Questions and Answers About Loans



Please click HERE to view an attachment regarding your eligibility for receiving the Federal Direct Subsidized loan. This regulation could affect the subsidy you receive on Federal Direct Subsidized loans. After you have read through this attachment, if you still have questions please contact our office.


The purpose of all loan programs is to assist students unable to obtain sufficient support from other sources. They are part of a family of aid known as Self Help Aid. Student loans must be repaid. Therefore, students are highly encouraged to borrow only what they need to cover direct educational expenses.

In order to qualify for assistance under any of the loan programs, the student must complete the Free Application for Federal Student Aid (FAFSA) and the DBU Supplemental Application for Financial Aid and Scholarships for the appropriate academic year. Both forms are available online.

Students who receive Federal Direct loans are required to complete online entrance counseling and sign an electronic Master Promissory Note (MPN) before the loan application process can be completed and loan funds posted to any student account. Exit counseling is required by students upon their graduation or withdrawal from the University. Exit counseling is required by Federal regulation and should be completed within 30 days of graduation or upon withdrawal from the University.

Students awarded Federal Direct loans must go online to secure their Federal loan.

Direct Loans FAQ's

Beginning Summer 2010 DBU began processing what was formally known as 'Federal Stafford Loans' through the Federal Direct Lending program.

The University no longer uses the Federal Family Education Loan Program (private lenders) to process student loans, Parent PLUS, and Graduate PLUS Loans.

Under the Federal Direct Loan program, the funds for your Federal loans comes directly from the Federal government. In the FFEL program, funds came via banks, credit unions, or other lending institutions participating in the program.

Eligibility rules and loan amounts are identical under both the FFELP and FDL programs.

In the William D. Ford Federal Direct Loan Program, the Department of Education serves as your lender and your loan funds are delivered from them to DBU.

This change has offered the benefits of:

Security of Funds - Due to changes in laws which govern Federal student loans, the tightening credit markets and the effect on private lenders, Federal Direct Loans offer the most secure and efficient manner of obtaining Federal loans for our students. In 2009 many private lenders stopped making loans to students.

A More Simplified Process - Federal Direct Loans offer a more streamlined process for the student borrower, allowing quick access to loan funds. The guaranteeing and disbursing processes are less stringent on the student borrower than previous loan programs.

Basic loan terms and loan amounts are the same as the FFELP/FDL program. The following are a few changes that have taken place:

  • While you may choose a private lender to fund any private alternative loans, your Direct Loan Subsidized and Unsubsidized Loans will be provided via the Federal government.
  • All students are still required to complete loan Entrance Counseling and provide Master Promissory Note (MPN) before receiving loan funds. A continuing student with previous Direct Loans at DBU need not complete Entrance Counseling again, or provide a new MPN.
  • After graduation (or once a student drops below halftime enrollment), a student may want to consider a consolidation of all Federal loans (including your FFELP/FDL loans) through the Federal Direct Loan program so that you will not have to make payments to multiple lenders.
  • Parent borrowers using Federal parent PLUS Loans and Graduate borrowers using Graduate PLUS Loans also obtain loans through the Federal Direct Loan program. DBU no longer processes Parent PLUS/Graduate PLUS loans through private lenders.
  • Borrowers are able to consolidate previously borrowed PLUS Loans from the FFELP/FDL program into the Federal Direct Loan program.

Direct Subsidized and Direct Unsubsidized Loans

What is the difference between the Subsidized and Unsubsidized Loan?
Direct Subsidized means that interest, which accrues on a loan, while a borrower is in school, grace, or authorized periods of deferment, is paid by the government. Therefore it is more beneficial to a borrower to have a Subsidized Loan, but there are more rigid eligibility requirements to qualify for a Subsidized Loan.

Direct Unsubsidized means that the borrower is fully responsible for paying the interest that accrues on the loan. Interest on an Unsubsidized Loan accrues from the date of disbursement and continues throughout the life of the loan.

