from the day it is disbursed until the loan is paid-in-full. Current interest rates are available in the information above. Proceeds are normally disbursed electronically to the school in multiple disbursements (usually one per semester). Parent borrowers begin repayment 30 days after the loan is fully disbursed, and standard repayment lasts ten years.

More information is available at the Federal Government web site. You can apply for a Direct Parent Loan at studentloans.gov.

Alternative Loans (other lending programs, not Federal aid)

Many alternative educational loans are available. These are consumer loans, not federal aid, and may have income requirements and credit checks.  Davenport does not and will not recommend a lender for private educational loans.  We encourage student and parent borrowers to select a lender based upon their educational and financial needs. Student and parent borrowers may select any lender they wish which may or may not be included in the online list.

Helpful Hints:

  1. Davenport University encourages you to maximize your Federal Direct Loan eligibility prior to pursuing a private loan.
  2. Private loans should be viewed as supplemental to other financial aid. 
  3. Private (i.e., Alternative) loans generally require a credit check and are not guaranteed by the Federal government.
  4. Thoroughly read through repayment guidelines, interest rate information, and other details before applying for a private loan. 
  5. Loan Fees -- Most lenders do not charge loan origination fees. Be sure to check all fees and interest rates before applying.
 

Be Smart

Student Loans are a good way to finance your education; however, just like car loans, mortgages and even credit cards, student loans are loans and must be repaid by the student or the parent, depending upon who takes the loan out.

Student loans have limits. Be sure to read the information below to understand the maximum amounts that are available both per academic year and the lifetime limits (otherwise known as loan aggregates). 

It's important that you Know Your Debt.

Key things to remember about using student loans:

  1. Borrow only what is necessary to finance your education.
  2. Look for alternatives to borrowing, such as scholarships, grants, and work study.
  3. Use the budgeting tools we have available.
  4. Contact your financial aid counselor to discuss smart borrowing and establishing a plan to finance your academic program.
  5. Contact Career Services to look for employment opportunities.
  6. Review our Know Your Debt Loan Counseling presentation. It's a self-guided presentation that provides great information about loans and borrowing carefully.
  7. NSLDS is a government web site where students can track and monitor all of their government student loans.
  8. Students have the right to cancel or reduce their student loan prior to disbursement. Contact your financial aid counselor for more information.
  9. Print and complete the Know Your Debt checklist.

Know What U Owe

Find out "What U Owe" at NSLDS (National Student Loan Data System)

To review your loan history you will need:

  • Your Social Security number
  • The first two letters of your last name
  • Birth Date
  • The Federal FSA ID used to sign your FAFSA

Mandatory Loan Proration

Undergraduate students borrowing Federal Direct loans (subsidized and unsubsidized) are subject to loan proration when they are graduating from their academic program at the beginning of their borrowing period.  By graduating at the beginning of their borrower-based academic year (BBAY), students won't be completing either a full academic year or BBAY, which in either instance requires the loan proration calculation.  This is mandated by the federal government.  Proration is a method of making Federal Direct student loans proportionate to the number of credits in which the students are enrolled in their final semester before graduation according to the following formula:

(# Credits enrolled in final semester/24) * Annual loan limit = Prorated loan amount

  • Since enrollment of at least six credit hours is required to be eligible for Federal Direct loans, enrollment less than that will not result in a loan award or loan proration.
  • Proration calculations and adjustments are typically performed just before the final semester of enrollment.  Notifications will be sent to affected students.
  • Annual loan limits vary according to depedency status, degree program, and whether or not a Parent PLUS loan denial has been processed.  Dependent students who have a Parent PLUS loan denial on file have the same loan eligibility as an independent student.

