Student Aid Reference Desk | Direct Loans | Deferment | Military service

The Direct Loan Program makes long-term loans available to students at all levels of study, and to parents on behalf of dependent students. The fe...

The Direct Loan Program makes long-term loans available to students at all levels of study, and to parents on behalf of dependent students. The federal government subsidizes interest during defined periods for undergraduate students who show need under the federal need analysis methodology, but only for a limited amount of time based on the length of the student’s program. Various repayment plans are available, as well as deferments, cancellations, and discharges.

Related terms: Loan Counseling; Cohort Default Rate (CDR)

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Academic Year Administrative Capability Audit and Program Review Cash Management Cohort Default Rate (CDR) Consumer Information Cost of Attendance (COA) Direct Loans Disbursement Enrollment Status Expected Family Contribution (EFC) Federal Supplemental Educational Opportunity Grant Program (FSEOG) Federal Work-Study Program (FWS) Financial Responsibility of Institutions Institutional Eligibility Loan Counseling Misrepresentation Need Analysis Overawards and Overpayments Packaging Payment Period Pell Grant, Iraq and Afghanistan Service Grant (IASG), and Children of Fallen Heroes Scholarship (CFHS) Perkins Loan Program Professional Judgment (PJ) Program Eligibility Program Participation Agreement (PPA) Recordkeeping Return of Title IV Funds (R2T4) Satisfactory Academic Progress (SAP) Student Eligibility TEACH Grant Third-Party Servicers Verification Written Arrangements

Statutory Authority

Web URL U.S. Code, Title 20—Education Chapter 28—Higher Education Resources and Student Assistance Subchapter IV—Student Assistance > Part D—William D. Ford Federal Direct Loan Program §§ 1087a – 1087j [HEA §§ 451 - 460]

Regulation

Web URL 34 CFR Part 685

ED References

PDF 2022-23 FSA Handbook, Vol. 3, July 2022

PDF 2023-24 FSA Handbook, Vol. 1, February 2023

PDF 2022-23 FSA Handbook, Vol. 1, June 2022

PDF 2022-23 FSA Handbook, Vol. 2, August 2022

PDF 2022-23 FSA Handbook, Vol. 4, May 2022

Web URL FSA Assessments, Direct Loans

Publications, Articles & Other Resources

Web URL A Case Study of Undergraduate Debt, Repayment Plans, and Postbaccalaureate Decision-Making Among Black Students at HBCUs

(Journal of Student Financial Aid)

Web URL A Primer on Higher Education, Student Aid, and the Federal Budget Process

(Journal of Student Financial Aid)

Web URL Another Lesson on Caution in IDR Analysis: Using the 2019 Survey of Consumer Finances to Examine Income-Driven Repayment and Financial Outcomes

(Journal of Student Financial Aid)

Web URL Borrowers Discuss the Challenges of Student Loan Repayment

(The Pew Charitable Trusts)

Web URL Changes in HBCU Financial Aid and Student Enrollment After the Tightening of PLUS Credit Standards

(Journal of Student Financial Aid)

Web URL College Student Debt and Anticipated Repayment Difficulty

(Journal of Student Financial Aid)

PDF Comparison of Sub and Unsub for Undergrads

(National Association of Student Financial Aid Administrators)

Web URL Debt Profiles of Model Students: The Projected Debt of Highly Productive Students and Its Economic Impact

(Journal of Student Financial Aid)

Web URL Direct Loans AskRegs Knowledgebase Q&As

(National Association of Student Financial Aid Administrators)

PDF Direct Loans Reference Sheet

(National Association of Student Financial Aid Administrators)

Web URL Direct Loans Self-Study Guide

(National Association of Student Financial Aid Administrators)

Web URL Do Promise Programs Reduce Student Loans? Evidence from Tennessee Promise

(The Journal of Higher Education)

Web URL Does the House Always Win? An Analysis of Barriers to Wealth Building and College Borrowing

(Journal of Student Financial Aid)

Web URL Education Tax Credits: A Different Trajectory for Federal Funding of Higher Education and Remediation for Effectual Policymaking

(Journal of Student Financial Aid)

Web URL Exploring IDR: A Comparison of Financial Situations and Behaviors Between Those in Traditional Student Loan Repayment and Those in Income-Driven Repayment

(Journal of Student Financial Aid)

Web URL Getting it Right: Design Principles for Student Loan Servicing Reform

(Third Way)

PDF Graduate and Professional Reference Sheet, 2022-23

(National Association of Student Financial Aid Administrators)

Web URL Higher Education: Can Debt Beat Savings?

