This section summarizes some of the main terms and conditions of your loans. You can find more detailed information about the terms and conditions of your loans in the Borrower's Rights and Responsibilities Statement (BRR) that accompanies this MPN. Each of the topics covered in this section of the MPN is followed by the item number of the BRR that provides additional information on that topic. The BRR is considered part of the MPN. Whenever we refer to the MPN, the term “MPN” includes the BRR.
We contract with loan servicers to process Direct Loan Program loan repayments, deferment and forbearance requests and other transactions, and to respond to questions about those loans. We will provide you with information about how to contact us or our servicers after your school disburses (repays) your loan. It is very important that you stay in communication with the servicer.
The words “we,” “us,” “our,” and “our” refer to the U.S. Department of Education or our loan servicers. The word "loan" refers to one or more loans made through the MPN.
The term “federal student aid” refers to financial assistance awarded through the following programs: the Federal Pell Grant Program, the Federal Supplemental Educational Opportunity Grant (FSEOG) Program, the Federal Work-Study Program (FWS), the LEAP Program (Leveraging Educational Assistance Partnership Grant Program), the Federal Supplemental Educational Opportunity Grant (FSEOG) Program, the Federal Work-Study Program (FWS) Program, and the Federal Education Assistance Partnership Grant (LEAP) Program, The Leveraging Educational Assistance Partnership Grant Program (LEAP), the TEACH Grant Program (TEACH Grant Program), the William D. Ford Federal Direct Loan Program (Direct Loan), and the William D. Ford Federal Direct Loan Program (Direct Loan). Ford Federal Direct Loan (Direct Loan), the Federal Family Education Loan (FFEL) Program, and the Federal Perkins Loan Program.
Laws applicable to this CPF and other legal information
The terms of this MPN are determined in accordance with the Higher Education Act of 1965 (HEA), as amended, our regulations, and other Federal laws and regulations. Throughout this MPN, we refer to these laws and regulations as “the Act”.
Even if you do not receive it, any notice we are required to send you about your loans will be effective if sent by certified mail to your most recent address according to our records, electronically to the e-mail address you have provided, or by any other means of notice permitted or required by law. You must notify the servicer immediately of any change in your contact information or status (see Item 14 of the BRR). If we do not require compliance with a term of this MPN, that does not waive our rights to require compliance with that or any other term in the future. No term of your loan may be modified or waived unless we do so in writing. If any term of your loan is determined to be unenforceable, the remaining terms will remain in effect.
Types of loans you can receive through this MPN
This MPN is used to make Direct Subsidized Direct Loan Program Subsidized Loans and Direct Unsubsidized Direct Loan Program Subsidized Loans. Only undergraduate students with financial need are eligible to receive Direct Loan Program Subsidized Loans. Both undergraduate and graduate students or students in a graduate or professional degree program may receive Direct Unsubsidized Direct Loan Program Loans.
Time limit on your eligibility to receive direct loan subsidy loans if you are a new borrower on or after July 1, 2013
If you are a new borrower on or after July 1, 2013, there is a limit on the maximum period of time you may receive Direct Subsidized Loans from the Direct Loan Program (this is called the “maximum participation period”), and in some cases you may be responsible for paying interest on such loans for all periods.
Use of the MPN to grant more than one loan
Amount you can borrow
There are annual maximum loan amounts (the maximum amount of loans you can borrow each academic year) and cumulative maximum loan amounts (the maximum amount of loans you can borrow for undergraduate and graduate study or in a professional graduate program) associated with this MPN. The maximum annual amounts and maximum cumulative amounts vary depending on your academic level (first year, second year, etc.) and, for undergraduate students, whether you were a dependent or independent student.
Interest rate
Unless we notify you in writing that a different rate will apply, the interest rate on any loan you receive under this MPN is a fixed rate (which means your interest rate will never change) that is calculated each year. When the rate is calculated, it applies to Direct Loan Program Subsidized Loans and Direct Unsubsidized Loans for which the first disbursement is made in the period beginning July 1 of one year and ending June 30 of the following year. This means that different interest rates may apply to the different loans you receive through this MPN.
The interest rate calculated cannot exceed the maximum rate established by law. The maximum interest rate for Direct Loan Program Subsidized Loans and Direct Loan Program Unsubsidized Loans made to undergraduate students is 8.25%. The maximum interest rate for Direct Unsubsidized Direct Loan Program Loans made to graduate students or students in a professional graduate program is 9.5%. If you are in the Armed Forces and the interest rate on your loan is higher than 6%, you may be eligible to have your rate capped at 6% during any period of active military service or other qualifying periods of military service.
Periods in which we charge interest
We generally do not charge interest on Direct Subsidized Loans while you are enrolled in an approved educational institution at least half-time, during your 6-month grace period, during periods of deferment, or during certain repayment periods under certain repayment plans that base your monthly payment amount on your income. Generally, we charge interest on Direct Subsidized Direct Loan Program Subsidized Loans during all other periods beginning on the day after the end of your grace period.
