Direct Loans

Federal Direct Loans

CSU San Bernardino participates in the Federal Direct Loan Programs through the Department of Education. Students, who are undergraduate, credential and graduate students, enrolled at least half-times are eligible to borrow.

Eligible students must be admitted, in good academic standing and enrolled in a program leading to a degree or certificate. The loans awarded are either subsidized, unsubsidized or a combination of both. The type and amount of loans offered will be determined by a student’s financial eligibility, dependency status, grade level and overall aggregate limits of previously borrowed funds. Graduate students are only eligible for Unsubsidized Loans.

Borrow Wisely

Although a Direct Stafford Loan is a convenient source of additional funding for your education, it is a loan that will be repaid with interest. It is important to budget and borrow carefully:

  1. Consider ways to keep your costs down in order to limit your total loan debt
  2. Borrow only what you need. You must repay loans with interest which, depending on the type of loan, can begin accumulating immediately upon disbursement of the loan.
  3. Before you borrow, estimate both the amount of debt you may be able to afford and the potential monthly loan payment you can expect after you graduate using the Department of Education’s Budget Calculator.
  4. Consider completing the Financial Awareness counseling session to assist you in understanding your financial aid and assisting you in managing your finances.
  5. Direct Loans provide you with delayed repayment while in-school, and flexible repayment options for when you enter into repayment.

Remember: You are obligated to repay your loan regardless of whether you complete your education, are satisfied with your education, or are able to find a job.

Subsidized Direct Loan

A subsidized loan is a government insured, long term, low interest loan for eligible undergraduate students. It is awarded on the basis of financial need. The federal government will pay (subsidize) the interest on your loan while you remain enrolled in college at least half-time or more. For borrowers who have funds disbursed after July 1, 2012, the interest will be paid (subsidized) only while the student is enrolled at least half-time but not during the six-month grace period prior to repayment.

Graduate students are not eligible to borrow a Subsidized Direct Loan.

Maximum Eligibility Period for Subsidized Direct Loans:

Congress enacted the "Moving Ahead for Progress in the 21st Century Act" which established time limitations on Stafford Subsidized student loans. This new law will be effective for first time borrowers or borrowers who have paid off their loans prior to July 1, 2013 and are borrowing again.

This law allows students to receive Subsidized loans only within 150% of the length of your program of study. Once a student has reached this limit, he is no longer eligible to receive Subsidized student loans. If the student loses eligibility for Subsidized loans, he may still quality for an Unsubsidized loan - which accrue interest while you are in school, as this time limit does not apply to Direct Unsubsidized Loans or PLUS Loans.

Example of Direct Subsidized Loan Time Limitations for First-time Borrowers
Bachelor Degree Program Credential Certification Program
6 Year Maximum

150 percent of 4 years = 6 years
1.5 Year Maximum

150 percent of 1 years = 1.5 years

Your maximum eligibility period can change if you change or progress to a program that has a different length. Direct Subsidized Loans borrowed for a previous program will count toward your current program limit.

For additional information, please review Time Limitations on Direct Subsidized Loans.

Unsubsidized Direct Loan

An Unsubsidized loan is a government insured, long term, low interest loan for eligible undergraduate and graduate students. It is generally offered to students who do not qualify for need based aid or who need loan assistance beyond the maximums provided by the Subsidized Loan program.

Unlike a subsidized loan, the borrower is responsible for paying the interest from the time the unsubsidized loan is disbursed until it's paid in full. Borrowers have the option of paying the interest or deferring while it while in college. If borrowers choose to defer the interest, it will be capitalized, which means it is added to the principal amount you borrowed. Future interest will be calculated on the higher loan amount. It is to a borrower’s advantage to pay the interest while attending college.

How to Apply for Direct Loans:

For either type of loan, the student must first fill out a FAFSA for the academic year in which they are requesting financial assistance. After the FAFSA is processed, the Office of Financial Aid and Scholarships will inform the student about their loan eligibility via an award. A student may view, accept or decline, all or in part, their Direct Loans offered via their MyCoyote.

Students who apply for a Direct Loan may also be required to complete a Master Promissory Note (MPN) to receive Federal Direct Loan(s). Clicking the link Electronic Master Promissory Note on the Financial Aid homepage will direct you to the site in order to complete this process.

First-time Borrowers

Before receiving a Federal Direct Loan, first-time borrowers at CSUSB must complete an Entrance Counseling workshop.

Interest Rates and Origination Fees

The interest rates vary based on the loan type and the disbursement date of the loan. They are fixed for the life of a loan. Borrowers will pay an origination fee, deducted proportionately from each loan disbursement.

Current Interest Rates

On August 2, 2011, Congress passed the Budget Control Act of 2011, which puts into place automatic budget cuts known as “sequester”. For Direct Loans, the sequester process does not change the amount, terms, or conditions of Direct Loans. Sequester directly impacts the amount of origination (processing) fees for a loan. The origination fee is determined by the first disbursement date, which is October 1st. Therefore, any loan with a primary disbursement date on or after October 1st must have the origination fee percentage adjusted.

For additional information on the loan fees and sequester.

Loan Limits

Federal Direct Loans have annual and aggregate borrowing limits. Annual limits are based on a student’s academic level and dependency status. Aggregate borrowing limits are based on a student’s Undergraduate or Graduate classification.

Graduating seniors who will attend college for less than a full year and graduate, will have their Direct Subsidized and Unsubsidized Loans prorated based upon the number of enrolled units at CSUSB during the year.

Students seeking certificates, excluding Credential, must be admitted to a program that is a minimum of one academic year in length to be eligible for Direct Subsidized and Unsubsidized Loans. Students in programs that are shorter than an academic year in length are not eligible for financial aid.

Annual and Aggregate Loan Limit Chart

Repayment of Loans

After you graduate, leave school, or drop below half-time enrollment, you have a 6-month grace period before your loans enter into active repayment. The repayment period for Stafford Loans varies from 10 to 25 years.

When it comes time to repay your loan, you can choose a Repayment Plan that is best suited to your financial situation.

Additionally, all students who are departing from the University and have borrowed loan funds are required to complete an Exit Counseling. Students who are identified of the above criteria, the Office of Financial Aid and Scholarships will have a hold on graduation certificates and official transcripts until verification that they have completed an Exit Counseling Session is received.

Managing your Loans

It is important that you keep track of your student loans and how much you have borrowed at CSU San Bernardino and other institutions you may have attended. The amount you borrow as an investment in your education can quickly add up. You may access your student loan history and your servicer’s contact information through the National Student Loan Data System (NSLDS) website.

The Direct Loans you borrow are maintained by a third party loan servicer on behalf of the Department of Education. A loan servicer is a company or organization that handles the billing and other services on your student loans. The majority of the loan servicers for the Department of Education have web portals that allow you to access and maintain your information current, make payments and communicate directly with them. It is important that you know who your loan servicer is. You may locate a listing of all loan servicers via Federal Student Aid site.

Additional Information

Direct Loan Basics For Students

Your Federal Student Loans: Learn the Basics and Manage Your Debt