Federal Direct Loans
A Federal Direct Loan is an education loan provided by the U.S. Department of Education. There are two types of Federal Direct Loans for graduate students: Federal Direct Stafford Loans and Federal Direct Grad Plus Loans.
Federal loan borrowers must meet citizenship and all federal aid eligibility requirements, be enrolled in an eligible program on at least a half-time basis (18 or more units) and must be enrolled in at least one class in the first mini of every semester covered by that loan. There is no credit check performed for Stafford Loan borrowers; however, Grad Plus borrowers are subject to a credit check during the loan application process. Students who do not meet credit requirements for the Grad Plus loan may apply with a credit-worthy cosigner.
Federal loans disburse in equal amounts, one for each semester covered by the loan. When loan disbursements are in excess of semester student account charges, the student receives a student account refund to use to cover other education-related costs.
Students have the right to cancel all or a portion of their federal loans by contacting the school in writing or via email to email@example.com within 14 days of the start of the enrollment period or 14 days after disbursement to the student account, whichever is later. Students may view loan disbursements made to their student accounts via Student Information Online.
Students who apply for federal education loans must meet citizenship and all eligibility requirements. Total education loans must not exceed the cost of attendance less financial aid from all sources.
Federal Loan Application Steps (U.S. Citizens and Permanent Residents)
The loan steps differ depending on whether you have borrowed federal loans previously as a Tepper School student.
More Information about Federal Loans
Federal Direct Loan Rates and Fees
Interest rates on Federal Direct Loans are fixed for the life of the loan. Students are advised to borrow their full Federal Direct Stafford Loan eligibility before borrowing a Federal Direct Grad Plus Loan. Please refer to the Federal Loan Rates and Fees page on the Federal Student Aid Information Center's website for more details.
Enrollment - Impact on Federal Loans
Required Loan Changes for Withdrawals, Non-Enrollment in a Mini, Dropping All Classes in a Mini, etc.
Enrollment factors can have a significant impact on loan eligibility, even in cases when a loan has been fully disbursed. All federal loans and most non-federal loans require students to be enrolled for at least 18 units per semester. Additionally, borrowers are required to be enrolled in both minis of a semester in order to qualify for the loans they are offered. Loan amounts in students’ financial aid award letters assume continuous enrollment in every mini of the semester(s) covered by their award letter and/or student loan(s). Students who withdraw, opt out of registering for a particular mini or drop all classes for a mini may be subject to changes in their loan eligibility. These changes can be significant, even in cases where the loan is fully disbursed, and can result in a loan cancellation, return of funds to the lender and a chargeback to the student’s account.
Student loan borrowers within the following categories are strongly encouraged to speak with a financial aid adviser in the Tepper School Financial Aid Office in advance of making any of the following decisions:
- Withdrawing from the program (refer to your program handbook for more details about withdrawals)
- Non-enrollment in any mini (including but not limited to non-enrollment for Mini 4 of the graduation year)
- Dropping all classes for a mini
Federal Financial Aid Adjustments
Per federal regulations, when federal financial aid is required to be returned to the federal loan programs (return to Title IV), the loans are returned in the following order:
- Federal Direct Unsubsidized Loan
- Federal Perkins Loan
- Federal Direct Grad Plus Loan
Students may be asked to submit verification of any information used to determine their eligibility for federal financial aid. This process is called “verification” and may be required by the U.S. Department of Education or may be initiated by the Tepper School.
Verification of Federal Financial Aid Application Information
The Tepper School of Business may perform verification of information submitted by a student in his/her application for federal financial aid if the student is selected by the federal Central Processing System (CPS) for verification or on a case-by-case basis if there is reason to believe that the student has submitted incomplete, inaccurate or inconsistent information in their application materials. The Tepper School also performs verification prior to making professional judgment decisions that impact a student’s expected family contribution (EFC) or in consideration of certain additional expenses that are above and beyond the school’s published cost of attendance. In cases where the student is not selected for verification but the school discovers conflicting information that impacts a student’s eligibility for federal aid, the Tepper School may request documentation other than the items listed below to resolve the conflicting information. The Tepper School may request any documentation it deems necessary to determine the accuracy of information submitted in a student’s application for federal financial aid. In order for the school to complete the verification process, students selected for verification are required to submit an IRS transcript (for the year that corresponds with the FAFSA for yourself and your spouse, if you are married). Additional verification documents may be required. Failure to submit requested documents within the award year will result in a decision to deny federal aid.