Generally, we charge interest on Direct Unsubsidized Loans during all periods (including while you are in school and during your grace period), beginning on the date your loan is first disbursed.
You are responsible for paying all interest we charge on your Direct Loan Program Loans. If you do not pay such interest, we may capitalize (add it to the principal balance of your loan).
Loan commission
We charge you a fee for each loan you receive. The loan fee is a percentage of the loan amount and will reduce the amount of money you receive to pay for your tuition. However, you are required to pay the full amount of the loan, including the amount taken for the loan fee. You will be advised of the specific loan fee charged to you in the disclosure statements that will be sent to you.
Late charges and collection costs
If you fail to make your full monthly loan payment within 30 days of your due date, we may require you to pay a late fee of not more than six cents for each dollar of each late payment. You may also be required to pay any other fees and charges permitted by law in connection with the collection of your loan. If you default on a loan, you will be required to pay reasonable collection costs in addition to court costs and attorney's fees.
Your right to cancel all or part of a loan
Prior to the disbursement of your loan proceeds, you may cancel all or part of your loan at any time by notifying your educational institution. Once your loan proceeds have been disbursed, you may cancel all or part of your loan within certain time periods established by law. These deadlines and the procedures for canceling all or part of your loan will be explained in the notice sent to you at the time of each loan disbursement.
How you will receive your loan proceeds
Generally, your school will disburse (pay) your loan money in more than one installment (called a “disbursement”) according to a schedule determined by your school. In most cases, the loan money will be applied to the account you have at the educational institution to pay for tuition, room and board, and authorized study fees. If any money remains after those charges are paid, the school will give the excess amount (called a “credit balance”) to you directly, unless you authorize the school to retain the credit balance.
Grace period
You will receive a 6-month grace period on your loan payment. The grace period begins the day after you cease to be enrolled as a minimum half-time student at an approved educational institution.
You will not be required to make any payments on your loan during the grace period. However, we charge interest during the grace period on Unsubsidized Direct Loan Program Loans and, in certain cases, on Direct Loan Program Subsidized Loans, and this interest will be capitalized at the end of the grace period if you fail to repay it.
Repayment of your loan
You must repay each loan you receive through the MPN in monthly installments over a repayment period that begins on the day immediately following the end of your 6-month grace period on that loan. You have the option of several repayment plans, including plans that base your required monthly payment amount on your income.
If you are temporarily unable to make your monthly loan payments, you may request a deferment or forbearance that allows you to temporarily stop making payments or make a smaller payment, also on a temporary basis (see Item 20 of the BRR). In some cases, we may grant a forbearance without your request.
You may prepay all or any portion of your loan at any time without penalty.
After you have repaid a loan in full, we will send you a notice to let you know that you have finished repaying your loan. You may repay different loans made through this MPN in full at different times.
Default on your loan
You will be considered to have defaulted on your loan if:
- you do not make your monthly loan payments for a total of at least 270 days;
- you fail to comply with other terms of the loan, and we determine that you do not intend to repay the loan, or
- we declare your loan to be due in advance (see “CONDITIONS WHEN WE MAY REQUIRE IMMEDIATE PAYMENT OF YOUR FULL LOAN AMOUNT”) and you fail to pay the amount due.
- If you default, we may:
- capitalize all outstanding interest, which will increase the principal amount due on the loan and the total amount of interest you will pay;
- report the default to the nationwide consumer reporting agencies (credit reporting agencies), which will significantly and negatively damage your credit history;
- demand that you immediately repay the loan in full;
- order an administrative wage garnishment (AWG);
- take (garnish) your federal income tax refund or Social Security Administration payments, or any other payment authorized to be garnished under federal law, and use that amount to pay off part of your loan;
- file a lawsuit against you to collect the loan, and
- require you to pay collection costs, which will increase the total amount you have to pay on your loan.
Conditions when we may require immediate repayment of the full amount of your loan
We may require you to immediately repay the full outstanding balance of your loan (this is called “early loan maturity”) if:
- you receive loan proceeds, but you do not begin attending any classes at the school that determined you were eligible for the loan;
- you do not use your loan proceeds to pay only your tuition expenses at the school that determined you were eligible for the loan;
- makes a false statement that makes it possible for him/her to receive a loan when, in fact, he/she is not eligible to receive a loan, or
- you default on your loan (see “DEFAULTING ON YOUR LOAN”).
Information we report about your loan
Periodically, we will report information about your loan to nationwide consumer reporting agencies (“credit reporting agencies”) and to the National School Loan Disbursement System (NSLDS). This information will include the disbursement dates, amounts, and payment status of your loan (e.g., whether you are current or delinquent on payments). If you default on a loan, we will report the default to nationwide consumer reporting agencies. Your loan will be identified as an educational loan. Educational institutions may have access to information in NSLDS for specific purposes that we authorize.
