2019–2020 Walden University Student Handbook (September 2019) 
    
    Oct 27, 2021  
2019–2020 Walden University Student Handbook (September 2019) [ARCHIVED CATALOG]

Federal Direct Loans


Return to: Federal Programs  

Federal Direct Loans are available to undergraduate and graduate students. Students must enroll at least half time to receive a Federal Direct Loan.

Federal Direct Subsidized Loans are need-based loans available only to undergraduate students. The U.S. Department of Education pays the interest on this loan while the student is enrolled at least half time in school. Students typically have a 6-month repayment grace period for all federal loans. A grace period is a period of time that generally begins on the day after a borrower graduates, leaves school, or drops below half-time enrollment and usually ends 6 months later. A borrower is not required to make payments during the grace period for subsidized loans made under the Direct Loan program.

Federal Direct Unsubsidized Loans are available to undergraduate and graduate students and are not need-based. The student pays the accruing interest while enrolled in school, unless the student arranges to postpone the interest payment by checking the appropriate box on the Master Promissory Note or contacting their servicer. Interest payments may be deferred for 6 months after graduation. If students are unsure, they can determine who their servicer is by going to NSLDS. A student is responsible for paying the interest on their Direct Unsubsidized loan during all periods (including the grace period). If a student chooses not to pay the interest while they are in school and during the grace, deferment, or forbearance periods, the interest will accrue (accumulate) and be capitalized. In other words, the interest will be added to the principal amount owed on the loan.

Interest Rates

  • Undergraduate subsidized and unsubsidized Direct Loans first disbursed on or after July 1, 2018, and before July 1, 2019, are fixed at 5.05%.
  • Undergraduate subsidized and unsubsidized Direct Loans first disbursed on or after July 1, 2019, and before July 1, 2020, are fixed at 4.53%.
    • The interest rate cap for these loans is 8.25%.
  • Graduate unsubsidized Direct Loans first disbursed on or after July 1, 2018, and before July 1, 2019, are fixed at 6.60%.
  • Graduate unsubsidized Direct Loans first disbursed on or after July 1, 2019, and before July 1, 2020, are fixed at 6.08%.
    • The interest rate cap for these loans is 9.5%.

Loan Fees

Most federal student loans have loan fees which are a percentage of the total loan amount. The loan fee is deducted from each loan disbursement students receive. Even though this means the money they receive will be less than the amount they actually borrowed, they are still responsible for repaying the entire amount of the borrowed loan.

  • Direct subsidized and unsubsidized loans first disbursed on or after October 1, 2018, and before October 1, 2019, have a 1.062% loan fee.
  • Direct subsidized and unsubsidized loans first disbursed on or after October 1, 2019, and before October 1, 2020, have a 1.059% loan fee.

Creditworthiness is not a requirement to obtain a Direct Loan (subsidized or unsubsidized). Under this program, students may borrow up to their maximum annual loan limit every award year (i.e., 9 months for quarter-based programs, 12 months for semester-based programs). Loan funds can be used to cover direct education costs such as tuition, fees, and room and board, as well as indirect costs, such as books and other education-related expenses.

Federal Direct Loans borrowed while enrolled at another institution may impact a student’s loan eligibility at Walden University. Before any funds are disbursed, students must read important disclosure information regarding their student loan(s). The Disclosure Statement provides information about the Direct Subsidized Loan and/or Direct Unsubsidized Loan that Walden University plans to disburse (pay out) by crediting the student’s school account, paying the student directly, or both. There is also a Plain Language Disclosure that will explain the terms of the loan(s). Both disclosures are available at StudentAid.gov. Walden encourages students to keep a copy of all disclosures for their records. All information submitted for the purpose of securing a federal student loan will be submitted to the National Student Loan Database (NSLDS) and are accessible by authorized agencies, lenders, and institutions. The student loan borrower is responsible for knowing the total amount of federal loans borrowed and can see a summary of their federal loan debt via NSLDS.

On August 2, 2011, Congress passed the Budget Control Act of 2011, which put into place automatic federal budget cuts, known as a “sequester.” To find out more information, please visit StudentAid.gov.

Entrance Counseling

First-time borrowers are required to complete Direct Loan Entrance Counseling prior to receiving the first disbursement of a Federal Direct Loan. Federal Direct Loan Entrance Counseling is completed online at StudentAid.gov and will help students understand their rights and obligations as a student loan borrower. Loan counseling is mandatory and must be completed before students can receive loan funds.

Federal Direct Graduate PLUS Loans

Federal Direct Graduate PLUS loans are available to graduate students enrolled at least half time who do not have an adverse credit history. Students may borrow up to the cost of attendance minus any other financial aid received. The total education cost may include tuition, living allowance, books and supplies, and transportation. Graduate students must use their Federal Direct Unsubsidized loan eligibility prior to applying for a Federal Direct Graduate PLUS loan.