Time Frame and Consequences
When required, federal verification must be completed prior to the end of the academic year or before the student ceases enrollment, whichever comes first, and generally must be completed prior to disbursement of any federal financial aid. In situations where verification is required after disbursement of federal financial aid has occurred and the verification results do not justify receipt of federal aid that the student has already received, the student is responsible for paying back all financial aid for which he/she is not eligible. Additionally, failure to submit requested verification materials with the required time frame disqualifies a student from receiving federal financial aid for the award year. If verification results in a change to financial aid awards, students are notified in writing within 30 days of the award change.
The Tepper School verifies a minimum of the following information for students subject to verification:
- Household size
- Number in college
- Child support paid
- Adjusted gross income
- Federal income tax paid
- Education credits
- Untaxed portions of Individual Retirement Account (IRA) distributions
- Untaxed portions of pensions
- IRA deductions and payments
- Tax-exempt interest income
If a student is a non-tax filer and not required to file a federal tax return, income earned from work is verified in addition to the first four items shown above.
When a student is selected by the school for verification, required documents are requested either via email to the student’s official Carnegie Mellon Andrew email account or in writing. If a student’s award changes as a result of the verification process, the school notifies the student via the student’s official Carnegie Mellon Andrew email account within 30 days of the award change. If the Tepper School discovers conflicting information that requires updates to the FAFSA, the Tepper School will either ask the student to make the change to the FAFSA via www.fafsa.ed.gov or make the FAFSA updates (if the student has authorized the school via the Tepper School Financial Aid Information Form to make FAFSA updates).
- The 2017-2018 Tepper School Verification Worksheet [pdf], signed and dated, is required.
- A federal tax transcript from the Internal Revenue Service (IRS) for the year that corresponds with the FAFSA is required. Please note that a signed copy of the federal income tax return is not sufficient documentation.
- One of the following Statements of Educational Purpose that corresponds with your FAFSA filing year is required.
- Other supporting documents may be required by the request of the school.
Fraud or Abuse
If the verification process reveals possible fraud or criminal misconduct in connection with a student’s federal financial aid application and/or verification processes, the matter will be referred to the U.S. Department of Education for investigation.
Questions about federal financial aid verification policies and procedures may be emailed to firstname.lastname@example.org.
Federal Direct Loan Repayment and Default Prevention
Federal Loan Repayment
Payment of principal and interest is deferred as long as the student is enrolled on at least a half-time basis (18 or more units per semester). Additionally, the Stafford Loan provides a six-month grace period for loan repayment after graduation or ceasing half-time enrollment. Repayment of Grad Plus begins within 45 days of the end of the in-school deferment; however, you may defer payment for six months after you cease to be enrolled on at least a half-time basis. Students have the option of making in-school payments, including interest-only payments. Any unpaid interest that accrues while the borrower is in an in-school deferment period is capitalized when repayment begins (added to the principle balance on the loan).
There is no prepayment penalty on Federal Direct Loans. Federal Direct Loans offer liberal repayment options including in-school deferments, unemployment deferments once in repayment, military deferments, economic hardship forbearance, loan forgiveness for certain public service employees, etc.
Understanding Federal Loan Repayment. Includes information about:
- Making payments/repayment plans/payment estimator
- Loan servicers
- Loan consolidation
- Loan forgiveness/cancellation/discharge
Federal Loan Exit Counseling
Exit counseling provides an explanation of repayment, deferment and cancellation privileges. Students who are graduating or who are not enrolled at least half time for the upcoming semester are required to complete exit counseling. The Tepper School Financial Aid Office will notify students by email when they are required to complete an exit counseling. To complete exit counseling, visit the Department of Education’s Federal Student Aid website and click the Log In button. Your Department of Education FSA ID is required to sign in. Failure to complete the requested information does not relieve you of your debt.
NSLDS (National Student Loan Data System): Access information about your federal loan portfolio.
MyMoney.gov: Visit this federal website for information on managing your money.
Equifax Encite Program
PO Box 740249
Atlanta, GA 30374
Experian National Consumer Assistance Center (formerly TRW)
PO Box 949
Allen, TX 75013-0949
Trans Union Corporation Consumer Disclosure Center
PO Box 390
Springfield, PA 19064-0390
Federal Loan Consolidation
The decision of whether or not to consolidate your federal loans is very individual. The following links provide helpful information for students considering consolidation or another repayment option.
Deferring Your Current Loans
Students who wish to defer currently existing student loans should contact their lender(s) about their eligibility for deferment. All federal and many (but not all) private loans may be deferred while a student is enrolled in an eligible program in at least 18 units of coursework.
If your lender requests verification of your enrollment from Carnegie Mellon, the university will provide this information once you are enrolled and your account is paid in full.