Combined Subsidized and Unsubsidized Annual Loan Limits

Dependent Freshman
(Freshman=0-29 hours completed)


Independent Freshman
(Freshman=0-29 hours completed)


Dependent Sophomore
(Sophomore=30-59 hours completed)


Independent Sophomore
(Sophomore=30-59 hours completed)


Dependent Junior/Senior
(Junior/Senior=60+ hours completed)


Independent Junior/Senior
(Junior/Senior=60+ hours completed)


Graduate Student


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Alternative Educational Loans

For many students, the amount of family resources, scholarships, and grants does not cover the entire cost of education. And, even after students have received low interest federal student loans, they may still need additional resources. These students and families may benefit from receiving low interest alternative student loans to help cover the remaining costs associated with attending DBU. We have compiled a list of other federal, state, and private loan resources to help bridge this gap (see links below).


Alternative Loan Lenders
Private Lenders


We encourage all students to complete the FAFSA and DBU Supplemental Application for Financial Aid to determine their eligibility for Federal loans before applying for private loans.

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Loan Disbursement

Loan funds are normally disbursed into student accounts in equal amounts, per Federal guidelines, twice per loan period. EXAMPLE: If the student's loan period consists of the Fall and Spring semesters, one disbursement will be made in the Fall and one in the Spring.

Each equal disbursement is applied to the student's account approximately one week after the add/drop period ends for that semester. If the loan period is one semester only (example, Summer), then one disbursement is made early in the semester (after the add/drop period ends).

DBU participates in Electronic Funds Transfer (EFT) for loan payments into student accounts.

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Loan Pro-ration

Undergraduate students who are completing their degrees and will be attending only a portion of the academic year will have their loan amounts adjusted (lower), or "pro-rated," according to Federal regulations. Contact the Office of Financial Aid for more information.

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Federal Direct Parent Loan for Undergraduate Students (PLUS)

Parents may borrow for their dependent undergraduate students under the Federal Direct Parent Loan for Undergraduate Students program (PLUS). The amount borrowed may be up to the cost of attendance (COA) minus other financial aid for each undergraduate student. This is a credit based loan.

The interest rate is a variable rate, or fixed according to when funds were borrowed. Repayment begins within thirty days after the final disbursement of the loan each year. The Department of Education of the Federal Government charges an origination and insurance fee for a PLUS Loan, which will be deducted from the loan proceeds.

To be eligible, parents and students must not currently be in default on any Federal Student Loan, or owe a refund on any Federal grant and must be a US citizen. The parent's credit history is evaluated by the lender prior to disbursement of the loan. If the PLUS Loan is denied, the student may then be eligible to borrow additional funds under the Federal Unsubsidized Loan program. Additional Parent Plus loan information may be obtained at

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Graduate PLUS Loan

Graduate students who have exhausted the Stafford Loan eligibility may apply for a Graduate PLUS Loan up to the cost of attendance. Graduate PLUS loans are credit based, so the student must meet the credit guidelines in order to be approved. An application may be made at
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Additional Federal Direct Student Loan Program Questions


I already have Stafford Loans through a lender other than the government. Do I pay back Direct Loans to the same place?
If you already have prior loans through the bank or a lending institution, you will make payments to your bank or lending institution (for your FFEL Loans). If you receive Federal Direct Loans, payments for those loans will be through the Direct Loan Servicing Center. However, you may choose to consolidate your loans at any time. Consolidation allows you to make payments to one source for all of your student loans.

What will happen to the existing loans that I have with other lenders if I also have Direct Loans?
After graduation, you have a choice. You may either make individual payments to your previous lender(s) and to the Department of Education for your Direct Loans, or you can consolidate your loans into one simple payment. This consolidation can be done with your previous lender, or with the Department of Education. However, many private lenders have discontinued their consolidation services.

