Federal Direct Loan

Paying for College
1

<p>Hi, I had a question about the federal direct loans I am receiving for the 2012-2013 school year. </p>

<p>I am eligible for a Federal Direct Subsidized loan for the 2012-2013 school year and saw that the interest rate jumped from 3.4% to 6.8% if the disbursement occurs AFTER July 1,2012. </p>

<p>Can I accept my federal direct subsidized loan now and have it disburse before that deadline and get the interest rate at 3.4%?</p>

<p>Furthermore, if I repay these loans before I graduate, does interest still accrual on it?</p>

2

<p>Federal loans are not disbursed until the start of the semester, so no, you can’t ask for the money now. The government wants to know that you are actually going to be a student before handing out money.</p>

<p>Since the loan is subsidized, interest does not accrue until after graduation, so yes, if you pay it off before graduation you will not have to pay interest.</p>

3

<p>Federal regulations prohibit schools from disbursing aid more than 10 days before the first day of the semester … so no, they can’t process the loan early.</p>

<p>Good thought, though! :)</p>

4

<p>Actually, this may all be a moot point. Legislators in Congress are working to keep the interest at 3.4% for another year (it’s election year).</p>

5

<p>They will probably wait until after loans are disbursed for fall, make it retroactive, and then cause huge headaches for schools and the loan system! ;)</p>

6

<p>It is indeed an election year, and no congressperson wants to have to spend this fall explaining to his/her constituents why he/she allowed their kids’ rates to double. The rate may increase on July 1, but then, after a summer of name-calling, I bet they’ll retroactively lower it again just in time for the start of school.</p>