Federal Direct Stafford Loans

The William D. Ford Federal Direct Stafford Student Loan Program, sponsored by the U.S. Department of Education, offers low interest rates, easy repayment terms, and is geared toward those entering or re-entering the workforce. The loan is not credit based and only requires that students meet specific eligibility requirements. All students must file a Free Application for Federal Student Aid (FAFSA) in order for the Office of Financial Aid to determine eligibility for a Federal Direct Stafford Loan. Depending on enrollment status, FAFSA results, cost of attendance, and other factors an amount and type of Federal Direct Stafford Loan (Subsidized or Unsubsidized) will be offered to eligible students. The federal government is the lender for student or parent loans received through the Federal Direct Loan Program.

Public Law 112-74 amended the Higher Education Act (HEA) to temporarily eliminate the interest subsidy provided on Direct Subsidized Loans during the six-month grace period provided to students when they are no longer enrolled on at least a half-time basis. This change was effective for new Direct Stafford Loans for which the first disbursement was made on or after July 1, 2012, and before July 1, 2014. The federal government will continue to pay interest that accrues on the Direct Subsidized Stafford Loan during in school and other eligible deferment periods.* The federal government does not pay interest on Direct Unsubsidized Stafford Loans at all. Students have the option to pay interest on the unsubsidized portion of a Direct Stafford Loan while in school, during other eligible periods of deferment, or let interest accrue until repayment begins. Deferred interest payments on Direct Unsubsidized Stafford Loans will be added to the principal loan amount and capitalized by the lender (meaning accrued interest will be added to the principal amount borrowed at repayment).

Applicants must be enrolled at least half-time to be eligible for a Federal Direct Stafford Loan and to maintain eligibility for in-school deferments (minimum six credits per semester, with all credits applicable to the degree program of study).

The following charts describe annual and aggregate maximum eligibility for the Federal Direct Stafford Loan Program, based on dependency status and grade level, as well as Perkins Loan Program requirements.

Annual and Aggregate Federal Direct Stafford Loan Limits

Dependent Undergraduate Students

Freshman
0–30 Credits
Sophomore
31–62 Credits
Junior
63–96 Credits
Senior
97+ Credits
Aggregate Limit
Stafford (Subsidized/Unsubsidized) $3,500 $4,500 $5,500 $5,500 $23,000
Additional Unsubsidized Stafford $2,000 $2,000 $2,000 $2,000 $8,000
Total Stafford $5,500 $6,500 $7,500 $7,500 $31,000

Independent Undergraduate/Dependent Undergraduate Students with PLUS Denial

Undergraduate students whose parents have been denied the Direct PLUS loan (based on credit), may apply for an additional $4,000 (first-year and second-year students) or $5,000 (third-year students and beyond) Direct Unsubsidized Stafford Loan (described under the subheading for Federal Direct Stafford Loans).

Freshman
0–30 Credits
Sophomore
31–62 Credits
Junior
63–96 Credits
Senior
97+ Credits
Aggregate Limit
Stafford (Subsidized / Unsubsidized) $3,500 $4,500 $5,500 $5,500 $23,000
Additional Unsubsidized Stafford $6,000 $6,000 $7,000 $7,000 $34,500
Total Stafford $9,500 $10,500 $12,500 $12,500 $57,500

Graduate Students

Graduate Limit Aggregate Limit
Unsubsidized Stafford $20,500 $138,500

*Ineligible for Subsidized Stafford Loans first disbursed on or after July 1, 2012


Through the possible combination of Subsidized and Unsubsidized Direct Stafford Loans, every student meeting all academic and eligibility requirements should be able to participate in the Federal Direct Stafford Loan Program. Information about the William D. Ford Direct Loan Program can be found at NYIT’s Office of Financial Aid and at www.studentloans.gov.

Regulations also require the Office of Financial Aid to offer financial aid based on the results of the needs analysis calculated by the federal government from the Free Application for Federal Student Aid (FAFSA) and to perform an eligibility file review for every student applying for the Federal Direct Stafford Loan. The Office of Financial Aid must review each application and will recommend an amount according to the number of credits attempted, the number of credits completed, the grade level, the cost of attendance, the outside resources available to each student and the Expected Family Contribution (EFC), as derived from the FAFSA. Loan repayment will not be required while the student maintains at least half-time attendance (minimum six credits per semester), with all credits applicable to the degree program of study. Repayment of principal and interest begins six months after the student leaves school or drops below half-time attendance.