(Journal of Student Financial Aid)

Web URL National Student Aid Profile: Overview of 2021 Federal Programs

(National Association of Student Financial Aid Administrators)

Web URL Parent Borrowing and College Completion

(Journal of Student Financial Aid)

PDF PLUS Borrowing in Texas: Repayment Expectations, Experience, and Hindsight by Minority-Serving Institution Status

(Trellis Company)

Web URL Policymakers Should Consider Impact of Growing Student Loan Balances on Borrowers and Taxpayers

(The Pew Charitable Trusts)

PDF Protecting Borrowers & Advancing Equity: Systemic Solutions to Improve Federal Student Loan Servicing & Repayment

(National Association of Student Financial Aid Administrators)

Web URL Social Dimensions of Student Debt: A Data Mining Analysis

(Journal of Student Financial Aid)

PDF Student Aid Reference Sheet, 2022-23

(National Association of Student Financial Aid Administrators)

Web URL Student Loan System Presents Repayment Challenges

(The Pew Charitable Trusts)

PDF Student Loans and Health-related Financial Hardship

(Journal of Student Financial Aid)

Web URL Student Loans, Financial Stress, and College Student Retention

(Journal of Student Financial Aid)

Web URL The Influence of Stafford Loan Debt Load on Persistence Among Historically Underserved Populations at a Hispanic Serving Institution

(Journal of Student Financial Aid)

Web URL The North Carolina Teaching Fellows Program: A Case Study of the Use of Forgivable Loans in Recruiting Future STEM Teachers

(Journal of Student Financial Aid)

Web URL Understanding Loan Use and Debt Burden Among Low-income and Minority Students at a Large Urban Community College

(Journal of Student Financial Aid)

Web URL Unforced Errors: How One Simple Fix Could Improve Student Loan Repayment

(Third Way)

Web URL Who do College Students Turn to for Financial Aid and Student Loan Advice, and is it Advice Worth Following?

(Journal of Student Financial Aid)

Subtopics

Acceleration

See De faulted loans

Adverse credit

See Borrower eligibility

Aggregate loan limits

Graduate/Professional

Direct Subsidized Loans

Limits

Web URL 685.203(d)(2)

Loss of subsidized eligibility on/after 7/1/12

PDF GEN-11-16

Prior to 7/1/12

Web URL 685.203(a)(5)

Direct Unsubsidized Loans

Web URL 685.203(e)(3)

PLUS

Web URL 685.203(g)

NSLDS information

General

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Calculating unsubsidized aggregate loan amounts

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

PLUS

Web URL 685.203(g)

Summary chart

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

PDF Federal Direct Loans Reference Sheet – 2022-23

(National Association of Student Financial Aid Administrators)

Treatment of consolidation loans

Web URL 685.203(i)

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Treatment of converted TEACH Grants

Web URL 685.203(k)

Undergraduate

Direct Subsidized Loans

Web URL 685.203(d)(1)

Direct Unsubsidized Loans

Dependent student whose parent cannot borrow PLUS

Web URL 685.203(e)(2)

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Dependent undergraduate student

Web URL 685.203(e)(1)

Independent undergraduate student

Web URL 685.203(e)(2)

Annual loan limits

Grade level progression

General information

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Grade level changes during academic year

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

New annual amount for same grade level

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Remedial work

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Transfer student’s grade level classification

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Graduate/Professional students

Direct Subsidized Loans

Limits

Web URL 685.203(d)(2)

