PLAIN LANGUAGE DISCLOSURE FOR DIRECT SUBSIDIZED LOANS AND DIRECT UNSUBSIDIZED LOANS

WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM (DIRECT LOAN PROGRAM)

ABOUT THE PLAIN LANGUAGE DISCLOSURE while you are in school, during the grace period, during deferment
You are receiving a Direct Subsidized Loan and/or Direct periods, and during some periods of repayment under certain
Unsubsidized Loan under a Master Promissory Note (MPN) that you repayment plans.
signed previously. This Plain Language Disclosure (PLD) summarizes Direct Unsubsidized Loans are for both undergraduate students and
information about the terms and conditions of your loan. graduate or professional students. You do not need to have financial
In this PLD, the words "we," "us," and "our" refer to the U.S. need to receive a Direct Unsubsidized Loan. Generally, we charge
Department of Education or our loan servicers. The word "loan" interest on Direct Unsubsidized Loans during all periods.
means a Direct Subsidized Loan or a Direct Unsubsidized Loan. 4. TIME LIMITATION ON DIRECT SUBSIDIZED LOAN ELIGIBILITY FOR
Refer to your MPN and the Borrower’s Rights and Responsibilities FIRST-TIME BORROWERS ON OR AFTER JULY 1, 2013
Statement (BRR) that you received with your MPN for the complete If you are a first-time borrower on or after July 1, 2013, there is a
terms and conditions of your loan, and for more detailed limit on the maximum period of time (measured in academic years)
information about the topics covered in this PLD. You can obtain a that you can receive Direct Subsidized Loans.
copy of the MPN that you signed, including the BRR, on Generally, if you are a first-time borrower on or after July 1, 2013
[Link] or by contacting your servicer. you may not receive Direct Subsidized Loans for more than 150% of
1. APPLICABLE LAWS AND OTHER LEGAL INFORMATION the published length of your current program of study.
Unless we tell you otherwise in this PLD, your MPN and the BRR After you have received Direct Subsidized Loans for 150% of the
control the terms and conditions of your loan. The terms and length of your current program of study, you are no longer eligible
conditions of loans made under your MPN are determined in to receive additional Direct Subsidized Loans, but you may continue
accordance with the Higher Education Act of 1965, as amended (the to receive Direct Unsubsidized Loans. In addition, if you continue to
HEA), our regulations, and other federal laws and regulations. In this be enrolled in any undergraduate program after you have lost
PLD we refer to these laws and regulations as "the Act." eligibility for Direct Subsidized Loans because of this time limit, in
Amendments to the Act may change the terms of the MPN that you most cases (there are certain exceptions) we will charge interest on
signed. Any amendment to the Act that changes the terms of the your Direct Subsidized Loans during all periods. We will notify you if
MPN will be applied to your loans in accordance with the effective this happens.
date of the amendment. Depending on the effective date, 5. USE OF THE MPN TO MAKE MORE THAN ONE LOAN
amendments to the Act may modify or remove a benefit that existed In most cases, you may receive more than one loan under the MPN
at the time you signed the MPN. that you previously signed for up to 10 years. Your school will tell
2. THE DIRECT LOAN PROGRAM you if you need to complete a new MPN. You also have the option of
The Direct Loan Program includes Direct Subsidized Loans, Direct signing a new MPN if you do not want to receive more than one loan
Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation under an MPN that you signed previously. If you do not want to
Loans. Loans made under the Direct Loan Program are called "Direct receive more than one loan under the same MPN, you must notify
Loans." Direct Loans are made by the U.S. Department of Education. your school or your servicer in writing.

We use servicers to process Direct Loan payments, deferment and 6. AMOUNT YOU MAY BORROW
forbearance requests, and other transactions, and to answer There are maximum loan amounts you may borrow in a single
questions about your loans. We will tell you how to contact us or our academic year (annual loan limits) that range from $5,500 to
servicers. It is important to keep in contact with your servicer. To $20,500, depending on your year in school, dependency status, and
learn more about loan servicers, visit [Link]/servicers. other factors. The actual amount you are eligible to borrow for an
If we transfer one or all of your loans to a new servicer, we will academic year may be less than the annual loan limit. There are also
notify you of who your new servicer is, how to contact your new maximum amounts you may borrow in total for undergraduate and
servicer, and when your loans will be transferred. graduate study (aggregate loan limits). To learn more, visit
[Link]/sub-unsub#how-much.
Your loan servicer will never ask you to pay a fee to access a benefit
of your loan, like a repayment plan. There are private companies 7. INTEREST RATE
that may offer to help you with your student loans for a fee, but The interest rates for Direct Subsidized Loans and Direct
those companies are not affiliated with us. To learn more, visit Unsubsidized Loans are determined in accordance with the Act.
