Federal Direct Student Loan Programs

What is the FDSLP?

Congress established the William D. Ford Federal Direct Student Loan Program (FDSLP) to reduce complexity within the financial aid process. FDSLP is a federal loan program that includes the William D. Ford Federal Direct Stafford Loans both subsidized and unsubsidized.

The difference between the FDSLP and the traditional Federal Family Education Loan Program is that the FDSLP does not involve the use of a private lender such as a bank. You are borrowing from the federal government and the money is disbursed directly to your Mercer County Community College student account.

 Federal Stafford Loan Information 2021-22 (PDF)

Federal Direct Student Loan Limits

For Direct Subsidized Loans and Direct Unsubsidized Loans, there are limits on the maximum amount you may borrow for the academic year (annual loan limits) and the maximum amount you may borrow in total for undergraduate and graduate study (aggregate loan limits).

Annual Loan Limits for Direct Subsidized and Direct Unsubsidized Loans
	Dependent Students	Independent Students
1st-year undergraduate (0-29 completed credits)	$5,500 (maximum $3,500 subsidized)	$9,500 (maximum $3,500 subsidized)
2nd-year undergraduate (30 or more completed credits)	$6,500 (maximum $4,500 subsidized)	$10,500 (maximum $4,500 subsidized)

The actual loan amount you are eligible to receive will be determined by your school, and it is based on your academic level, whether you are dependent or independent, and other factors such as:

• The length of your term and program
• Your cost of attendance
• Your Expected Family Contribution (EFC)
• Other financial aid you receive; and
• Your remaining eligibility under the annual and aggregate loan limits.

The actual amount you receive for an academic year may be less than the maximum annual amount shown in the chart above.

The annual loan limits include both Direct Subsidized and Direct Unsubsidized Loans, and any subsidized or unsubsidized Federal Stafford Loans you received through the Federal Family Education Program (FFEL) for the same academic year period.

Consistent with federal regulations, Federal Direct Student Loans have an origination fee. You can review the Stafford Loan origination fee and interest rates here.

General Requirements

Once you are awarded a Federal Direct Student Loan, you must fulfill certain requirements before loans can be credited to your account. These include, but may not be limited to:

Loan Entrance Counseling: Stafford Entrance Counseling is designed to help you understand your obligation as a borrower and provides other useful information on the loan process. Entrance Counseling is required of all first time borrowers. Entrance Counseling can be completed at www.studentaid.gov.

Master Promissory Note: 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). Generally, you can borrow additional Direct Loans on a single MPN for up to 10 years.

Students who wish to receive federal loans must meet all other criteria applicable to the federal aid programs in general, such as enrollment (6 or more credits in your program of study each semester you wish to receive loans), good academic standing (SAP), citizenship or permanent residency, and complying with any federal or institutional requirements based on your FAFSA.

Using Your Loan to Pay Your Term Bill

Your Federal Direct Student Loan(s) will show as a pending aid in the Student Finance section of your myMercer portal once your signed promissory note and Entrance Counseling are received by the Financial Aid Office. Term bills are available upon registration. Federal loans, as well as any other financial aid funds, will be applied against any charges on your account first.

Refund Checks

If a student has a late start classes and at the time of the disbursement the enrollment is less than 6 credits the loan may be held until 14 days after the beginning of the late start classes.

Exit Counseling

If you have received a subsidized or unsubsidized loan under the Direct Loan Program, you must complete exit counseling at www.studentaid.gov each time you:

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

Exit counseling provides important information that you need as you prepare to repay your federal student loan(s). Topics include: Understand Your Loans, Plan to Repay, Avoid Default, and Make Finances a Priority. Exit Counseling provides the borrower with the rights and responsibilities of a Federal loan recipient.

Important note: Students completing Exit Counseling are encouraged to also access the National Student Loan Data System at studentaid.gov to retrieve and review loan and lender information. The National Student Loan Data System (NSLDS) is the U.S. Department of Education's central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan Program, and other Department of Education programs. NSLDS provides a centralized, integrated view of Title IV loans and grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or grant data.

Loan Repayment

Students who borrow a Federal Direct Student Loan and have borrowed a Federal Stafford Loan in the past, can have their loans consolidated so that they will be making only one payment. Loan consolidation will be made at the request of the student when entering repayment. The college will provide more information to you regarding this option during the semester or visit www.studentaid.gov for account information.

Loan repayment begins six months after you leave school or cease to be enrolled on at least a half-time basis. These six months are referred to as a grace period.

The federal government offers various loan repayment options listed below.

• The standard loan repayment plan requires fixed monthly repayment amount paid over a fixed period of time.
• The extended repayment plan assumes a fixed annual repayment amount paid over an extended period of time.
• The graduated repayment plan establishes annual repayment amounts at two or more levels. Repayments are paid over a fixed or extended period of time.
• The income contingent repayment plan calls for varying annual repayment amounts based on the Adjusted Gross Income (AGI) of the borrower over an extended period of time, as determined by the U.S. Department of Education.

While you are enrolled in school (6 credits or above), no payments are due on the subsidized Federal Direct Student Loan, and no interest accrues (unless you are repaying a previous loan and are enrolled less than part time).

The grace period for the unsubsidized Federal Direct Student Loan is the same as the subsidized, but you must continue to pay the interest on the loan while in school and in the the grace period.

CDR-Default Prevention Plan

This Default Prevention Plan is dedicated to student success and improving Mercer County Community College's cohort default rate (CDR) in the Federal Direct Loan program. The school’s CDR is calculated by dividing the number of borrowers that default by the number of borrowers that went into repayment during a specific time frame. Regulations hold schools accountable for their CDR over a three year measurement period, requiring the CDR to be under 30%, to avoid sanctions.

Preventing borrowers from going delinquent will keep the CDR low; this may be accomplished through entrance, exit, and grace counseling. If a borrower becomes delinquent, then outreach will be required to counsel the student back to a successful repayment solution. By focusing on what is best for the students and their long-term loan repayment success we will also achieve success for Mercer County Community College by achieving a low CDR.