Federal Pell Grant

A Federal Pell Grant, unlike a loan, does not have to be repaid. Pell Grants are awarded to students who demonstrate financial need and who have not yet earned a bachelor's or professional degree. Pell Grant annual amounts are updated by the federal government ahead of the start of the new award year. The amount of Federal Pell Grant funds you may receive over your lifetime is limited by federal law to be the equivalent of six years of Pell Grant funding. Since the maximum amount of Federal Pell Grant funding you can receive each year is equal to 100%, the six year equivalent is 600%. Effective with the 2017-2018 award year, eligible students may be awarded up to one and one-half Federal Pell Grants (i.e. 150% of the student’s scheduled award) during a single award year. Therefore, a student may reach their 600% limit more quickly than the six year equivalent.

The Pell Grant amount awarded will depend on:

• Financial need
• Cost of Attendance
• Enrollment Status

You may not receive Federal Pell Grant funds from more than one school at a time.

Federal Direct Loan Program

Direct Loans (DL), from the William D. Ford Federal Direct Loan Program, are low-interest loans for eligible students to help cover the cost of higher education at a four-year college or university, community college, trade, career or technical school. Eligible students borrow directly from the U.S. Department of Education at participating schools.

There are several benefits in using the Direct Loan Program:

• A Direct Loan is a source of funding for student loans.
• A Direct Loan offers the option of an income-contingent repayment plan or an income-based repayment plan when you enter repayment. This means you will have the option of ensuring that your loan repayment amount will always be affordable based on what your income will allow.
• Students in the Direct Loan program who enter into public service jobs can have any remaining balance on their loans forgiven after ten years of public service work. (While this option does not exist in the FFEL program, students who borrowed in that program can consolidate their loans into the DL program in order to take advantage of this forgiveness program.)
• Most lenders offer benefits during repayment after a student makes payments from 2 to 4 years. Very few students end up receiving those benefits. In DL, students earn benefits after only 1 year.
• Should a student make payments late under DL, the late fees charged are less than the late fees charged in the FFEL Program.

Federal Direct Loans

• A Direct Subsidized Loan is awarded on the basis of the student's financial need and other specific eligibility requirements. The federal government does not charge interest on these loans while borrowers are enrolled at least half-time, during a six-month grace period, or during authorized periods of deferment.
• A Direct Unsubsidized Loan is not based on the student's financial need, but students must also meet specific eligibility requirements. Interest is charged throughout the life of the loan. The borrower may choose to pay the interest charged on the loan or allow the interest to be capitalized (added to the loan principal).
• A Direct PLUS Loan is a federal loan that graduate or professional degree students and parents of dependent undergraduate students can use to help pay education expenses. The U.S. Department of Education makes Direct PLUS Loans to eligible borrowers through schools participating in the Direct Loan Program.

Direct Loan Resource Center

In order to receive federal student loans, you must complete certain requirements. The Department of Education created the Federal Student Aid website to manage borrower requirements and provide valuable information regarding federal student loans. The three items listed below are required from all borrowers.

1. Entrance Counseling

   To ensure that you understand your rights and responsibilities as a student loan borrower, the Federal Government requires you to participate in loan counseling before receiving a Direct Loan, if you have not previously received a Direct Loan, Federal Family Education Loan or Supplemental Loans to Students (SLS) Loan.

2. Master Promissory Note (MPN)

   The Master Promissory Note, commonly referred to as MPN, is a document that must be signed in order to receive a federal student loan.  The signed MPN binds you to the federal government as a promise to repay the student loan you intend to take out to help cover your educational expenses. The MPN provides valuable information about the rights and responsibilities you have as a borrower.

3. Exit Counseling

   Prior to graduating or leaving school, Direct Loan borrowers must complete exit counseling. The Direct Loan Exit Counseling will explain your rights and responsibilities as a Direct Loan Borrower. Your Federal PIN is required in order to complete the Exit Interview because your personal loan information will be provided.

Current Interest Rates

Congress has passed the Bipartisan Student Loan Certainty Act of 2013, which ties federal student loan interest rates to financial markets. Under this Act, interest rates will be determined each June for new loans being made for the upcoming award year, which runs from July 1 to the following June 30. Each loan will have a fixed interest rate for the life of the loan.

The following table provides the most current available interest rates for new Direct Loans made on or after July 1, 2022, and before July 1, 2023. These rates will apply to all new Direct Loans made during this time, even loans already disbursed before the passage of the Act.

***On April 6, 2022, the U.S. Department of Education (ED) extended COVID-19 emergency relief for student loans through Aug. 31, 2022. The emergency relief includes the following measures for eligible loans:

• a suspension of loan payments
• a 0% interest rate
• stopped collections on defaulted loans

Temporary 0% Interest Extended

On Nov. 22, 2022, the student loan payment pause and 0% interest rate were extended.

Have questions? Find out what loans qualify and get additional information about the COVID-19 emergency relief for student loans.