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FAQ regarding the Direct Loan Program

How do I complete an electronic master promissory note?

Your FSA ID is required to complete this process. If you do not have a valid FSA ID, you must go and create a FSA ID at:

  • Log on to the website at:
  • Sign In using your FSA ID
  • Select the "Sign Master Promissory Note" option
  • Be sure to select University of Wisconsin-Eau Claire when asked to provide the name of your school
  • Follow the instructions, and remember to print a copy of the promissory note for your records

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Is there any expense to me when I borrow under the Direct Loan program?

If you have a Direct Subsidized Loan, the federal government does not charge you interest while you're enrolled in school at least half time or during deferments (Subsidized loans taken out prior to July 1, 2012 are not charged interest in the grace period or after June 30, 2014). If you have a Direct Unsubsidized Loan, interest will be charged beginning the day the loan is disbursed to you until the day the loan is repaid in full. You may pay the accumulating interest while you are in school or you have the option of capitalizing the interest.

The loan fee is another expense of borrowing a Direct Loan. The loan fee charged for Direct Subsidized and Unsubsidized loans is 1.069 up to October 1,2017 when it will reduce to 1.066%, of the amount you borrow. The loan fee is subtracted from the loan money when it is disbursed.

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What if I have concerns about the terms of my loan that cannot be resolved by talking to my lender?

The Department of Education has established an ombudsman to work with student borrowers to informally resolve any loan disputes or problems. If you have concerns about the terms of your loan that cannot be resolved by talking to your lender, you are encouraged to contact the Ombudsman Customer Service Line at 1-877-557-2575 or visit the OSFA Ombudsman web site.

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Who is my loan servicer?

Your loan servicer is listed on your disbursement notice.  You should receive a disbursement notice each time a loan amount is disbursed and usually this is at the beginning of each semester.
You may also locate your servicer at NSLDS .
You can locate a list of the servicers at Student Loans .                                                          

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How can I find out how much I have borrowed?

You may link directly to the NSLDS .  By entering a Social Security Number, birth date and zip code, a direct loan borrower can see his or her last loan payment, next payment due date, current balance and loan status.

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What are my repayment options?

There are four repayment plans:

  • With the Standard Repayment Plan, you will make a fixed payment of at least $50 a month for up to 10 years.
  • Under the Extended Repayment Plan, you still have a minimum monthly payment of $50, but you can take up to 25 years to repay your loans. The length of your repayment period will depend on the total amount you owe when your loans go into repayment.
  • With Graduated Repayment, your payments start out at one level, then increase over time. The repayment period 10 years..
  • The Income Contingent Repayment Plan gives you the flexibility to meet your Direct Loan obligations without causing undue financial hardship. Each year, your monthly payment amount is calculated on the basis of your annual income and the total amount of your Direct Loans.

If you do not choose a repayment plan, your loans are placed in the Standard Repayment Plan. If none of the repayment plans meet your needs because you have exceptional circumstances, the Direct Loan Servicing Center may provide an alternative repayment plan.  At the Federal Student Aid Web Site, you can compare the initial monthly payments that you would make under each of the four Direct Loan repayment plans using a repayment calculator.

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Can I combine my loans to make repayment easier?

Yes. Any Direct Subsidized Loans (including FORD and Perkins) can be combined into one Direct Subsidized Consolidation Loan, and any Direct Unsubsidized Loans (including UFDL and SLS) can be combined into one Direct Unsubsidized Consolidation Loan. Refer to the Federal Student Aid for additional information.

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When do I begin repayment?

After you graduate, leave school, or drop below half-time enrollment, you have six months before you must begin repayment. This is called a grace period. If you have a Direct Subsidized Loan, the interest begins 6 months after you are out of school (students who have a subsidized loan during the period of July 1, 2012 to June 30, 2014 start accruing interest upon graduation on that loan) will not be accuring interest on a subsidized loan in their grace period. If you have a Direct Unsubsidized Loan, you will have to pay interest both while in school and during the grace period, unless you choose to have the interest capitalized.

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Can I prepay my loan?

Yes. You may prepay all or part of the unpaid balance on a loan to your servicer at any time without penalty. If you have more than one Direct Loan, be sure to specify which loan you are prepaying.

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Can my Direct Loan debt ever be canceled?

A loan cancellation means you never have to repay your loan. You can receive a loan cancellation only under special circumstances such as death, total and permanent disability, and an inability to complete a course of study because your school closed. Also, your loan may be canceled if your school did something wrong or failed to do something, which led to legal action being taken against the school.

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What should I do about my loan if I'm a transfer student?

If you transfer to another school and will be enrolled at least half time, contact your servicer to request an in-school deferment. If you still owe money on any other federal student loans, contact your servicer to get an in-school deferment form.

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What if I have problems repaying my loan? (What deferments are possible?)

If you can't make a payment on your loan as scheduled, contact your servicer. The servicer will help you avoid defaulting on your Direct Loans. Two options for postponing payment are deferment and forbearance.

  • Deferment
    During deferment of Direct Subsidized Loans, principal payments are postponed, and interest is not charged. In the case of Direct Unsubsidized Loans, principal payments are postponed but interest continues to be charged. There are many possible deferments depending on your situation. Some of the deferments that may be available to you are:
    • Pursuing at least half time study at an eligible school
    • In a graduate fellowship program approved by the Department of Education
    • In a rehabilitation training program for individuals with disabilities, approved by the Department of Education
    • Conscientiously seeking but unable to find full-time employment (for up to three years)
    • Experiencing economic hardship (for up to three years)
    • Service in the Peace Corps
    • Service under the domestic volunteer service act of 1973
    • Comparable volunteer service for tax-exempt organization of demonstrated effectiveness in the field of community service
  • Check your promissory note for all the deferments you may be eligible to receive. Deferments can be used at any time to help you manage your Direct Loan payments.

    You may qualify for forbearance if you do not qualify for a deferment, but still can't make loan payments for acceptable reasons. During forbearance your payments may be postponed or reduced for a specified period, or you may receive an extension on the time you have to repay your loans. In any case, interest will continue to be charged and, unless it is paid, it will be added to your principal balance.

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What happens if I don't repay my loan?

Several things can happen if you fail to make loan payments on time or if you default on your loans, including:

  • You will not be eligible for further federal student financial aid.
  • You may damage your credit rating.
  • The federal government can take your federal tax refunds.
  • Your total debt may be increased by late fees, court costs, attorney's fees, etc.
  • Your employer can withhold part of your wages and give them to the federal government.
  • Your car and other possessions can be repossessed and sold to pay the loans.
  • The federal government can sue you.

Remember, if you are having trouble making your payments, call the Direct Loan Servicing Center at 1-800-848-0979. The Servicing Center will work with you to help you avoid default.

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Is there Ford Loan forgiveness for teachers?

The Stafford Loan Forgiveness Program became effective on July 1, 2001. The program grants loan forgiveness of up to $17,500 for qualifying borrowers.

For more detailed information, you may go to Loan Forgiveness for Teachers or you may view the Stafford Loan Forgiveness brochure.

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