Interest Rates

  • Federal Direct Graduate PLUS loans first disbursed on or after July 1, 2018, and before July 1, 2019, have an interest rate fixed at 7.60%, with interest beginning to accrue upon disbursement.
  • Federal Direct Graduate PLUS loans first disbursed on or after July 1, 2019, and before July 1, 2020, have an interest rate fixed at 7.08%, with interest beginning to accrue upon disbursement.
    • The interest rate cap is 10.5%.

Loan Fees

  • Federal Direct Graduate PLUS loans first disbursed on or after October 1, 2018, and before October 1, 2019, have a 4.248% loan fee.
  • Federal Direct Graduate PLUS loans first disbursed on or after October 1, 2019, and before October 1, 2020, have a 4.236% loan fee.

The loan fee is retained by the federal government to reduce the cost of supporting these low interest loans.

Process

  • If one has not been submitted for the current year, the student completes the Free Application for Federal Student Aid (FAFSA) at https://studentaid.gov/h/apply-for-aid/fafsa.
  • Student completes the Direct Graduate PLUS Loan Request, Direct Graduate PLUS Master Promissory Note (MPN), and Graduate Level Direct Loan Entrance Counseling. Forms are available at StudentAid.gov.
  • The Office of Financial Aid receives the approved/endorsed Graduate PLUS Loan Record and the Direct Graduate PLUS MPN from the U.S. Department of Education (ED) and adds the Graduate PLUS award to myFinAid.
  • Student goes to myFinAid to accept, reduce, or decline the Graduate PLUS award amount.
  • If student is registered and all official transcripts are on file with the Office of Admissions, the Office of Financial Aid sends a Direct Graduate PLUS Loan origination record to the ED.

Decisions

The U.S. Department of Education is responsible for all Graduate PLUS loan credit decisions. Graduate PLUS loan borrowers are required to pass a simplified credit check, meaning that the Department of Education is not looking for a certain credit score or for an extensive credit history, but simply the absence of an adverse credit history. Students can view their application status at StudentAid.gov or by calling Federal Direct Loans at 1-800-557-7394. Effective March 29, 2015 credit decisions are held for 180 days.

The following may cause a Graduate PLUS loan to be denied. Please refer to StudentAid.gov for more information.

  • Bankruptcy Discharge
  • Charge off account, collection account, and/or 90 or more days delinquent on any debt
  • Deed in lieu of foreclosure
  • Defaulted loan that is claim paid
  • Foreclosure process started
  • Foreclosure
  • Repossession/voluntary surrender
  • Tax lien
  • Wage garnishment

Students will receive an immediate response of an approved or denied application upon electronic completion as well as the loan reference number, which is needed if students wish to pursue an endorser. The Office of Financial Aid will be notified electronically of the credit decision only if the application was completed electronically. Applications are not approved or denied based on the dollar amount requested; therefore, students should NOT complete additional applications once a denied decision is rendered by the Department of Education. Approval for the Graduate PLUS loan is specific to the individual loan. It is possible to be approved for one loan and denied at a later date for a new loan. Once the loan application is denied, students must either find an endorser or appeal the credit decision by documenting extenuating circumstances.

The Office of Financial Aid has no control or influence on the credit decision rendered by the Department of Education. All correspondence regarding credit appeals and endorsers must be sent to the U.S. Department of Education.

Denied students still have two options to obtain the Graduate PLUS Loan:

  • Review their credit report (for free) at AnnualCreditReport.com for possible errors and correct them before appealing directly to the U.S. Department of Education.
  • Obtain an endorser who does not have an adverse credit history. The endorser will be responsible for repaying the Direct PLUS Loan if the borrower does not.

Endorsing a Graduate PLUS Loan

The steps below are to be taken by the parent endorser. These steps MUST be completed electronically and in a single session; paper addenda will not be accepted:

  1. Create an FSA ID. Endorsers must log in using their own FSA ID to complete an endorser addendum.
  2. Sign onto StudentAid.gov. This is the website where the endorser electronically co-signs for the loan.
  3. Click on “Complete Endorser Addendum” (under $$Obtain Aid at bottom of the webpage).
  4. Enter the Endorser Code or an Award Identification Number (provided by student borrower) and follow the instructions.
  5. Accept or reduce the Direct Graduate PLUS loan amount. This will need to be done prior to the record being sent for certification.

Disbursement

Usually done in three equal amounts at the beginning of each semester/quarter and sent directly to the university. A federal loan fee may be deducted from the proceeds.

Repayment

Federal Direct Graduate PLUS loan repayment normally begins 6 months after a student graduates, leaves school, or drops below half-time enrollment.

Federal Direct Parent Loans for Undergraduate Students (PLUS)

Federal PLUS Loans are available to all parents of dependent undergraduate students regardless of income. Qualification is based solely on good credit. They must be the student’s biological or adoptive parent or the student’s stepparent, if the biological or adoptive parent has remarried at the time of application. Their child must be a dependent student who is enrolled at least half time at Walden. There are no debt-to-income ratio guidelines or employment verification requirements. Parents may borrow up to the total education cost for the year, minus any other financial aid that the student is receiving. The total education cost can include tuition and fees, room and board, books and supplies, transportation, and living allowance.

