US Federal Loans
It is imperative that you read the following information to fully understand the application process. Please note that US Federal Aid regulations for Foreign Schools differ from those for US domestic schools and that the process to be followed is in accordance with the regulations for Foreign Schools. It is important to adhere to deadlines and to plan early as the process takes time from initial application to loan origination.
Eligibility for US Federal Aid
Students from the United States of America who choose to study at foreign institutions are not eligible for grants from the US Federal government e.g. Pell Grants but may apply for US Federal loans to fund their study. The Federal ‘Direct Lending’ loan program is available to US citizens or eligible non-citizens who are enrolled in a degree-seeking undergraduate or graduate program at least half-time, making satisfactory academic progress (CGPA > 2.0) and are not in default on a previous loan or exceeding federal loan limits.
INELIGIBLE students are:
- SINARC students and other visiting students
- CEP students
- Students not enrolled in a degree program such as those classified as ‘Special’ status
- PharmD students
- Medical School students
- Nursing School students
- Undergraduate students enrolled for fewer than 6 credit hours in a semester
Eligible students can apply for the following Federal Aid loans:
- Direct Loans (Subsidized and Unsubsidized)
- Direct Plus Loans (Parent Plus and Graduate Plus)
Loans and Interest Rates
These are fixed-rate student loans from the US Department of Education for undergraduate and postgraduate students attending university at least half-time.
Direct Subsidized Loans
Direct Subsidized loans are federally guaranteed loans based on financial need as determined by the Department of Education. Interest does not accrue on the loan while you are in university at least halftime, for the first six months after you leave the university (referred to as the grace period) and during any future deferment periods. The federal government subsidizes the interest during these times.
Direct Unsubsidized Loans
Direct Unsubsidized loans are federally guaranteed loans that are not based on financial need. Interest accrues from the time the loan is disbursed to the school. If you choose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan).
Direct Plus Loans
Direct Plus loans are available from the US Department of Education and are not based on financial need. The parents, who are U.S. citizens, of an undergraduate dependent student (as defined by the US Department of Education) are eligible for a Parent Plus loan if they meet certain credit guidelines. Independent graduate students are eligible for a Graduate Plus loan if they meet certain credit guidelines.
US Federal loans are educational loans and Direct, Direct Plus and any Private loans are expressly for the purpose of covering the primary costs of educational study e.g. tuition, student accommodation & board, books/academic requisites, commuter travel etc. The primary costs of education cannot exceed the student’s ‘Cost of Attendance (COA)’ which is the official estimate of your tuition and living costs for the academic year of study. Loans are not intended to cover other expenses that are not directly related to academic study. It is advisable that you plan a budget to make sure that you have enough funding to cover your period of study. You should note that it is important to borrow what you need but to remember at all times that you will have to repay it in the long term.
Interest rates for federal student loans are determined by federal law
|Interest Rates for Subsidized, Unsubsidized and PLUS Loans as determined by federal law|
|Effective July 1st, 2017|
|Loan Type||First Disbursed between July 1st , 2018 & July 1st, 2019||
First Disbursed between
July 1st, 2019 & July 1st, 2020
|Fixed at 5.05%||Fixed at 4.53%|
|Fixed at 5.05%||Fixed at 4.53%|
Loans (Graduate or Professional Students)
|Fixed at 6.60%||Fixed at 6.08%|
|Direct PLUS Loans (Parents and Graduate Or Professional Students)||Fixed at 7.60%||Fixed at 7.08%|
Direct Loan Application Guidelines
Step 1: FAFSA/SAR
The Free Application for Federal Student Aid (FAFSA) is used to determine student eligibility for federal student aid including Direct Loans. It will collect demographic and financial information related to both the student applicant and his or her parent(s) so it is best to sit down and complete it together.
You must complete the online FAFSA.The school code for LAU is G41133. Once you have completed the online application you will receive a Student Aid Report (SAR) in the mail approximately two weeks after your application has been processed. If you provide an email address then you can request that your Student Aid Report be sent via email.
The FAFSA application must be completed each year you would like to be considered for U.S. federal financial aid. For the 2018-2019 academic year, you must complete it before June 30, 2019.
Step 2: Entrance Counseling
All students who wish to apply for US Federal loans must complete loan entrance counseling. Entrance counseling is a federal requirement. The purpose of loan entrance counseling is to help you to better understand your responsibilities in relation to your loans. It will provide you with consumer information related to borrowing Direct Loans. Entrance Counseling is only done one time and must be completed prior to the loan disbursement. Entrance Counseling can be completed online at the StudentLoans.gov website.
Step 3: Loan Entitlements
After your FAFSA application is received and reviewed by LAU, the financial aid and scholarships office will contact you and collect any additional information or documentation that is needed. Once the necessary information has been provided, an Award Letter will be emailed to you indicating the type(s) and amount(s) of loans that you are eligible to borrow for the specified period of enrollment. You will have the right to decline the loan or request a lower loan amount. The Award Letter will include instructions on how to proceed including signing the Master Promissory Note.
The amount of money a student can borrow depends on several factors including:
- Estimated Family Contribution (EFC) that results from the FAFSA application and determines “need”.
- Cost of Attendance (COA) as calculated by the University which includes tuition fees, living expenses and more
- Grade level in school
- Dependency status
|Direct Stafford Loan Limits (Subsidized and Unsubsidized)|
|Undergraduate Students||Graduate Students|
|1st year||$5,500 ($3,500)3||$9,500 ($3,500)||$20,500 ($8,500) for each year|
|2nd year||$6,500 ($4,500)||$10,500 ($4,500)|
|3rd & 4th year||$7,500 ($5,500)||$12,500 ($5,500)|
|Aggregate||$31,000 ($23,000)||$57,500 ($23,000)||$138,5004 ($65,500)|
1Except those whose parents are unable to borrow PLUS loan.
