How Much Can I Borrow?
Annual loan limits for subsidized Federal Direct Loans are $3,500 for first year, $4,500 for sophomores, and $5,500 for juniors and seniors. In addition, a dependent undergraduate may borrow up to $2,000 each year in an unsubsidized loan. Students whose parents are denied a PLUS Loan or independent students may be eligible to borrow additional funds through the Unsubsidized Federal Direct Loan program. Limits are $4,000 for first or second year students and $5,000 for students in their third or fourth years. Total Federal Direct Loan indebtedness for undergraduate students may not exceed $31,000.
- Loan Fees
The loan fee for the Federal Direct Loans is 1.062%, which will be deducted from each loan disbursement received by the college.
- Loan Entrance Interview
Federal regulations require that a student borrowing a Federal Direct Loan for the first time at a school attend an Entrance Interview session, either in-person or on-line, even if he/she has attended one at a previous school, prior to receiving any federal monies.
- Master Promissory Note
The Federal Direct Loan Master Promissory Note allows you to borrow Subsidized and/or Unsubsidized Federal Direct Loans for your entire college career by signing only one note. It can be used for a single period of enrollment (one academic year) or for multiple periods (such as your first through senior years).
This note is valid for up to ten years from the original date of signature. It is very important that you understand the long-term commitment you are making by signing this note. We encourage you to record all amounts that you borrow and keep all of your loan paperwork together so you can keep track of your cumulative borrowing.
- How and When Do I Get My Loan Money?
Loan funds are disbursed in two equal installments, normally once each semester. These funds will be received by the school electronically. You must be enrolled on at least a half-time basis when the loan is disbursed to be eligible to receive the funds. Your Federal Direct Loan funds will be credited to your student account and will reduce the amount you owe the school.
- Repayment Options
Repayment on Federal Direct Loans begins six months after graduation from Pitzer, or if you cease to be at least a half-time student. Generally, you will have from 10 to 25 years to repay your loan, depending on the repayment plan that you choose. You may choose among several repayment plans. You may change plans at any time and there is no penalty for pre-payment.
Standard Repayment Plan – Fixed monthly payments of at least $50 for up to 10 years.
Graduated Repayment Plan – Payments start out lower and increase, usually every two years. Loan must be repaid within ten years.
Income-Contingent Repayment (ICR) Plan – Your monthly payment is adjusted each year based on your annual income (and your spouse’s income, if you are married), your family size, and the total amount of your Direct Loans. You make payments for 25 years and then any unpaid loan amount will be forgiven.
Income-Based Repayment (IBR) Plan -This plan caps required monthly payments at an amount that is intended to be affordable based on income and family size. You are eligible to repay under the IBR if your calculated IBR payment is less that what you would have to pay under the 10-year Standard Repayment Plan. If you repay under the IBR for 25 years and meet other requirements, any remaining balance of your loan(s) may be canceled.
Types of Federal Direct Loans for Students
- Subsidized Direct Loan
This is a need-based loan. The 19-20 interest rate on this loan is fixed at 4.53% and the federal government pays the interest while you are enrolled at least half-time. There is a six-month grace period after your last date of at least half-time enrollment before you begin repayment on the loan.
- Unsubsidized Direct Loan
This is a non-need based loan with terms similar to the Subsidized Direct Loan with one major exception: you are responsible for all the interest payments. The 19-20 interest rate on this loan is fixed at 4.53%. You may pay the interest while you are enrolled or allow it to accrue and be capitalized.
Steps to Applying for a Federal Direct Loan