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Frequently Asked Questions about Direct Loans



With the Direct Loan program who will I make repayment to?

Payments are made to the U.S. Department of Education and/or the designated loan servicer they assigned to your loans.  Students do not have to start repayment until six months after they graduate or they fall below half-time status. However, you can make payments at any time towards your loan.

The U.S. Department of Education pays (subsidizes) the interest while the borrower is in school and during grace and deferment periods on subsidized Direct Loans. The borrower is responsible for paying the interest that accrues on unsubsidized Direct Loans.

The interest rate for Direct Loans is set on an award year basis. The award year is July 1st – June 30th.  The rate on all new loans is subject to change the following July 1st.  All loans disbursed during this period carry that rate, which is fixed over the life of the loan.  For example:
  • Subsidized Direct Loan disbursed July 1, 2013 – June 30, 2014 has a fixed interest rate of 3.86%.
  • Undergraduate unsubsidized Direct Loan disbursed July 1, 2013 – June 30, 2014 has a fixed interest rate of 3.86%.
  • Graduate unsubsidized Direct Loan disbursed July 1, 2013 – June 30, 2014 has a fixed interest rate of 5.41%.
  • Graduate and Parent PLUS Direct Loans disbursed July 1, 2013 – June 30, 2014 has a fixed interest rate of 6.41%.
Refer to www.jmu.edu/finaid for the current interest rate.  You can learn more about this aid program at http://www.jmu.edu/finaid/aidprog.shtml.

With subsidized and unsubsidized Direct Loans you have a grace period of 6 months after you graduate, leave school or drop below half-time status before you must begin repayment on a loan. During the grace period on a subsidized loan you don't have to pay any principal and you won't be charged interest. On an unsubsidized loan you don't have to pay any principal, but you will be charged interest. You can either pay the interest as you go along or it will be capitalized (i.e., added to the principal loan balance) later.

What steps do I need to take in order to get a Direct Loan?

The steps you are required to take depend on the type of borrower you are and which Direct Loan you would like to accept. The following definitions will help you make that determination.

  • A “student borrower” is a student wishing to accept a Subsidized Direct Loan, Unsubsidized Direct Loan, or Grad PLUS Direct Loan.
  • A “parent borrower” is a parent wishing to accept a Parent PLUS Direct Loan.
  • A “new borrower” is a student or parent who has never had a subsidized or unsubsidized loan at JMU.
  • A “returning borrower” is a student or parent who had a subsidized or unsubsidized loan at JMU in prior years.
Common Rules:
There are also some rules that apply to all student borrowers. They include:
  • All students must complete the FAFSA (this must also be completed for Parent PLUS Direct Loans)
  • All students must meet the general eligibility requirements for financial aid outlined at http://www.jmu.edu/finaid/wm_library/elig_criteria.html
  • All students will go to https://mymadison.jmu.edu/ and enter their e-ID and password to accept their Direct Loan(s) (Exceptions for Grad PLUS Direct Loans and Parent PLUS Direct Loans are noted below)
  • Instructions regarding the completion of Entrance Loan Counseling and the Direct Loan Master Promissory Note will be e-mailed to JMU students and parents once the financial aid award is made.  Please do NOT complete any of these documents until you are requested to do so.

New Borrower Rules:
New student borrowers wishing to apply for a Subsidized Direct Loan and/or Unsubsidized Direct Loan need to complete the following:
  1. Accept loan(s) on MyMadison
  2. Direct Loan Master Promissory Note (this only needs to be done when you apply for your first Direct Loan at JMU)
  3. Entrance Loan Counseling
New student borrowers wishing to apply for a Graduate PLUS Direct Loan need to complete the following documents:
  1. Graduate PLUS Direct Loan Request Form
  2. Direct Loan Master Promissory Note (this only needs to be done when you apply for your first Grad PLUS Direct Loan at JMU)
  3. Graduate Entrance Loan Counseling
New parent borrowers wishing to apply for a Direct Parent PLUS Direct Loan need to complete the following:
  1. Parent PLUS Direct Loan Request Form
  2. Direct Loan Master Promissory Note (this only needs to be done when you apply for your first Parent PLUS Direct Loan at JMU)
Returning Borrower Rules:
Returning student borrowers wishing to apply for a Subsidized Direct Loan and/or Unsubsidized Direct Loan need to complete the following:
  1. Accept loan(s) on MyMadison
  2. Direct Loan Master Promissory Note (this only needs to be done when you apply for your first Direct Loan at JMU)
Returning student borrowers wishing to apply for a Graduate PLUS Direct Loan need to complete the following documents:
  1. Graduate PLUS Direct Loan Request Form
  2. Direct Loan Master Promissory Note (this only needs to be done when you apply for your first Grad PLUS Direct Loan at JMU)
Returning parent borrowers wishing to apply for a Direct Parent PLUS Direct Loan need to complete the following:
  1. Parent PLUS Direct Loan Request Form
  2. Direct Loan Master Promissory Note (this only needs to be done when you apply for your first Parent PLUS Direct Loan at JMU)