Interest Rates

  • Federal Direct Parent PLUS loans first disbursed on or after July 1, 2018, and before July 1, 2019, have a fixed interest rate at 7.60%, with interest beginning to accrue upon disbursement until it is repaid in full.
  • Federal Direct Parent PLUS loans first disbursed on or after July 1, 2019, and before July 1, 2020, have a fixed interest rate at 7.08%, with interest beginning to accrue upon disbursement until it is repaid in full.
    • The interest rate cap is 10.5%.

Loan Fees

  • Federal Direct Parent PLUS loans first disbursed on or after October 1, 2018, and before October 1, 2019, have a 4.248% loan fee.  
  • Federal Direct Parent PLUS loans first disbursed on or after October 1, 2019, and before October 1, 2020, have a 4.236% loan fee.

The loan fee is retained by the federal government to reduce the cost of supporting these low interest loans.

Process

  • If one has not been submitted for the current year, the student completes the Free Application for Federal Student Aid (FAFSA) at StudentAid.gov.
  • Parent completes the Parent PLUS Loan Request and Parent PLUS Master Promissory Note (MPN), and the student completes the undergraduate-level Direct Loan Entrance Counseling. All forms are available online at StudentAid.gov.
  • The Office of Financial Aid receives the approved/endorsed Parent PLUS Loan Record and the Direct Parent PLUS MPN from the U.S. Department of Education and adds the Parent PLUS award to myFinAid.
  • Student goes to myFinAid to accept, reduce, or decline the Parent PLUS award amount.
  • If student is registered, and all official transcripts are on file with the Office of Admissions, the Office of Financial Aid sends a Direct Parent PLUS Loan origination record to ED.

Decisions

The Department of Education is responsible for all Parent PLUS loan credit decisions. Parent PLUS Loan borrowers are required to pass a simplified credit check, meaning that the U.S. Department of Education is not looking for a certain credit score or for an extensive credit history but simply the absence of an adverse credit history. Student can view the status of their parents’ application by logging in to StudentAid.gov or by calling Federal Direct Loans at 1-800-557-7394. Effective March 29, 2015, credit decisions remain valid for 180 days.

The following may cause a Parent PLUS loan to be denied:

  • Bankruptcy Discharge
  • Charge off account, collection account and/or 90 or more days delinquent on any debt
  • Deed in lieu of foreclosure
  • Defaulted loan that is claim paid
  • Foreclosure process started
  • Foreclosure
  • Repossession/voluntary surrender
  • Tax lien
  • Wage garnishment

Parents will receive an immediate approval or denial of their application upon electronic completion as well as the loan reference number, which is needed if the parent wishes to pursue an endorser. The Office of Financial Aid will be notified electronically of the credit decision only if the application was completed electronically. Applications are not approved or denied based on the dollar amount requested; therefore, parents should not complete additional applications once a denial is rendered by the Department of Education. Credit decisions are held for 90 days. Once the loan application is denied, the parent must either find an endorser or appeal the credit decision by documenting extenuating circumstances. The Office of Financial Aid has no control over or influence on the credit decision rendered by the Department of Education. All correspondence regarding credit appeals and endorsers must be sent to the Department of Education. Approval for the Parent PLUS loan is loan specific. It is possible to be approved for one loan and denied at a later date for a new loan.

Denied parents still have two options to obtain the Parent PLUS Loan:

  • Review their credit report (for free) at AnnualCreditReport.com for possible errors and correct them before appealing directly to the U.S. Department of Education.
  • Obtain an endorser who does not have an adverse credit history. The endorser will be responsible for repaying the Direct PLUS Loan if the borrower does not.

Endorsing a Parent PLUS Loan

Steps below are to be taken by the parent endorser. These steps MUST be completed electronically and in a single session; paper addenda will not be accepted:

  1. Create an FSA ID. Endorsers must log in using their own FSA ID to complete an endorser addendum.
  2. Sign on to StudentAid.gov. This is the website where the endorser electronically co-signs the loan.
  3. Click on “Complete Endorser Addendum” (under $$Obtain Aid at bottom of the webpage).
  4. Enter the Endorser Code or an Award Identification Number (provided by student borrower) and follow the instructions.
  5. Accept or reduce the Parent PLUS loan amount. This will need to be done prior to the record being sent for certification.

Disbursement

Usually done in three equal amounts at the beginning of each semester/quarter and sent directly to the university. A federal loan fee may be deducted from the proceeds.

Repayment

Federal Direct Parent PLUS loan repayment normally begins within 60 calendar days after the loan has been fully disbursed, unless a deferment is requested. During any period that a payment is not required, interest will still accrue on the loan. In certain circumstances, parents may elect to repay the loan on a graduated repayment schedule, making interest-only payments (minimum is based on term of the loan, but at least $50 per month) for a portion of the repayment term.