IMPORTANT NOTICES
GRAMM-LEACH-BLILEY ACT NOTICE
The Gramm-Leach-Bliley Act (Public Law 106-102) requires that lenders must provide certain information to their customers regarding the collection and use of nonpublic personal information. We disclose nonpublic personal information to third parties only to the extent necessary to process and administer your loan as authorized by the Privacy Act of 1974. See Privacy Act Notice below. We do not sell or otherwise make your information available to third parties for commercial purposes.
We protect the security and confidentiality of nonpublic personal information by implementing the following policies and practices. Physical access to sites where nonpublic personal information is maintained is monitored and controlled by security personnel. Our computer systems have a high level of resistance to tampering and breaches. These systems limit access to data to our staff and contracted personnel, who can access it only when necessary. In addition, they control the ability of individual users to access and modify records in the systems. All users of these systems are given a unique user name that identifies them. All interactions between individual users and the systems are logged.
NOTICE ON THE LAW OF CONFIDENTIALITY OF INFORMATION
The Privacy Act of 1974 (Section 552a of Title 5 of the U.S. Code) requires that you must receive the following notice:
The authority to collect the requested information from and about you is found in §451 et seq. of the Higher Education Act of 1965 (HEA), as amended (20 U.S.C. §§1087a et seq.Participating in the William D. Ford Federal Direct Loan (Direct Loan) Program and providing us with your SSN is voluntary. However, to participate you must provide us with the requested information, including your SSN.
The primary purposes for collecting information on this form, including your SSN, are to verify your identity, determine your eligibility to receive a loan or the benefit of a loan (such as a deferment, forbearance, forgiveness or forgiveness) through the Direct Loan Program, enable servicing of your loan(s), and, if necessary, to locate you for collection and to send a report on your loan(s) if it or they become delinquent or default. We also use your SSN to identify your account and allow you to access your account information electronically.
The information in your record may be disclosed, on a case-by-case basis or through an electronic data matching program, to those authorized third parties in accordance with the routine uses specified in the appropriate System of Records Notices. Routine uses of this information include, but are not limited to, disclosure to federal, state or local agencies, private persons or entities such as relatives, current and former employers, business and personal associates, consumer reporting agencies, financial and educational institutions, and guaranty agencies to verify your identity, determine your eligibility to receive a loan or the benefit of a loan, permit the servicing or collection of your loan(s), enforce the terms of the loan(s), investigate possible fraud, and verify compliance with federal student financial aid program rules or locate you if you become delinquent or default. To provide default rate estimates, information may need to be disclosed to guaranty agencies, financial and educational institutions, or state agencies. To provide financial aid history information, disclosures may be made to educational institutions. To assist program administrators in tracking repayments and cancellations, information may need to be disclosed to guaranty agencies, financial and educational institutions, or federal or state agencies. To provide a standardized method for educational institutions to efficiently report student enrollment status, disclosures may be made to guaranty agencies or financial and educational institutions. To advise you about payments you are required to make, disclosures may be made to guaranty agencies, financial and educational institutions, or federal, state or local agencies.
In the event of litigation, we may need to send records to the Department of Justice, the courts, a legal entity, counsel, a party or a witness if relevant and necessary to the litigation. If this information, either alone or in conjunction with other information, is indicative of a possible violation of law, we may forward it to the appropriate authority for appropriate action. We may send information to members of Congress if you ask them for help with certain federal student aid issues. In the event of employment claims, grievances or disciplinary actions, we may be required to disclose relevant records to arbitrate the dispute or investigate. If required by a collective bargaining agreement, we may disclose records to labor organizations recognized under Title 5, Chapter 71 of the U.S. Code. We may disclose information to our contractors to carry out any programmatic function that requires disclosure of records. Before disclosing the information, we require the contractor to take the safeguards required by the Privacy Act. We may also be required to disclose information to qualified investigators in accordance with the safeguards of the Privacy Act.
FINANCIAL DISCLOSURE ACT NOTICE
Pursuant to the Right to Financial Privacy Act of 1978 (12 U.S.C. §§ 3401-3421), ED may access the financial records of your education loan file maintained in accordance with the Direct Loan Program administration, as well as the financial records of any account at a financial institution used to disburse Direct Loan Program loan funds to you.
NOTICE ON REDUCTION OF FORMALITIES
Under the Paperwork Reduction Act of 1995, no person is required to respond to a data collection instrument unless it displays a valid Office of Management and Budget (OMB) control number. The valid OMB control number for this data collection instrument is 1845-0007. The average time required to complete this data collection instrument is 30 minutes (one-half hour) per response, including the time required to review instructions, search existing data sources, collect and maintain the necessary data, and complete and review the information collected. The obligation to respond to this data collection instrument is required to obtain a benefit in accordance with 34 CFR 685.201.