Federal Direct Loan Terms and Conditions

Applying for a Loan

To apply for a Federal Direct Loan, you must first complete and submit the Free Application for Federal Student Aid (FAFSA) form. Westminster College will use the information from your FAFSA to determine how much student aid you are eligible to receive. Your financial aid offer will generally include Federal Direct Loans.

Loan Eligibility

  • To receive either a Subsidized or Unsubsidized Federal Direct Loan, you must be enrolled at least half-time.
  • Generally, you must also be enrolled in a program that leads to a degree or certificate awarded by the school.
  • Federal Direct Subsidized Loans are available only to undergraduate students who have financial need.
  • Federal Direct Unsubsidized Loans are available to both undergraduates and graduate or professional degree students. You are not required to show financial need to receive a Federal Direct Unsubsidized Loan.
  • You will receive an email instructing you to check Self-Service for details about your loan eligibility and updates to your Federal Direct Loans.

Loan Limits

The Financial Aid Office determines the loan type(s) if any, and the actual loan amount you are eligible to receive each academic year. However, there are limits on the amount in subsidized and unsubsidized loans you may be eligible to receive each academic year (annual loan limits) and the total amounts you may borrow for undergraduate and graduate study (aggregate loan limits). The actual loan amount you are eligible to receive each academic year may be less than the annual loan limit. These limits vary depending on what year you are in school and whether you are a dependent or independent student.

Undergraduate Students

  Total Loans Subsidized Loans
Independent Freshman $9,500 $3,500
Independent Sophomore $10,500 $4,500
Independent Junior $12,500 $5,500
Independent Senior $12,500 $5,500
Lifetime Limit $57,500 $23,000

Graduate Students

  Total Loans Subsidized Loans
Graduate Student $20,500 $0
Lifetime Limit $138,500

Interest Rates

Interest rates are fixed rates for the life of the loan. Rates for loans disbursed on or after July 1, 2021 and before July 1, 2022 by loan type are:

  • Undergraduate Subsidized or Unsubsidized Loans: 3.73%
  • Graduate or Professional Unsubsidized Loans: 5.28%

Origination Fee

An origination fee is a percentage of your loan amount charged by the lender to process your loan. Federal student loans have an origination fee; therefore, the amount you may receive as a disbursement will be slightly lower than the amount you accept. Until Oct. 1, 2021, origination fees by loan type are:

  • Direct Student Loan: 1.057%
  • Direct PLUS Loan: 4.228%

Entrance Counseling

If you have not previously received a Federal Direct Loan, the federal government requires you to complete entrance counseling to ensure you understand the responsibilities and obligations you are assuming.

If you are completing entrance counseling to borrow a loan as an undergraduate student, then the entrance counseling will fulfill counseling requirements for Federal Direct Subsidized and Unsubsidized Loans.

If you are completing entrance counseling to borrow a loan as a graduate or professional student, the entrance counseling will fulfill counseling requirements for Federal Direct Unsubsidized Loans and Federal Direct PLUS Loans.

To complete entrance counseling, visit the Federal Student Aid website.

Master Promissory Note (MPN)

The Master Promissory Note (MPN) is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s).

You can borrow additional Federal Direct Loans at Westminster College on a single MPN for up to 10 years. To complete a Master Promissory Note, visit the Federal Student Aid website.

Exit Counseling

Exit counseling provides important information to prepare you to repay your federal student loan(s).

If you have received a subsidized, unsubsidized, or PLUS loan under the Federal Direct Loan Program or, you must complete exit counseling each time you:

  • Drop below half-time enrollment
  • Graduate
  • Leave school

To complete exit counseling, visit the Federal Student Aid website.

Repayment

Once you graduate, drop below half-time enrollment, or leave school, your federal student loan goes into repayment. In most cases, however, you have a 6-month grace period before you are required to start making regular payments. If you have a PLUS loan, your loan will go into repayment as soon as the loan is fully disbursed (paid out).

Note: When your loan enters repayment, your servicer will automatically place you on the Standard Repayment Plan. You can request a different repayment plan at any time.

To find out who your lender is or learn about the different repayment options, visit the Federal Student Aid website.

Borrower Default Rate

Westminster's most recently reported borrower default rate for federal student loans is 3.2% for the 2017 federal fiscal year, well below the national average of 9.7%.