At LAU, we believe that your education is the best investment you can make. We are pleased to participate in the Federal Direct Loan Program for U.S. citizens and eligible non-citizens. The Direct Loan Program is available as a resource for both undergraduate and graduate students who need additional assistance paying for their education expenses. The Direct Loan Program offers both student and parent loans.
For more information please explore these webpages or contact us.
- Be either a U.S. citizen or a green card holder in the U.S. with a valid Social Security Number.
- Maintain continuous Satisfactory Academic Progress and possess a GPA of 2.0 or higher.
- Complete the online Free Application for Federal Student Aid (FAFSA)
- Register for Selective Service either on the FAFSA or at www.sss.gov
- Be enrolled as a regular student in an eligible, degree-seeking undergraduate or graduate program at least half-time. INELIGIBLE students include:
- SINARC students and other visiting students
- CEP students
- Students not enrolled in a degree program such as those classified as ‘Special’ status
- PharmD students
- Medical School students
- Nursing School students
- Undergraduate students enrolled for fewer than 6 credit hours in a semester
Application & Procedures
The Free Application for Federal Student Aid (FAFSA) found on the FAFSA website is used to determine student eligibility for federal student aid including Direct Loans. It will collect demographic and financial information related to both the student applicant and his or her parent(s) so it is best to sit down and complete it together. Please note the below:
- You will need to put LAU’s school code, G41133, on the FAFSA so that we receive your information
- LAU will review your FAFSA for discrepancies and will compare it to your LAU financial aid application to ensure consistency
- The FAFSA must be completed each year you would like to be considered for U.S. federal financial aid
- Both you and a parent will need to electronically sign your FAFSA using a Personal Identification Number (PIN). Your PIN can be used each year to electronically apply for federal student aid and to access your Federal Student Aid records online. Your PIN serves as your electronic signature and provides access to your personal records, so you should never give your PIN to anyone, including commercial services that offer to help you complete your FAFSA. Apply for a PIN
Information & procedures
The Direct Loan Program offers the following types of loans:
- Subsidized loans are for students with demonstrated financial need, as determined by federal regulations. No interest is charged while a student is in school at least half-time, during the grace period, and during deferment periods
- Unsubsidized loans are not based on financial need; interest is charged during all periods, even during the time a student is in school and during grace and deferment periods
- PLUS loans are unsubsidized loans for the parents of dependent students and for graduate/professional students. PLUS loans help pay for education expenses up to the cost of attendance minus all other financial assistance. Interest is charged during all periods. PLUS borrowers must not have an adverse credit history.
The amount of money you can borrow depends on several factors including your:
- EFC that results from your FAFSA application and determines your “need”
- Cost of Attendance (COA) as calculated by the University which includes tuition fees, living expenses and more
- Grade level in school
- Dependency status
Direct Stafford Loan Limits (Subsidized and Unsubsidized)
|Undergraduate Students||Graduate Students|
|1st year||$5,500 ($3,500)3||$9,500 ($3,500)||$20,500 ($8,500) for each year|
|2nd year||$6,500 ($4,500)||$10,500 ($4,500)|
|3rd & 4th year||$7,500 ($5,500)||$12,500 ($5,500)|
|Aggregate||$31,000 ($23,000)||$57,500 ($23,000)||$138,5004 ($65,500)|
1Except those whose parents are unable to borrow PLUS loan.
2These limits also apply to dependent students whose parents are unable to borrow a PLUS loan.
3These numbers in parentheses represent the maximum SUBSIDIZED
4The aggregate amounts for graduate students include loans for undergraduate study.
All new graduate/professional student loans will be UNSUBSIDIZED effective July 1, 2012.
After your FAFSA is received and reviewed by LAU, the Federal Financial Aid Coordinator will contact you and collect any additional information or documentation that is needed. Once you have provided the necessary information you will be emailed an Award Letter which will indicate the type(s) and amount(s) you are eligible to borrow for a specified period of enrollment. You have the right to decline the loan or to request a lower loan amount. The Award Letter will tell you how to do this. You should only borrow what you truly need. Any Direct Loan money you borrow is a legally binding loan that must be repaid. The Award Letter will include instructions on how to proceed including signing the Master Promissory Note and completing Entrance Counseling.
A Master Promissory Note (MPN) is your promise to repay the loan and includes your borrower’s rights and responsibilities. A new MPN must be completed each academic year that you wish to receive a Direct Loan. Entrance Counseling is only done one time and must be completed prior to the loan disbursement. Entrance Counseling will provide you with consumer information related to borrowing Direct Loans. Both the MPN and Entrance Counseling can be completed online at www.studentloans.gov. You will need your FAFSA PIN to sign in. You will also be asked to sign a Title IV Authorization Form. By signing this form, you give your approval that we can apply the loan proceeds to minor prior year charges, other fees on your student account such as parking or library fines and it also explains how the refund procedure works.
