Federal Direct Loans

How to Apply for and Receive a Federal Direct Loan

Step 1. Complete the Free Application for Student Aid (FAFSA). The FAFSA is the Department of Education’s online application which is required for anyone requesting federal financial aid. UA Little Rock’s school code is 001101. Once you have completed this form, the information will be sent to our office. Your financial aid package will be calculated and awarded to you via BOSS.

Step 2. Log in to BOSS and accept your loan.

Step 3. If you are a first-time Direct Loan borrower, complete an online Entrance Counseling session. You must complete Entrance Counseling before we can disburse loan funds to you. This online loan counseling session will take about 30 minutes to complete.

Step 4. Complete the Federal Direct Loan Master Promissory Note. If you are a first-time borrower through the Federal Direct Student Loan Program, you must electronically sign the Master Promissory Note on the Department of Education’s website.

More Information About the Federal Direct Loan

The Federal Direct Loan is the most common student loan program for funding undergraduate and graduate education. There are two types of loans, Subsidized and Unsubsidized, and they differ in the following ways:

Need-based versus Non-need-based – The subsidized loan is considered a need-based loan, which means it is only awarded to those students who can demonstrate a financial need for the loan funds. The unsubsidized loan is available to anyone whose other financial aid doesn’t meet the Cost of Attendance. Both loans require the borrower to complete the Free Application for Federal Student Aid (FAFSA).

In-School Interest Subsidy—Subsidized Loans are interest-free as long as the borrower is enrolled at least half-time in a degree program at a university or college and for the six-month grace period that follows. Unsubsidized Loans begin accruing interest from the date of disbursement, and interest continues to accrue while the borrower is in school.

Interest Rates for both loans are fixed rates. In some cases, the subsidized loans have a lower interest rate than the unsubsidized loans.

Loan Limits differ depending on the borrower’s grade level, dependency status, type of loan, and whether or not the borrower’s parent’s PLUS Loan has been denied.

  • An undergraduate student’s dependency status is determined by the FAFSA.
  • If a student is deemed independent or their parent is denied a PLUS Loan, the student may borrow more in additional unsubsidized loans.

Eligibility: To be eligible for a Direct Loan, you must be a U.S. citizen or eligible non-citizen (most commonly a permanent resident), not have previous defaults on a federal loan, be enrolled or plan to enroll at least half-time, and maintain satisfactory academic progress.

Loan Fees: Both the Subsidized and the Unsubsidized Direct Loans have origination fees. The fee is deducted from the loan proceeds at disbursement.

Grace Period: Direct Loans have a six-month grace period. Repayment and, in the case of Subsidized Loans, interest accrual does not begin until six months after the student graduates, withdraws, or is enrolled less than half-time.