Do I have to start making payments for my other loans with those lenders now?
As long as you continue to enroll in halftime enrollment, you will not be required to make payments on your loans. However, when you are expected to make payments – you will make payments to your lending institution (for your FFEL), as well as to the U.S. Department of Education (Direct). Again, you may consolidate your loans with the Federal Direct Loan Servicing Center. You will need to contact them in order to set this up.

Will I be able to consolidate my bank loans and Direct Loans together?
Yes, to qualify for Direct Consolidation Loans, borrowers must have at least one Direct Loan or Federal Family Education Loan (FFEL) that is in grace, repayment, deferment, or default status. However, loans that are in an in-school deferment cannot be included in a Direct Consolidation Loan.

Borrowers who do not have Direct Loans may be eligible for a Direct Consolidation Loan if they


  • Include at least one FFEL Loan and have been unable to obtain a Federal Consolidation Loan with a FFEL consolidation lender, or

  • Have been unable to obtain a Federal Consolidation Loan with income-sensitive repayment terms acceptable to them or intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program.

Borrowers can consolidate most defaulted education loans, if they make satisfactory repayment arrangements with their current loan holder(s).

Where can I go to consolidate my loans?
You may explore your options, as discussed above, with either private lenders or follow this link to the Federal Direct Loan Consolidation Program for information on consolidating with them.

How do I apply for a Federal Direct Loan?
Because we will be using the William D. Ford Federal Direct Loan Program exclusively for our Stafford and PLUS loans you will do the same as you have previously. For new and existing student borrowers simply complete your online FAFSA ( and online DBU Supplemental Application (, indicating you would like to be considered for loans on each. A financial aid counselor will evaluate your eligibility and you will be notified with an award letter in the mail along with instructions on guaranteeing your Federal Direct Loan.

I have already done a Master Promissory Note and Entrance counseling for my old loans. Will I need to do these again?
Yes, you will be required to complete both a new MPN and Entrance counseling session in order to ensure receipt of your loan disbursements. You will only be required to complete this requirement one time for Federal Direct Loans. Each Federal Direct Loan you have from that point forward will not require you to complete a new MPN or entrance counseling.

How do I sign my MPN and Entrance counseling electronically?
You will need to obtain a copy of your Federal PIN Number you used to electronically sign your FAFSA application. You may request a copy of this number at

What is the grace period for Direct Loans?
Yes, both FFELP and FDL loans have the same characteristics and eligibility requirements. The grace period is 6 total months and begins once you graduate or drop to a less than halftime enrollment status.

I don't need as much loan as I originally thought. How do I reduce my Direct Loan for the next semester?
Should you wish to reduce your loan funds, you will need to fill out and submit a Federal Direct Loan Reduction form to the Office of Financial Aid.

How do I request an additional Direct Loan during the semester if I change my mind and need more funds?
Should you need more funds, if you brought in more hours or did not originally take out your full loan amount, you must first consult the Office of Financial Aid. Once it is determined that you are eligible for additional loan funds, you will need to fill out and submit a Federal Direct Loan Increase form to the Office of Financial Aid.

Will I be able to contact the Department of Education if I have questions?
For Federal Direct Loan information, you may contact the Direct Loan Servicing Center at 1-800-0979. Their hours of operation are Monday through Friday 8:00 am EST to 8:30 pm EST.


Where can I find out about Student Loan Repayment Interest Rates?
Clicking HERE will take you to tables that will provide answers on repayment of Student Loans and the interest rates associated with them.

Where can I get online information to view my total student loan history?
At the National Student Loans Data System (or NSLDS) you can get information on all of your Non-Direct student loans. NSLDS is a database of all of your student loan information and you can access it using your Department of Education Pin (the same one you use on the FAFSA web site). If you don't have a PIN you can request one by selecting the Request a PIN button link.

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Information regarding specific yearly amounts for each Federal Aid program is available in the FINANCIAL AID STUDENT GUIDE, published annually by the US Department of Education.

Click HERE to view that publication online.