502-2-2 Packaging

Title:	Packaging
Owner:	Student Financial Services
Last Update/Review:	07/31/2024

Policy: Direct Loans

Federal Direct Loans are low interest loans for students to help pay for the cost of their college education. The lender is the U.S. Department of Education. There are two types of loans: Subsidized and Unsubsidized.

A Subsidized Direct Loan is a need-based loan. The Federal Government pays the interest while the student is enrolled in school. The Student Financial Services Office will determine the student’s eligibility for this loan based on the information reported on the FAFSA. The Subsidized Direct Loan is awarded based on the student’s EFC, the cost of attendance, and financial need. Interest does not accrue while the student is enrolled in a half-time or greater enrollment status and repayment is deferred until six months after leaving school or dropping below half-time enrollment status.

An Unsubsidized Direct Loan is a non-need-based loan. The student is responsible for paying the interest while enrolled in school. Students do have the option to defer the interest until leaving school or dropping below half-time enrollment status. If the student chooses to defer the interest, it will accumulate and capitalize onto the principal. The Student Financial Services Office will determine eligibility for this loan based on the information reported on the FAFSA. The Unsubsidized Direct Loan is based only on the cost of attendance minus any other aid. Unsubsidized Direct Loans are not based on financial need.

The lender will charge an origination fee on each loan disbursement. The origination fee is re-evaluated annually (October 1st). The Federal Government re-evaluates interest rates annually (July 1st), based on the T-Bill.

First-time borrowers must complete a Master Promissory Note (MPN) and Entrance Counseling before funds can be released - both may be completed at https://studentloans.gov/myDirectLoan/index.action.

If a student is in the first year of undergraduate and is a first-time borrower (A first-time borrower is someone who has not previously received a Direct Subsidized Loan, a Direct Unsubsidized Loan, a Subsidized or Unsubsidized Federal Loan, or a Federal Supplemental Loan for Students (SLS)), Aspen University does not release the first disbursement of the Direct Loan until 30 calendar days after the student’s program of study begins.

The combination of Subsidized and Unsubsidized Direct Loans cannot exceed federal loan limits shown below:

Dependent student:
$3,500 freshman + $2,000 unsubsidized
$4,500 sophomore + $2,000 unsubsidized
$5,500 junior + $2,000 unsubsidized
$5,500 senior + $2,000 unsubsidized

Independent student:
$3,500 freshman + $6,000 unsubsidized
$4,500 sophomore + $6,000 unsubsidized
$5,500 junior/senior + $7,000 unsubsidized

Graduate student:
$8,500 unsubsidized+ $12,000 unsubsidized

Direct Loan Aggregate Loan Limits

$31,000 dependent undergraduate ($23,000 maximum subsidized)
$57,500 independent undergraduate ($23,000 maximum subsidized)
$138,500 graduate ($65,500 maximum subsidized)

Graduate and professional students are no longer eligible for Direct Subsidized Loans, but may have existing balances on such loans, which count toward the student’s aggregate loan limit. These amounts may vary, depending on any additional aid the student may receive. A Student may only receive up to their cost of attendance or budget for the academic year.

Federal Pell Grant

The Federal Pell Grant is considered gift-aid and typically does not have to be repaid. The Pell Grant award is based upon the student’s Estimated Family Contribution (EFC), enrollment status and on financial need using the student’s Cost of Attendance (COA). Grants do not have to be repaid unless, for example, the student is awarded funds incorrectly or the student withdraws from school and does not meet the payment period completion threshold of 60% or higher.

Pell Grants are awarded only to undergraduate students; meaning those who have not earned a bachelor’s or graduate degree. Pell amounts are subject to change yearly. In order to determine a student’s eligibility, the student must complete a Free Application for Student Aid (FAFSA) and the school must receive a valid Institutional Student Information Record (ISIR) while the student is enrolled and eligible. To be valid, the ISIR must contain the following:

A Pell-eligible EFC.
All information used in the calculation of the EFC to be complete and accurate at the time the application was signed.
Accurate information, subject to updating, at the time the ISIR (not selected for verification) is submitted to USU.
Accurate information as of the time of verification, at the time the ISIR (selected for verification) is submitted to USU.

The amount of the Pell is determined by referring to the student’s EFC, COA and enrollment status and then crosschecked with the corresponding Federal Pell payment chart as laid out in the yearly FSA Handbook.

Purpose: To ensure accurate and eligible awarding of Direct Subsidized and Unsubsidized Loans and Federal Pell Grant.

Scope: This policy applies to all students eligible for and receiving Direct Loans and Federal Pell Grant.

Document and Form(s): Not applicable.