Loss of subsidized eligibility on/after 7/1/12

PDF GEN-11-16

Prior to 7/1/12

Web URL 685.203(a)(5)

Direct Unsubsidized Loans

Web URL 685.203(b)(2)(iii)

Web URL 685.203(c)(1)(i)

Web URL 685.203(c)(2)(v)

PLUS

Web URL 685.203(f)

Health professions students

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Loan limit period (period to which loan limit applies)

Web URL 685.203(h)

Loan limit progression [Scheduled Academic Year (SAY) and Borrower Based Academic Year (BBAY)]

Web URL 685.303(e)

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Maximum loan amount (need limitation)

Web URL 685.203(j)

PLUS

Web URL 685.203(f)

Preparatory coursework

Direct Subsidized Loans

Web URL 685.203(a)(6)

Direct Unsubsidized Loans

Web URL 685.203(c)(2)(vi)

Students returning for same or lower credential

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Summary chart

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

PDF Federal Direct Loans Reference Sheet – 2022-23

(National Association of Student Financial Aid Administrators)

Teacher certification (postbaccalaureate)

Direct Subsidized Loans

Web URL 685.203(a)(7)

Direct Unsubsidized Loans

Web URL 685.203(c)(2)(vii)

Transfer student

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Treatment of converted TEACH Grants

Web URL 685.203(k)

Undergraduate students

First year

Direct Subsidized Loans

Web URL 685.203(a)(1)

Web URL 685.203(a)(8)

Web URL 685.203(a)(9)(i)

Direct Unsubsidized Loans

Dependent student

Web URL 685.203(b)(1)

Dependent student whose parent cannot borrow PLUS

Web URL 685.203(c)(1)

Web URL 685.203(c)(2)(i)

Web URL 685.203(c)(2)(viii)

Web URL 685.203(c)(2)(ix)(A)

Web URL 685.203(c)(3)

Independent undergraduate student

Web URL 685.203(b)(2)

Web URL 685.203(c)(1)

Web URL 685.203(c)(2)(i)

Web URL 685.203(c)(2)(viii)

Web URL 685.203(c)(2)(ix)(A)

Second year

Direct Subsidized Loans

Web URL 685.203(a)(2)

Web URL 685.203(a)(9)(ii)

Direct Unsubsidized Loans

Dependent student

Web URL 685.203(b)(1)

Dependent student whose parent cannot borrow PLUS

Web URL 685.203(b)(2)

Web URL 685.203(c)(1)

Web URL 685.203(c)(2)(ii)

Web URL 685.203(c)(2)(ix)(B)

Web URL 685.203(c)(3)

Independent undergraduate student

Web URL 685.203(b)(2)

Web URL 685.203(c)(1)(i)

Web URL 685.203(c)(2)(ii)

Web URL 685.203(c)(2)(ix)(B)

Third year through end of undergraduate program (including upper division programs, i.e., programs requiring an associate or baccalaureate for admission)

Direct Subsidized Loans

Web URL 685.203(a)(3)

Web URL 685.203(a)(4)

Direct Unsubsidized Loans

Dependent student

Web URL 685.203(b)(1)

Dependent student whose parent cannot borrow PLUS

Web URL 685.203(c)(1)

Web URL 685.203(c)(2)(iii)

Web URL 685.203(c)(2)(iv)

Web URL 685.203(c)(3)

Independent undergraduate student

Web URL 685.203(b)(2)

Web URL 685.203(c)(1)(i)

Web URL 685.203(c)(2)(iii)

Web URL 685.203(c)(2)(iv)

Application of payments

Application of prepayments

Web URL 685.211(a)(3)

Application of refunds and returns of Title IV funds from schools

Web URL 685.211(c)

Order of application for scheduled payments

Web URL 685.211(a)(1)

Order of application under income-based repayment

Web URL 685.221(c)

Order of application under PAYE repayment

Web URL 685.209(a)(3)

Order of application under REPAYE repayment

Web URL 685.209(c)

Prepayment without penalty

Web URL 685.211(a)(2)

