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Federal Direct Student Loans

Published on AidPage by IDILOGIC on Jun 24, 2005

Administered by:

Assistance considerations...

Length and Time Phasing of Assistance

Applicants may apply for a loan for any year of school. There are four repayment plans that are available for Direct Loan borrowers: (1) A standard repayment plan with a fixed monthly payment amount over a period of up to 10 years; (2) an extended repayment plan with a fixed monthly payment amount paid over a period of 12 to 30 years, depending on the amount owed; (3) a graduated repayment plan with a monthly payment that will increase generally every 2 years. The repayment period varies from 12 to 30 years, depending on the amount owed; and (4) except for Direct PLUS Loan borrowers, an income contingent repayment (ICR) plan with a monthly payment that is adjusted annually based on the income of the borrower and paid over a extended period of time not to exceed 25 years. Any unpaid balance remaining after 25 years in the ICR plan is forgiven by the Secretary of Education. However, under current IRS rules, the amount written off is considered taxable income to the borrower in the year it is written off. A legislative change removing this taxable treatment has been sought.

Formula and Matching Requirements

None.

Note:
A formula may be based on population, per capita income, and other statistical factors. Applicants are informed whether there are any matching requirements to be met when participating in the cost of a project. In general, the matching share represents that portion of the project costs not borne by the Federal government. Attachment F of OMB Circular No. A-102 (Office of Management and Budget) sets forth the criteria and procedures for the evaluation of matching share requirements which may be cash or in-kind contributions made by State and local governments or other agencies, institutions, private organizations, or individuals to satisfy matching requirements of Federal grants or loans.

Cash contributions represent the grantees' cash outlay, including the outlay of money contributed to the grantee by other public agencies, institutions, private organizations, or individuals. When authorized by Federal regulation, Federal funds received from other grants may be considered as the grantees' cash contribution.

In-kind contributions represent the value of noncash contributions provided by the grantee, other public agencies and institutions, private organizations or individuals. In-kind contributions may consist of charges for real property and equipment, and value of goods and services directly benefiting and specifically identifiable to the grant program. When authorized by Federal legislation, property purchased with Federal funds may be considered as grantees' in-kind contribution.

Maintenance of effort (MOE) is a requirement contained in certain legislation, regulations, or administrative policies stating that a grantee must maintain a specified level of financial effort in a specific area in order to receive Federal grant funds, and that the Federal grant funds may be used only to supplement, not supplant, the level of grantee funds.