What is a Federal Direct Student Loan?
The Federal Direct Student Loan Program is a cooperative effort between the federal government and educational institutions: 1) The federal government provides the student loan funds, 2) Schools determine the loan amount and interest subsidy, confirm eligibility, and determine the loan period. Direct Student Loans provide funds to help meet educational expenses. However, unlike gift aid,
loans must be repaid.
Federal Direct Student Loans are offered in two forms: subsidized and unsubsidized.
Subsidized:
The student borrower will not be charged interest while enrolled at least half-time in school and during grace or deferment periods. The federal government subsidizes, or pays, the interest during these periods. Interest begins to accrue and repayment of the principal begins six months after no longer being enrolled half-time in an educational institution.
Unsubsidized:
The student borrower is responsible for the interest. Interest accrues within sixty days of disbursement and may either be paid while the student is in school or capitalized and added to the principal amount borrowed. As with subsidized loans, principal repayment begins six months after no longer being enrolled half-time in an educational institution.
How Much Can I Borrow?
- The total financial aid, including Federal Direct Student Loans, can never exceed the cost of attendance. Limits indicated are the federal maximums, which undergraduate students can receive during two major terms of enrollment. Graduate students have three major terms of enrollment
- In addition to annual loan limits, there are aggregate loan limits. Students may never borrow more than the aggregate loan limit for all subsidized and unsubsidized loans at the University of the Southwest and other schools.
Academic Year Loan Limits and Aggregate Loan Limits
| Year |
Dependent Undergraduate Student (except students whose parents are unable to obtain PLUS Loans) |
Independent Undergraduate Student
|
Graduate and Professional Degree Student |
Freshman Year
|
$3,500 in subsidized loans plus $2,000 in unsubsidized loans |
$9,500-No more than $3,500 of this amount may be in subsidized loans. |
$20,500 |
| Sophomore Year |
$4,500 in subsidized loans plus $2,000 in unsubsidized loans |
$10,500-No more than $4,500 of this amount may be in subsidized loans. |
| Junior and Beyond (each year) |
$5,500 in subsidized loans plus $2,000 in unsubsidized loans |
$12,500-No more than $5,500 of this amount may be in subsidized loans. |
| Maximum Total Debt from Stafford Loans When You Graduate (aggregate loan limits) |
$31,000 (maximum $23,000 subsidized) |
$57,500-No more than $23,000 of this amount may be in subsidized loans. |
$138,500- The graduate debt limit includes Stafford Loans received for undergraduate study. |
How Do I Apply?
Students may review the details of the financial aid award offered by logging into Self-Service from the USW website. A link to Self-Service can be accessed by clicking the Current Students button at the top right of any USW webpage. Once in Self-Service, click on "Financial Aid" to accept or deny each award individually and loans. The amount requested by the student will be divided equally between the fall and spring semesters unless otherwise indicated by the student. Students have the option to request the loan for the maximum amount awarded or request the loan amount needed. Be sure to complete each step until a confirmation page appears.
If student loans are accepted the student must complete the loan process by clicking on to the
Direct Loan Entrance Counseling and the
Direct Loan Master Promissory Note. All three steps must be completed and submitted to receive student loan funds. (Links are provided in the portal.)
NSLDS
Students and parents who enter into a loan agreement with Federal Direct Loans will have their loan information submitted to NSLDS (the National Student Loans Data System) which is accessible by authorized agencies,lenders, and institutions.
Federal Direct PLUS Loans
Federal Direct Plus Loans are guaranteed by the federal government, applied for at
studentaid.gov, and are issued to credit-worthy parents of dependent students or for graduate students. The interest rate is reasonable and repayment begins 60 days after the second disbursement. Student must be enrolled at least half time (6 hours undergraduate, 3 hours graduate).
Parents may borrow the Parent Plus Loan for dependent undergraduate students. Graduate students may apply for the Grad PLUS Loan on their own behalf. For frequently asked questions about Federal Direct Plus Loans or to apply, please click below.
Alternative/Private Loans
Alternative/Private loans are designed specifically to help you meet the needs of covering the cost of attendance. Private Loans are available to credit worthy students. A co-signer may be required. This type of loan is funded by private agencies such as banks, savings & loans or credit unions. Details vary with each lender. Please understand all details (interest rate, repayment, etc) regarding the loan before applying. University of the Southwest does not show preference for one lender over another and each student is encouraged to comparison shop for the right lender that will meet the student's needs.
Borrow conservatively - loans must be paid back.
Please note the following to avoid delay, cancellation, and/or return of your student loan and funds.
Federal Regulations stipulate: Students must enroll at least half-time in an eligible academic program each loan disbursement term. Student must complete Entrance Counseling prior to initial student loan disbursement. First-year undergraduate student's loan funds will not disburse until 30 calendar days after the first day of classes.
Student must make satisfactory academic progress as defined in the USW catalog for program of study.
Students are encouraged to meet published financial aid deadlines as established by the Office of Financial Aid at USW.
Sample Loan Repayment Schedule
Students may obtain a sample loan repayment schedule by clicking the link below:
Each student is responsible for reading and understanding all printed materials.