 

Loan Proration Chart

 Credits Sophomore Independent Junior/Senior Independent Sophomore Dependent Junior/Senior Dependent
  Sub Unsub Combined Sub Unsub Combined Sub Unsub Combined Sub Unsub Combined
6 1125 1500 2625 1375 1750 3125 1125 500 1625 1375 500 1875
7 1313 1750 3063 1604 2042 3646 1313 583 1896 1604 583 2188
8 1500 2000 3500 1833 2333 4167 1500 667 2167 1833 667 2500
9 1688 2250 3938 2063 2625 4688 1688 750 2438 2063 750 2813
10 1875 2500 4375 2292 2917 5208 1875 833 2708 2292 833 3125
11 2063 2750 4813 2521 3208 5729 2063 917 2979 2521 917 3438
12 2250 3000 5250 2750 3500 6250 2250 1000 3250 2750 1000 3750
13 2438 3250 5688 2979 3792 6771 2438 1083 3521 2979 1083 4063
14 2625 3500 6125 3208 4083 7292 2625 1167 3792 3208 1167 4375
15 2813 3750 6563 3438 4375 7813 2813 1250 4063 3438 1250 4688
16 3000 4000 7000 3667 4667 8333 3000 1333 4333 3667 1333 5000

Tips

  1. Do your homework. Many private banks and lenders as well as the federal government are in the student loan business.
  2. Visit Federal Student Aid to learn more about Federal Government Direct Loans.
  3. Try not to take out a larger loan then necessary to fund your college experience. Be sure to apply for things such as work-study positions, grants, and scholarships to help pay for your college expenses. This will help lower the amount of money you may need to borrow.
  4. Keep track of what kind of loan(s) you have, whom you’ve borrowed the money from and how much you borrow. Loans have different minimum monthly payments, interest rates and repayment plans. Don’t just sign the promissory note and forget about it. Keep it in a safe place so that you can refer back to it.
  5. Shop and compare. Loans come in several varieties: subsidized, unsubsidized, and alternative.  You should maximize your federal loan options prior to considering bank-based loans.  Bank-based loans have different interest rates and payback options. Make sure you look at all the loan options and choose the one that is most appropriate for your financial needs.
  6. Remember loans have to be paid back. They are not free whether your loan is subsidized or unsubsidized; you will owe interest on the money that you borrow. If your loan is larger than the amount needed to pay for your tuition, you may receive a check for the excess amount. If you decide to spend this check, keep in mind that you must pay it back along with interest fees.
  7. Keep in mind loans must be repaid even if you do not finish school. When the time comes to pay back your student loans, make sure you set up a repayment plan that makes sense for your financial situation. 
  8. You must start repaying your student loan six months (your grace period) after your official graduation date or the date that you decide to leave school.  Contact your servicer to get deferment, payment, and loan consolidation options.
  9. Understand what loan consolidation is and realize that it is not always beneficial for everyone.

Q&A about Student Loans

WHO OWNS MY LOAN?

If you are not sure who owns your loan, you can check on the National Student Loan Data System (NSLDS) at www.nslds.ed.gov. You will have to use your federal FSA ID (the one you received to sign your FAFSA). You will then be able to find out who the holder of your loan is, who the servicer is and how much you owe etc. You can also call your school and ask them for assistance.

WHERE DO I SEND MY PAYMENT?

Student loan payments are to be sent to your loan servicer. Sometimes student loans are sold which may change where you have to send your payment. If you are unsure of where to send your payment, review the written materials from your lender, visit their website or call them.

CAN I CHANGE MY PAYMENT AMOUNT/PAYMENT PLAN?

Usually borrowers can change their repayment plan at least once a year and sometimes monthly. There are certain minimum monthly requirements that must be met, depending on the payment plan. Contact your lender or servicer for more information.

MY LOAN WAS SOLD-WHAT DOES THIS MEAN?

Just like a car, bank or mortgage loan, student loans can be sold to another bank, lender, to the U.S. Department of Education or to a secondary market. Regardless of who holds your student loan, you are still legally obligated to repay the full amount of the loan and the interest fees.

I MISSED MY PAYMENT, WHAT DO I DO NOW?

Contact your lender immediately to discuss your options. Consider changing your repayment plan if your current plan is not working for you. Keep track of all communications.

I CAN’T MAKE MY PAYMENT, WHAT SHOULD I DO?

Don’t ignore the debt…it won’t go away. There are many options to help, including changing your payment due date, repayment plan, or requesting a deferment or forbearance. Contact your lender or school for assistance.

DON’T SEE YOUR QUESTION HERE?

Submit a question to FinancialAid@davenport.edu and we will do our best to provide an answer within two business days. Please indicate “LOAN QUESTION” in the subject line of the email.