[Link]/loanscams. Different interest rates may apply depending on when a loan was
3. DIRECT SUBSIDIZED LOANS AND DIRECT UNSUBSIDIZED LOANS first disbursed (paid out) and other factors. Different loans you
received under the same MPN may have different interest rates.
Direct Subsidized Loans are only for undergraduate students. To
receive a Direct Subsidized Loan, you must have financial need. Loans first disbursed on or after July 1, 2013 have a fixed rate
Generally, we do not charge interest on Direct Subsidized Loans (meaning that the rate will never change) that is calculated each
Page 1 of 4
Revised 11/2019
 PLAIN LANGUAGE DISCLOSURE FOR DIRECT SUBSIDIZED LOANS AND DIRECT UNSUBSIDIZED LOANS
year. When the rate is calculated, it applies to all loans that have a balance of your loan at certain points. This is called "capitalization."
first disbursement date during the period beginning on July 1 of one Capitalization increases the principal amount you owe on the loan
year and ending on June 30 of the following year. The interest rate and the total amount of interest you will pay. To learn more about
for loans made to undergraduate students can never be more than capitalization, visit [Link]/interest#capitalization.
8.25%. The interest rate for loans made to graduate or professional 9. LOAN FEE
students can never be more than 9.5%.
For each loan you receive, we charge a loan fee that is a percentage
Loans first disbursed during the period from July 1, 2006 through of the amount you borrowed. The loan fee will be subtracted from
June 30, 2013 have different fixed interest rates. To view the each loan disbursement, meaning that the actual disbursement
interest rates for these loans, visit [Link]/interest. amount you receive will be less than the disbursement amount you
Loans first disbursed before July 1, 2006 have variable interest rates must repay. We will notify you of the specific loan fee that we
that are adjusted each year on July 1. If you have loans with a charge on each loan you receive. To learn more, visit
variable interest rate, we will notify you annually when the rate is [Link]/interest#fees.
adjusted. 10. LATE CHARGES AND COLLECTION COSTS
Servicemembers Civil Relief Act (SCRA). Under the SCRA, if you are If you do not make any part of a payment within 30 days after it is
serving in the military the interest rate on loans you received before due, we may require you to pay a late charge. We may also require
you began your military service may be limited to 6% during your you to pay other charges and fees involved in collecting your loan.
service. In most cases, we will determine if you are eligible for this
11. YOUR RIGHT TO CANCEL ALL OR PART OF A LOAN
benefit based on information from the U.S. Department of Defense,
and if you have any qualifying loans with an interest rate greater Before your loan money is disbursed, you may cancel all or part of
than 6%, we will automatically reduce the rate on those loans to 6% your loan at any time by notifying your school. After your loan
during your military service. money is disbursed, there are two ways to cancel your loan:
Interest rate reduction for automatic withdrawal of payments. You  Within certain timeframes you can notify your school that you
will receive a 0.25% reduction in the interest rate on your loan if you want to cancel all or part of your loan. Your school will tell you
choose to repay the loan under the automatic withdrawal option. the specific cancellation timeframe that applies to you.
Under this option, we automatically deduct your monthly loan  Within 120 days of the date your school disbursed your loan
payment from your checking or savings account. money, you may cancel all or part of your loan by returning all
8. PERIODS WHEN WE CHARGE INTEREST or part of the loan money to us. Contact your servicer for
instructions on how to do this.
Direct Subsidized Loans. Generally (see exceptions below), we do
not charge interest on Direct Subsidized Loans while you are You do not have to pay interest or the loan fee on the part of your
enrolled in school at least half time, during your grace period, during loan that is cancelled or returned within these timeframes.
deferment periods, and during some periods of repayment under 12. HOW YOU WILL RECEIVE YOUR LOAN MONEY
certain repayment plans. Generally, we charge interest on Direct In most cases your school will disburse your loan money in more
Subsidized Loans during all other periods, starting on the day after than one installment. Each installment is called a disbursement.
your grace period ends. Depending on how your school measures your academic progress, it
Exceptions: We charge interest on Direct Subsidized Loans during will generally make a loan disbursement at the beginning of each
the grace period if the first disbursement of the loan was made academic term (for example, at the beginning of each semester or
during the period from July 1, 2012 through June 30, 2014. If you are quarter), or will make one disbursement at the beginning of the
a first-time borrower on or after July 1, 2013, under certain period of study for which you are receiving the loan, and one at the
conditions we charge interest on Direct Subsidized Loans during all midpoint of that period of study. Your school may disburse your loan
periods, as explained in Item 4 of this PLD. money by crediting it to your student account, or may give some or
Direct Unsubsidized Loans. Generally, we charge interest on Direct all of it to you directly by check or other means. We will notify you
Unsubsidized Loans during all periods, starting on the date of the each time your school disburses part of your loan money.