Attendance at multiple schools during same period

PDF 2022-23 FSA Handbook, Vol. 3, Ch. 5, July 2022

Authority to pay refund or return of funds to ED on behalf of borrower

Web URL 685.306

Borrower defenses against collection of a loan and school liability

Web URL 685.206(c)

Web URL 685.222

PDF Federal Register, 12/11/20, p. 79862

Web URL Electronic Announcement, 3/15/19

Borrower eligibility

Parent borrower of PLUS loans

Adverse credit history

General rules

Web URL 685.200(c)(1)(vii)

PDF Federal Register, 1/14/15, pp. 1848 to 1849

PDF Federal Register, 10/23/14, pp. 63319 to 63321

Web URL Electronic Announcement, 1/27/15

PDF 2022-23 FSA Handbook, Vol. 1, Ch. 5, June 2022

Definition of endorser

Web URL 685.102(b)

Borrowing on behalf of an eligible dependent undergraduate student

Web URL 685.200(c)(2)

Citizenship/residency

Web URL 668.33

Web URL 685.200(c)(1)(iii)

PDF 2023-24 FSA Handbook, Vol. 1, Ch. 2, February 2023

PDF 2022-23 FSA Handbook, Vol. 1, Ch. 2, June 2022

Default on Title IV loans

Web URL Student Loan Default Has Serious Financial Consequences

(The Pew Charitable Trusts)

General rules

Web URL 668.32(g)(1)

Web URL 685.200(c)(2)(iv)

Web URL 685.200(d)

Definition of satisfactory repayment arrangement

Web URL 685.102(b)

Disability cancellation of previous loan

Web URL 685.200(a)(1)(iv)

Web URL 685.200(c)(1)(vi)

Fraudulently obtained Title IV funds

Web URL 685.200(c)(2)(vii)

Overpayment of Title IV funds

Web URL 668.32(g)(4)

Web URL 685.200(c)(2)(iv)

Parent (definition and qualification to borrow)

Web URL 685.200(c)(2)

Web URL GEN-14-14

PDF 2022-23 FSA Handbook, Vol. 1, Ch. 5, June 2022

Social Security number

Web URL 685.200(c)(2)(ii)

Statement of Educational Purpose

Web URL 668.32(h)

Web URL 685.200(c)(2)(v)

Student borrower

See top list entry for Student Eligibility

Code of conduct

Web URL 668.14(b)(27)

PDF 2022-23 FSA Handbook, Vol. 2, Ch. 3, August 2022

Collection charges

Web URL 685.202(e)

Web URL 685.211(d)(2)

Consolidation

General rules

Web URL 685.220

Interest rate

Web URL 685.202(a)(10)

Web URL 685.220(g)

PDF Federal Register, 8/16/22, pp. 50326 to 50328

Loans eligible for consolidation

Web URL 685.220(b)

Defaulted loans

Acceleration

Web URL 685.211(d)(1)

Collection actions

Web URL 685.211(d)(3)

Eligibility for deferment

Web URL 685.204(a)(3)

Failure to repay in response to immediate demand letter

Web URL 685.211(e)(3)

Fresh Start

Web URL GEN-22-13

Web URL Electronic Announcement, 8/17/22 (GENERAL-22-58)

Satisfactory repayment arrangements

Web URL 685.102(b)

Deferment

Additional deferments for borrowers with loans made prior to 7/1/93

Web URL 682.210(b)

Web URL 685.204(j)

Borrower’s responsibility to request and document deferment

Web URL 685.204(a)(4)

Cancer Treatment

Web URL Electronic Announcement, 8/22/19

Economic hardship

Web URL 685.204(g)

Graduate fellowship

General rules

Web URL 685.204(d)

Medical internship or residency

Web URL 685.204(d)(2)(i)(C)

In-school deferment

General rules

Web URL 685.204(b)

Medical internship or residency

Web URL 685.204(b)(1)(ii)

Methods for identifying or conveying deferment status

Web URL 685.204(b)(2)

Military service

Direct Loans

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