Effective for Federal Direct Stafford Loans first disbursed on or after July 1, 2006, the interest rate is fixed. Prior to this date, Federal Direct Stafford Loan interest rates were variable. Federal Direct Loan interest rates change from year to year (in July), and may also change specifically for one type or the other; Subsidized or Unsubsidized, Graduate or PLUS. The interest rate for subsidized and unsubsidized loans disbursed between July 1, 2018 and June 30, 2019 is 5.05 percent. Students who received loans prior to the aforementioned dates and who still have balances outstanding on those loans will continue with the interest rate rules in effect at the time of their original loans. Borrowers will also be charged an origination fee. The Origination Fee represents the lenders’ (the federal government) fee for making the loan. For loans disbursed after October 1, 2018, the origination fee is 1.062 percent.

* Public Law 112-141 also includes a new limit on eligibility for Direct Subsidized Stafford Loans (SULA – Subsidized Usage Limit Applied) for new borrowers on or after July 1, 2013. On or after July 1, 2013 a borrower will not be eligible for new Direct Subsidized Stafford Loans if the period during which the borrower has received such loans exceeds 150 percent of the published length of the borrower’s educational program. The law also provides that a borrower reaching the 150 percent limit becomes ineligible for interest subsidy benefits on all Direct Subsidized Stafford Loans first disbursed to that borrower on or after July 1, 2013. After you have received Direct Subsidized Loans for your maximum eligibility period, you are no longer eligible to receive additional Direct Subsidized Loans. In addition, if students continue to be enrolled in any undergraduate program after receiving Direct Subsidized Loans for the maximum eligibility period, the federal government will no longer (with certain exceptions) pay the interest that accrues on Direct Subsidized Loans for periods when they would have normally done so.

Please see example of calculating the Maximum Eligibility Period:

Program Length Multiply by Maximum Eligibility Period
5-Year Bachelor’s Degree 1.5 7.5 Years
4-Year Bachelor’s Degree 1.5 6 Years
2-Year Associate’s Degree 1.5 3 Years

Please see example of calculating the Subsidized Usage Period:

(Subsidized Usage Period = Days in Loan Period/Days in Academic Year)
Begin Date End Date Number of Days
Loan Period August 27, 2013 May 17, 2014 264
Academic Year August 27, 2013 May 17, 2014 264
Subsidized Usage Period = 264/264 = 1 Year
Subsidized Usage Period Enrollment for Year Multiply by Prorated Usage
1 Year Full-time 1 1 Year
1 Year Three-quarter time .75 .75 Year
1 Year Half-time .5 .5 Year

Information about the William D. Ford Federal Direct Loan Program can be found at www.studentloans.gov or by visiting Financial Aid – Federal Loan Limits.

Borrower-Based Academic Years and Federal Loans: “Seasonal Loans”

A standard academic year for NYIT is fall/spring (two semesters); however, a Borrower-Based Academic Year (BBAY) or Seasonal Loan is specific to the period of study for which the borrower is attending and looking to borrow a federal loan. For example, a spring/summer academic year (two semesters) or a summer/fall academic year (two semesters) represents a BBAY or Seasonal Loan. Seasonal Loans are available upon request for those students who wish to receive federal student loans for borrower-based academic years.

Students who are enrolled at least half-time during the summer session may request to be reviewed for Federal Direct Unsubsidized Stafford Loan eligibility for the summer term. The Office of Financial Aid will determine the student’s eligibility for federal and/or private loans for this period of enrollment based on FAFSA information and financial aid history. A student will be awarded Federal Loans for a borrower-based year consisting of two terms, either summer/fall or spring/summer, unless the student is graduating or changing enrollment status.

In order to award aid to the student, the Office of Financial Aid must have a valid FAFSA on file for the appropriate academic year, as well as a completed Seasonal Loan Request form. The Office of Financial Aid will use this form to determine the cost of attendance and budget for the terms being awarded. Students must complete the form in full with information for both terms, otherwise it will not be processed.

Students should understand that Federal Direct Stafford Loans taken during summer sessions still count toward their aggregate loan limits and may result in them using up eligibility more quickly than students with a traditional two-semester year (fall/spring). Students should also be aware that most scholarships and grants are only offered during the fall and spring semesters.

We strongly recommend that students speak with a Financial Aid Advisor when completing and submitting the Seasonal Loan Request form to the Financial Aid Office, as they may have pertinent questions that can be answered in advance to avoid processing delays.