Federal Direct Loan Programs

Loans are guaranteed by the federal government and funded through the United States Department of Education. Students must file a FAFSA form to participate in federal loan programs.
Direct Subsidized Loan

Direct Subsidized Loans are for students with financial need. Your school will review the results of your Free Application for Federal Student Aid (FAFSA) and determine the amount you can borrow. You are not charged interest while you're in school at least half-time and during grace periods and deferment periods.

Direct Unsubsidized Loan

You are not required to demonstrate financial need to receive a Direct Unsubsidized Loan. Like subsidized loans, your school will determine the amount you can borrow. Interest accrues (accumulates) on an unsubsidized loan from the time it's first paid out. You can pay the interest while you are in school and during grace periods and deferment or forbearance periods, or you can allow it to accrue and be capitalized (that is, added to the principal amount of your loan). If you choose not to pay the interest as it accrues, this will increase the total amount you have to repay because you will be charged interest on a higher principal amount.

Note: Before July 1, 2010, Stafford, PLUS and Consolidation Loans were also made by private lenders under the Federal Family Education Loan (FFEL) Program. As a result of recent legislation, no further loans will be made under the FFEL Program beginning July 1, 2010. All new Stafford, PLUS and Consolidation Loans will come directly from the lender under the Direct Loan Program.

How do I apply for a Stafford Loan?

As with all federal student aid, you must complete the Free Application for Federal Student Aid (FAFSA). Most students use FAFSA on the Web to complete their application. Schools use the information from your FAFSA to determine how much student aid you will receive.

Master Promissory Note: When you receive a Stafford Loan for the first time, you must complete a Master Promissory Note (MPN). The MPN is a legal document in which you promise to repay your loan and any accrued interest and fees to the lender. It also explains the terms and conditions of your loan. In most cases, one MPN can be used for loans that you receive over several years of study. If you previously signed an MPN to receive a FFEL Program loan, you will need to sign a new MPN for a Direct Loan.

Entrance Counseling: All students are also required to complete Stafford Loan Entrance Counseling. The Entrance Counseling makes sure that you are fully aware of your responsibilities and obligations concerning the loan funds you choose to borrow.

You may complete your MPN and required Entrance Counseling online.

How much can I borrow?

There are limits on the maximum amount you are eligible to receive each academic year (annual loan limit) and in total (aggregate loan limits). These limits are shown in the chart in the next section. The actual amount you can borrow each year depends on your year in school, whether you are a dependent or independent student, and other factors, and may be less than the maximum amounts shown in the loan limit chart. Your school will determine what types of loans and how much you may borrow.

Depending on your financial need, you may be eligible to receive a subsidized loan for an amount up to the annual subsidized loan borrowing limit for your level of study. If you have education expenses that have not been met by subsidized loans and other aid, you may also receive an unsubsidized loan so long as you don't exceed the combined subsidized and unsubsidized annual loan limits.

Annual and Aggregate Loan Limits

The following chart provides maximum annual and aggregate (total) loan limits for subsidized and unsubsidized Direct Stafford Loans.

 
Year
Dependent Undergraduate Student
(except students whose parents are unable to obtain PLUS Loans)
Independent Undergraduate Student
(and dependent students whose parents are unable to obtain PLUS Loans)
First Year $5,500 - No more than $3,500 of this amount may be in subsidized loans. $9,500 - No more than $3,500 of this amount may be in subsidized loans.
Second Year $6,500 - No more than $4,500 of this amount may be in subsidized loans. $10,500 - No more than $4,500 of this amount may be in subsidized loans.
Third and Beyond
(each year)
$7,500 - No more than $5,500 of this amount may be in subsidized 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 - No more than $23,000 of this amount may be in subsidized loans. $57,500 - No more than $23,000 of this amount may be in subsidized loans.
 
What are the current interest rates? Direct Subsidized Loans:

Undergraduate students: If the first disbursement of your subsidized loan is between July 1, 2010 and June 30, 2011, the interest rate on your loan is fixed at 4.5%. The interest rate on subsidized loans first disbursed to undergraduate students between July 1, 2011 and June 30, 2012 will be fixed at 3.4%. Subsidized Stafford loans disbursed after June 30, 2012, will be fixed at 6.8%

Direct Unsubsidized Loans:

The interest rate is fixed at 6.8% for all borrowers (undergraduate and graduate).

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