Federal Direct Loans for Undergraduate Students
How to Receive a Federal Direct Loan:
1) File a FAFSA
2) Accept your Direct Loan on MyFinAid
3) Complete a Direct Loan Entrance Counseling Session and a Master Promissory Note online
4) Be enrolled at least half-time
A Federal Direct Loan is a low-interest loan available to college students who are enrolled at least half-time, are pursuing a degree, and meet other basic requirements. These loans do not require credit approval and offer a variety of deferment and repayment options. They are financed directly by the U.S. government so you do not need to choose a lender. There are two types of Federal Direct Loans: subsidized or unsubsidized.
A subsidized loan is awarded on the basis of financial need. The U.S. government pays (or subsidizes) the interest on this loan while you are enrolled at least half-time and during periods of deferment.
An unsubsidized loan is awarded regardless of need. You are charged interest from the time the loan is disbursed and you may either make or defer interest payments while you are in school and during periods of deferment. If you defer your interest payments, the accumulated interest will be capitalized, or added, to the principal of your loan when you enter repayment. All future interest charges are based on the new, higher principal loan amount. It is less expensive over the long run if you pay the interest while you're in school.
To receive a Federal Direct Loan at UC Berkeley, you must complete the following steps:
STEP 1) File a current-year Free Application for Federal Student Aid (FAFSA) at http://www.fafsa.ed.gov. Also, your financial aid file at UC Berkeley must be complete.
STEP 2) Accept your Direct Loan on MyFinAid at https://myfinaid.berkeley.edu. Be sure to type in the actual dollar amount you are accepting for each loan and for each semester.
- The U.S. Department of Education (ED) requires first-time borrowers at Berkeley to complete a Loan Entrance Counseling Session (this includes continuing students who are first-time borrowers on the campus, as well as all entering students). These sessions include information on loan repayment obligations and the consequences of loan default. You must also complete a Master Promissory Note (MPN) listing UC Berkeley. If you completed an MPN while attending another school, or if a previously completed MPN has expired, you must complete a new one.
- Both of these requirements—the Loan Entrance Counseling Session and the Master Promissory Note (MPN)—are completed online at https://studentloans.gov. You will need your Federal Personal Identification Number (PIN) to log in to your account and to electronically sign your MPN. For more information about the PIN, visit the PIN website at http://pin.ed.gov.
- Before you begin, please review the information in "What You Need" and "What to Expect" sections on the https://studentloans.gov website. Be sure to choose the University of California at Berkeley, 200 California Hall, Berkeley, California, as your school.
- After you sign in at the https://studentloans.gov website, click on and complete both the Entrance Counseling and the Sign Master Promissory Note processes. The MPN process is complete only after you see a Congratulations message, which appears a few steps after you view your MPN. Be sure to confirm that you have completed both processes successfully by clicking on the View My Loan Documents link.
- Your Entrance Counseling and MPN data are electronically submitted to UC Berkeley in about two to three business days. Once your MPN record is received by UC Berkeley, you will no longer see a Message on your MyFinAid account saying that you need to complete your loan process.
STEP 4) Be enrolled at least half-time without any registration or financial blocks. The Direct Loan funds will be transferred to your Campus Accounts Receivable System (CARS) account. There, it will pay any outstanding balances and, if there are remaining loan funds, you will receive a refund. Please visit http://studentbilling.berkeley.edu/carsRefunds.htm for more information about refunds.
Within 120 Days of Disbursement:
- You have the right to cancel all or part of any disbursement of a Federal Direct Loan without being charged interest and other loan fees as long as the cancellation is processed within 120 days of the original disbursement date. The disbursement date is the date the funds were applied to your CARS bill.
- To request a cancellation, simply log on to your MyFinAid account, choose the "Loans & Work-Study" link from the left menu bar, then select "Revise Loan Amounts" and enter your changes. If the deadline has passed, you will not be able to make a change.
- When you cancel your loan by reducing the amount on MyFinAid, a charge will be applied to your CARS account which may create a balance due. You are responsible for paying this balance. If you do not, your future registration and financial aid disbursements may be blocked.
- If you wish to take advantage of cancellation benefits, you must make your request through your MyFinAid account, as instructed above. Checks sent to Direct Loan Servicing prior to the 120-day deadline will be processed as a regular payment, will be applied to accrued interest and older loans, and you will not get any cancellation benefit.
More Than 120 Days After Disbursement :
- After 120 days past your loan disbursement date, you cannot cancel your loan, but you can make a payment. You should send your payment to Direct Loan Services (DLS). You can find their payment address on their website: https://www.myedaccount.com/ContactInfoEng.aspx.
- In order to get your payment applied to a particular loan, you must include a letter with your payment that has specific instructions about how to apply your payment. For example: “Please apply this $200 payment to my unsubsidized loan first disbursed on 01/10/09, paying off any accrued interest and then applying any remaining payment to the principal of that loan.” You should monitor the application of any payment you make that has special instructions.
- You can always just send a payment to DLS and it will be applied according to their business rules, which will usually pay down accrued interest and older loans before newer loans.
For more information on Direct Loans, please refer to the https://studentloans.gov website.