Loan Terms

Federal Direct Loan Program (DL)

Eligible students and parents borrow directly from the U.S. Department of Education. Direct loans include subsidized and unsubsidized loans, and PLUS Loans. These loans are repaid directly to the U.S. Department of Education (ED).

A subsidized loan is awarded based on financial need. A borrower will not be charged any interest before repayment begins or during deferment periods. The federal government subsidizes the interest during these periods while the student is attending school.

An unsubsidized loan is not awarded based on need. A borrower will be charged interest from the time the loan is disbursed until it is paid in full. If interest is allowed to accrue while a student is in school or during other periods of non-payment, it will be added to the principal amount and additional interest will be based on that higher amount. Borrowers can choose to pay the interest as it accumulates while in school.

The amounts borrowed depend on a student’s grade level and dependency status at the university. The following table indicates Federal Direct loan limits based on status of dependent undergraduate, independent undergraduate or graduate student.

Federal Direct Subsidized and Unsubsidized Annual Loan Limits

  Dependent
Undergraduate
Student
Independent
Undergraduate
Student
Graduate/Professional
Student
1st Year $5,500
– No more
than $3,500 of
this amount
can be
subsidized
loan
$9,500
– No more than
$3,500 of this
amount can be
subsidized loan
$20,500
2nd Year $6,500
– No more
than $4,500 of
this amount
can be
subsidized
loan
$10,500
– No more than
$4,500 of this
amount can be
subsidized loan
 
3rd and
4th Years
$7,500
– No more
than $5,500 of
this amount
can be
subsidized loan
$12,500
– No more than
$5,500 of this
amount can be
subsidized loan
 

A student whose parent cannot obtain a parent loan for undergraduate student (PLUS) loan is allowed to borrow additional unsubsidized Direct Loan amounts. Student dependency status will be determined based on answers to questions on the Free Application for Federal Student Aid (FAFSA).

After you have completed the MPN, an award letter is sent from the university and a disclosure statement from Direct Lending informing you of the types and amount of student loans awarded for the loan period. Direct Lending will mail a disclosure statement and notification of anticipated disbursement dates. When funds are received, the university confirms eligibility and current registration. Any changes and/or breaks in attendance or failure to start as scheduled, may prevent federal financial aid funds from being disbursed.

Loans are processed for an academic year, which is two six month terms with a minimum of 12 competency units per term for undergraduates and eight units per term for graduate students. The university will disburse federal financial aid loans in at least two installments. The first half disbursed at the beginning of the loan period and the second half disbursed at the midpoint of the loan period. In order to meet eligibility standards for second and subsequent loan disbursements the student must meet Satisfactory Academic Progress (SAP) requirements and be enrolled in the second six month term.

Federal Direct Parent Loan for Undergraduate Students (PLUS)

If you are a dependent undergraduate student, your parents may apply for a PLUS loan to assist with your educational expenses. The application process includes completion and submission of a PLUS Loan application by your parents and completion and submission of the Free Application for Federal Student Aid (FAFSA) by the family. The application process is completed through the Federal Direct Loan Program. This loan is based on credit worthiness as determined by the U.S. Department of Education (ED).

The yearly limit is equal to the cost of attendance (COA) minus any other financial aid received. Interest is charged on the loan from the date first disbursement is made until the loan is paid in full. The parent borrower has the option to begin repayment either within 60 days from date loan is fully disbursed or wait six months after the dependent student (on whose behalf the parent borrowed) ceases to be enrolled at least half-time basis.

The parent has the option to defer payment on the loan and interest while the student is enrolled in school. Repayment on the loan begins six months after the date student ceases to be enrolled at least half-time. Under certain circumstances, your parents may receive a deferment or forbearance on their loan, as long as it is not in default. Generally, the same deferment or forbearance provisions that apply to Stafford loans also apply to PLUS loans.

Students whose parents receive a PLUS loan are subject to the terms and conditions disclosed on the Federal Direct PLUS Loan Application and Master Promissory Note (MPN).

Federal Direct PLUS Loans for Graduate and Professional Degree Students

Graduate students can borrow an amount up to the cost of attendance (COA) minus other estimated financial assistance. The terms and conditions applicable to parent PLUS loans also applies to graduate PLUS loans.

Applicants are required to complete the Free Application for Federal Student Aid (FAFSA) and are given an opportunity to request the maximum eligibility under the Federal Direct Loan Program before applying for a graduate PLUS loan.

Students who receive a graduate PLUS loan are subject to the terms and conditions disclosed on the Federal Direct PLUS Loan Application and Master Promissory Note (MPN).

Federal Direct Loans are charged origination fees, which are deducted from the loan proceeds by the U.S. Department of Education (ED).

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