Federal Direct Unsubsidized Loan | Federal Direct Graduate PLUS Loan
There are two types of Federal Loans Fordham Law students may borrow: the Federal Direct Unsubsidized Loan (Direct Loan) and the Federal Direct Graduate PLUS Loan (Grad PLUS). Students should borrow the Direct Unsubsidized Loan first and, if there is additional unmet need, then borrow the Direct Graduate PLUS Loan. As of July 1, 2012, graduate students are no longer eligible to borrow the Federal Direct Subsidized Loan.
The Direct Loan is not need based. There is no credit check performed for Direct Loan borrowers. The maximum a student can borrow in a Direct Loan is $20,500 per academic year. As of July 1, 2021, Direct Loans will have a fixed interest rate of 5.28% for the life of the loan. The interest rate on these loans will change annually, but once set, it will remain fixed for the life of the loan. Interest will be charged from the date the loan is disbursed to the student's tuition account. Students may pay the interest that accrues on the Direct Loan while in school or defer repayment of the interest. Paying the interest while in school would result in considerable savings over the life of the loan. If unpaid, the interest will be capitalized, i.e., added to principal, at repayment, and future interest will accrue on this higher principal balance.
The U.S. Department of Education charges a 1.057% origination fee for all of its Direct Loans, and the fees are deducted prior to disbursement. Direct Loans are disbursed in two equal installments: one-half at the beginning of the fall semester, and the remaining half at the beginning of the spring semester.
There is a six-month grace period on the Direct Loan which begins the day after you graduate, leave school, or drop below half-time enrollment. Repayment begins at the end of the grace period. Generally, you will have 10-25 years to repay your Direct Loans, depending on the repayment plan you choose.
The Grad PLUS Loan has the same eligibility requirements as the Direct Loan; however, this loan is a credit-based loan available to law students who have an absence of adverse credit. As of July 1, 2021, Grad PLUS loans will have a fixed interest rate of 6.28% for the life of the loan. The interest rate on these loans will change annually, but once set, it will remain fixed for the life of the loan. Grad PLUS Loans accrue interest from the date the loan is disbursed to the student's tuition account and carry an origination fee of 4.228% which is deducted at disbursement. Accrued interest can be paid while you are in school or it will be capitalized, i.e., added to principal at repayment. Loan repayments can be deferred while in school at least half time. These loans do not have a grace period; however, if the loan was first disbursed after 7/1/08, the borrower will be eligible for a six-month post-enrollment deferment to align repayment of these loan with the borrower's Direct Loans. You will have 10-25 years to repay these loans, depending on the repayment plan you choose.
Credit approval is based on federally mandated criteria. Please note that the Department of Education recently changed its credit criteria. The recent changes are listed in bold below. In order to qualify, you must not have any of the following items on your credit report:
- Bankruptcy discharge within the past five years.
- Voluntary surrender of personal property to avoid repossession within the last five years.
- Repossession of collateral within the last five years.
- Foreclosure proceedings started.
- Foreclosure within the last five years.
- Conveying your real property that is subject to a mortgage (by deed) to your lender to avoid foreclosure (deed in lieu of foreclosure).
- Accounts currently 90 days or more delinquent.
- Unpaid collection accounts.
- Charge-offs/write-offs of federal student loans.
- Wage garnishment within the last five years.
- Defaulting on a loan, even if the claim has been paid.
- Lease or contract terminated by default.
- County/state/federal tax lien within the past five years.
Credit approval is valid for 180 days. Your credit is evaluated each time you request a new loan unless you have had a credit decision within the preceding 180 days. If you think you may have adverse credit, you may want to obtain your credit report in advance of applying for a Grad PLUS Loan.
If you are denied credit, your options are to:
- Apply for the loan with an endorser, who is a credit worthy loan co-signer
- Reapply after you correct any invalid information on your credit report
- Appeal, based on extenuating circumstances, with Applicant Services at: 1-800-557-7394 (or 1-8770461-7010 TDD) Monday - Friday 8 a.m. to 8 p.m.
- The appeal process requires an applicant to document, to the satisfaction of the Department of Education, that either (1) the information causing the adverse credit decision is incorrect or has been corrected OR (2) there are extenuating circumstances relating to the adverse credit history.
Correspondence will be sent to Grad PLUS Loan applicants who receive an adverse credit determination. Instructions regarding the denial of your application and securing an endorser for the loan will be included. Please note that while we are glad to guide you through the process, our office has no control over credit decisions determined by the Department of Education.