first disbursement. 13. USE OF LOAN MONEY
No accrual of interest benefit for active duty service members. We You may use your loan money only to pay for authorized educational
do not charge interest on any type of Direct Loan first disbursed on expenses (for example, tuition, room, board, books) at the school
or after October 1, 2008 during periods while you are on qualifying that determined you were eligible to receive the loan.
active military duty in an area of hostilities where your service 14. INFORMATION YOU MUST REPORT AFTER YOU RECEIVE YOUR
qualifies you for special pay (for up to 60 months). LOAN
Interest capitalization. If you do not pay the interest as it accrues on While you are still in school, you must notify your servicer and your
a loan, we will add the accrued interest to the unpaid principal school if you change your address, telephone number, or name. At
Page 2 of 4
Revised 07/2019
 PLAIN LANGUAGE DISCLOSURE FOR DIRECT SUBSIDIZED LOANS AND DIRECT UNSUBSIDIZED LOANS
any time after you receive your loan, you must notify your servicer if Income-driven repayment plans
you: Under an income-driven repayment plan (IDR plan), your monthly
 Change your address, telephone number, or name; or payment amount is based on your income and family size. Changes
 Have any other change in status that affects your loan (for in your income and family size will result in changes to your monthly
example, if you received a deferment but no longer qualify for payment amount. If you choose an IDR plan, you must certify your
the deferment). family size and provide documentation of your income (and, if you
are married, your spouse’s income) each year so that we can
15. GRACE PERIOD
recalculate your payment amount. Your monthly payment amount
You do not need to begin making payments on your loan until 6 under an IDR plan is generally a percentage of your discretionary
months after you stop attending school or drop below half-time income.
enrollment. This is called your "grace period."
Under an IDR plan, any remaining loan amount that you owe after
16. REPAYING YOUR LOAN you have made the equivalent of a certain number of years of
The repayment period for each loan you receive begins on the day qualifying monthly payments will be forgiven. You might have to pay
after your grace period ends. We will notify you of the date your first federal income tax on the loan amount that is forgiven.
payment is due. There are four IDR plans: the Revised Pay As You Earn (REPAYE), Pay
You have a choice of repayment plans. There are two types of As You Earn (PAYE), Income-Based Repayment (IBR), and Income-
repayment plans: traditional repayment plans and income-driven Contingent Repayment (ICR) plans. There are different eligibility
repayment plans. We will ask you to choose a repayment plan. If requirements for each of the IDR plans, but the chart below
you do not choose a plan, we will place you on the Standard summarizes some of the key terms of each plan. For more
Repayment Plan. Generally, you may change from your current information, visit [Link]/IDR.
repayment plan to any other repayment plan you qualify for at any Plan Payments are Forgiveness is
time after you have begun repaying your loan. You can prepay your generally… generally provided
loans at any time without penalty. after…

When choosing a repayment plan, it is important to understand that REPAYE 10% of discretionary 20 or 25 years
income
there is a relationship between your payment amount and the total
PAYE 10% of discretionary 20 years
amount of interest that you will pay on your loans. Generally, you
income
will pay more interest over the life of your loan if you have a lower
IBR 15% of discretionary 25 years
monthly payment amount, and will pay less interest if you have a
income
higher monthly payment amount.
ICR 20% of discretionary 25 years
Traditional repayment plans income

Under a traditional repayment plan, your required monthly payment 17. DEFAULTING ON YOUR LOAN
amount is based on the loan amount that you owe, the interest rate
You will be considered in default on your loan if you do not make
on your loans, and the length of the repayment period.
your monthly loan payments for a total of at least 270 days or we
There are three traditional plans: the Standard, Graduated, and accelerate your loan (see Item 18, below) and you do not pay the
Extended repayment plans. The chart below summarizes some of amount due.
the key terms of each of the traditional repayment plans. For more
If you default on your loan, we may:
information, visit [Link]/plans.
 Report the default to nationwide consumer reporting agencies
Plan Payments… Loan will be repaid
(credit bureaus);
within…
 Demand that you immediately repay the loan in full;
Standard Are fixed 10 years
 Order administrative wage garnishment (AWG) of your wages;
Graduated Start low, then 10 years
increase every 2 years  Take (offset) your federal income tax refund or Social Security
Extended Are fixed, or 25 years Administration payments or other payments authorized for
Start low, then offset under federal law and use that amount to pay off part of
increase every 2 years your loan;
(your choice)  File a lawsuit against you to collect on the loan; and
 Require you to pay collection costs.