Typically students will take out a Direct Loan to help fund the entire academic year and half the loan proceeds will be applied to fall semester and the remainder will be applied to spring semester. The lender also takes a small percentage off the gross loan amount before the money is received by LAU. This is called an ‘origination fee’. It is currently 1.068% for subsidized and unsubsidized loans and 4.272% for PLUS loans. For example, you took out a $3,500.00 subsidized loan. You could expect to receive $1732.00 during fall semester and $1732.00 during spring semester. The loan proceeds are received by LAU and will be posted directly to your student account after the Drop/Add period is over at the beginning of each semester. If there is an excess credit balance on your student account after tuition and other fees are covered, the proceeds will be issued to you in the form of a refund check to be picked up from the Business Office as described in the Title IV Authorization Form. If the excess credit balance results from a parent PLUS loan the check will be issued to your parent.
If you are receiving your first undergraduate Direct Loan disbursement the loan proceeds will not be posted to your account until 30 days after the start of classes. This delay will not affect your course registration and you will not be dropped from courses as long as the balance will be paid in full when the loan funds are received.
In order to maintain eligibility for Direct Loans you MUST maintain Satisfactory Academic Progress (SAP) as outlined in LAU’s SAP Policy. Among other things, this means that you must maintain a 2.0 CGPA or higher and show that you are following a normal progression time in pursuit of your degree. Study abroad will likely affect your eligibility for Direct Loans. Before committing to a study abroad program you should check with the Federal Financial Aid Coordinator.
Repayment & Interest
Interest rates are fixed for the life of the loan. The interest rates for federal student loans are determined by federal law. If there are future changes to federal law that affect federal student loan interest rates, we will update this page to reflect those changes. For loans first disbursed on or after July 1, 2014 and before July 1, 2015 the rates are:
Undergraduate Subsidized or Unsubsidized 4.66%
Graduate Unsubsidized 6.21%
Parent or Graduate PLUS 7.21%
If you withdraw from classes at any point during a semester in which you are receiving Direct Loan(s) the University is required to perform calculations to determine the amount of loan money we have earned and the amount that should be refunded to the lender. Please review our Return to Title IV Policy for more information.
When you cease enrollment at LAU either by graduating or withdrawing OR when you enroll less than half-time, you are required to complete online Exit Counseling similar to Entrance Counseling but with a focus on repayment. Exit Counseling can be completed at www.studentloans.gov.
You will have a six (6) month grace period before repayment of your loans begins. Your loan servicer will contact you regarding the repayment of your Direct Loan(s). Any information that LAU has regarding your Direct Loans will be reported to the National Student Loan Data System (NSLDS). NSLDS provides a centralized, integrated view of Title IV loans and grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or grant data. You can see your Title IV aid history by going to www.nslds.ed.gov.
There are several repayment plans you can choose from and typically you will have between 10 and 25 years to repay your loan. More information about the various repayment plans can be found here.
To get an early look at which repayment plans you may be eligible for and see estimates for how much you would pay monthly and overall, you can use the Federal Student Aid Repayment Estimator. There is no prepayment penalty on any of the Direct Loan types. You can make payments, including interest-only payments, while in school. Making interest payments while in school will save you money in the long run.
If you have multiple Direct Loans spanning multiple academic years you may consolidate your loans to make repayment easier. Consolidation would mean one monthly payment instead of several. More information about consolidating your loans can be found here.
If you have trouble making payments on your loans you should contact your loan servicer as soon as possible. You may be eligible for a deferment or forbearance. In a deferment or forbearance period, you will not be required to submit payments and there will be no penalties. A deferment is a temporary suspension of loan payments for specific situations such as reenrollment in school, unemployment, or economic hardship. Forbearance is a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty. You can receive forbearance if you’re not eligible for a deferment. You should contact your loan servicer if you need more information on these options.
Failure to Repay
You are responsible for repaying your student loans even if you do not graduate, have trouble finding a job after graduation, or just didn’t like the school. If you do not make any payments on your federal student loans for 270-360 days and do not make special arrangements with your lender to get a deferment or forbearance, your loans will be in default. Default is a very serious matter and notifications sent you from your loan servicer should not be ignored! There are many consequences to defaulting on your student loans and they include:
- National credit bureaus can be notified of your default, which will harm your credit rating, making it hard to buy a car or a house.
- You will be ineligible for additional federal student aid if you decide to return to school.
- Loan payments can be deducted from your paycheck.
- State and federal income tax refunds can be withheld and applied toward the amount you owe.
- You will have to pay late fees and collection costs on top of what you already owe
- You can be sued.