If you default on your loan you will lose eligibility for other federal
student financial aid and assistance under most federal benefit
programs. You will also lose eligibility for loan deferments,
forbearances, and repayment plans. If you default on your loans,
Page 3 of 4
Revised 07/2019
 PLAIN LANGUAGE DISCLOSURE FOR DIRECT SUBSIDIZED LOANS AND DIRECT UNSUBSIDIZED LOANS
there are several ways you can get out of default. To learn more 21. LOAN DISCHARGE (HAVING YOUR LOAN FORGIVEN)
about getting out of default, visit [Link]/end-default. If you meet certain conditions, we may discharge (forgive) some or
18. CONDITIONS WHEN WE MAY REQUIRE YOU TO IMMEDIATELY all of your loan. You cannot have your loan discharged solely
REPAY THE FULL AMOUNT OF YOUR LOAN because you did not complete the education paid for with your loan,
We will require you to immediately repay the full amount of your are unable to find employment in the field of study for which your
loan (this is called "acceleration") if you: school provided training, or are dissatisfied with, or do not receive,
the education you paid for with your loan. To learn more, visit
 Receive loan money but do not begin attendance in any classes [Link]/forgiveness.
at the school that determined you were eligible to receive the
Death, total and permanent disability, bankruptcy, school closure,
loan;
false certification, identity theft, unpaid refund, and borrower
 Use your loan money to pay for anything other than authorized
defense
educational expenses at the school that determined you were
eligible to receive the loan; We may discharge (forgive) all or part of your loan if:
 Make a false statement that causes you to receive a loan that  You die or become totally and permanently disabled;
you are not eligible to receive; or  Your loan is discharged in bankruptcy after you have proven to
 Default on your loan. the bankruptcy court that repaying the loan would cause undue
19. INFORMATION WE REPORT ABOUT YOUR LOAN hardship;
 You were unable to complete the course of study paid for with
We will report information about your loan to nationwide consumer
reporting agencies (commonly known as "credit bureaus") and to your loan because your school closed;
the National Student Loan Data System (NSLDS) on a regular basis.  Your school falsely certified your eligibility;
This information will include the disbursement dates, amount, and  A loan in your name was falsely certified as a result of a crime
repayment status of your loan (for example, whether you are of identity theft;
current or delinquent in making payments). Your loan will be  Your school did not pay a refund of your loan money that it was
identified as an education loan. required to pay under federal regulations; or
 Your school did something or failed to do something related to
20. DEFERMENT AND FORBEARANCE (POSTPONING PAYMENTS)
your loan or to the educational services that the loan was
If you meet certain requirements, you may receive a deferment or intended to pay for.
forbearance that allows you to temporarily stop making payments
Teacher Loan Forgiveness
on your loan. To learn more about deferment and forbearance, visit
[Link]/deferment-forbearance. We may forgive a portion of your eligible loans if you teach full-time
for five consecutive years in certain low-income elementary or
You may receive a deferment:
secondary schools, or for certain low-income educational service
 While you are enrolled at least half-time at an eligible school; agencies, and meet certain other qualifications. To learn more, visit
 While you are unemployed or experiencing an economic [Link]/teach-forgive.
hardship;
Public Service Loan Forgiveness
 While you are serving on qualifying active military duty; or
 For loans first disbursed on or after September 28, 2018, or for A Public Service Loan Forgiveness (PSLF) program is also available.
loans first disbursed before that date that entered repayment Under this program, we will forgive the remaining balance due on
on or before September 28, 2018, while you are receiving your eligible Direct Loans after you have made 120 qualifying
treatment for cancer and for an additional 6 months after your payments (after October 1, 2007) on those loans under certain
treatment has ended. repayment plans while you are employed full-time by a qualifying
employer. To learn more, visit [Link]/publicservice.
This is not a complete list of available deferments. For a complete
22. LOAN CONSOLIDATION
list, visit [Link]/deferment-forbearance.
We may give you a forbearance if you are temporarily unable to You can combine one or more of your federal education loans into a
make your loan payments for reasons including, but not limited to, new Direct Consolidation Loan with a single monthly payment.
financial hardship or illness. You may also receive a forbearance Consolidation may also allow you to extend the period of time for
under other circumstances that are described at repaying your loans. Although consolidation can provide certain
benefits, it can also cause you to lose benefits on the loans that you
[Link]/deferment-forbearance.
consolidate. To learn more, visit [Link]/consolidation.

Page 4 of 4
Revised 07/2019