2These limits also apply to dependent students whose parents are unable to borrow a PLUS loan.
3These numbers in parentheses represent the maximum SUBSIDIZED
4The aggregate amounts for graduate students include loans for undergraduate study
Step 4: Master Promissory Notes and Title IV Authorization Form
The Master Promissory Note (MPN) is a legal document in which the students promise to repay their loan(s) and any accrued interest and fees to the US Department of Education. It also explains the terms and conditions of their loan(s). You must complete a new MPN each academic year that you wish to receive a Direct Loan. One MPN is completed for the Subsidized/Unsubsidized loans. A separate MPN is required should you wish to take out a Graduate PLUS or Parent PLUS loan.
The MPN can be completed online at the StudentLoans.gov website.
Federal regulations require universities to obtain authorization from students in order to use federal loan aid funds for other educationally related institutional charges that may be incurred such as parking fees, health insurance, library fines, etc. You will be asked to sign a Title IV Authorization Form that authorizes LAU to use the loan proceeds for these charges. When the loan funds are disbursed to your account to cover all dues and there is an excess amount remaining, LAU will refund you by issuing a check within 14 calendar days, unless you specify in writing authorizing LAU to hold the funds for future charges. The written authorization MUST be submitted to the Business Office. Refund checks MUST be picked up in the Business Office. Credit balances resulting from Federal Parent PLUS loans will be refunded to the parent borrower unless authorized otherwise by the parent in the parent PLUS application.
Step 5: Plus Loans
Students must request all PLUS loans on the StudentLoans.gov website.
In applying for a PLUS loan a credit check will be carried out on the individual requesting the loan. No PLUS loan can be certified until this credit check is completed. You must select Complete PLUS Request Process to initiate the credit check
If you or your parent has an adverse credit history, you may still be eligible to receive a Direct PLUS loan. You can obtain an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS loan if the student/parent is unable to repay the loan. In the case of a parent borrowing on behalf of their dependent student, the endorser cannot be the student on whose behalf the parent is obtaining the Direct PLUS loan.
Please note in the case of dependent undergraduate students, the Parent PLUS loan is borrowed in the name of the parent.
Step 6: Loan Approval
All loans will be originated by LAU with the US Department of Education.
Step 7: Origination Fees (file fees)
There is an origination fee on all Direct Subsidized, Unsubsidized and PLUS Loans. The origination fee is a percentage of each loan amount taken by the lender before the money is received by LAU. For Subsidized and Unsubsidized loans disbursed on or after October 1st, 2018 and before October 1st 2019, the loan origination fee is 1.062%. For PLUS loans disbursed on or after October 1st, 2018 and before October 1st, 2019, the loan origination fee is 4.248%. The loan fee will be proportionately deducted from each loan disbursement. For example, if you took out a $3,500.00 subsidized loan, you could expect to receive $1,731.00 during the fall semester and $1,731.00 during the spring semester.
Step 8: Disbursements
The loan proceeds are received by LAU and will be posted directly to your account after the Drop/Add period is over at the beginning of each semester. If there is an excess credit balance in your account after tuition and other fees are covered, the proceeds will be issued in the form of a refund check to be picked up from the Business Office as described in the Title IV Authorization Form. If the excess credit balance results from a parent PLUS loan the check will be issued to your parent.
If you are receiving your first undergraduate Direct Loan disbursement the loan proceeds will not be posted to your account until 30 days after the start of classes. This delay will not affect your course registration and you will not be dropped from courses as long as the balance will be paid in full when the loan funds are received.
Step 9: Accommodation Costs
You should note that on-campus accommodation costs are not deducted from your loans by the Business Office. It is your responsibility to abide by the deadline to pay the dorm fees as deemed necessary.
Satisfactory Academic Progress
In order to maintain eligibility for Direct Loans, you MUST maintain Satisfactory Academic Progress (SAP) as outlined in LAU’s SAP Policy. Among other things, this means that you must maintain a CGPA of 2.0 or higher and show that you are completing your degree requirements in a timely matter. Study abroad will likely affect your eligibility for Direct Loans. Before committing to a study abroad program you should check with the Financial Aid and Scholarships Office. LAU will assess each student’s SAP at the end of each academic semester to ensure compliance.
Withdrawal and the Return of Federal Aid Loan Funds – R2T4 Policy
If you withdraw from classes at any point during a semester or fails to attend your classes, you must inform the Financial Aid and Scholarships office and the US Department of Education no later than 5 working days after withdrawal. Students who withdraw from their program of study are required to inform LAU in writing to email@example.com. You should note that failure to attend after enrolment is deemed to be a withdrawal. You should also note that when you withdraw, any disbursed unearned loan funds must be returned to the US Department of Education. Please review our Return to Title IV Policy for more information.
Federal regulations require that all Direct Loan borrowers who graduate or withdraw from their program of study complete a Loan Exit Counseling Session. This session is designed to provide borrowers with important information regarding their responsibilities as well as repayment information. Students who withdraw from their course of study or fall below at least half-time study at any point during the current academic year will be required to complete Exit Counselling via Student Loans.gov. The US Department of Education will also be notified.
You will have a six (6) month grace period before repayment of your loans begins. Your loan servicer will contact you regarding the repayment of your Direct Loan(s). Any information that LAU has regarding your Direct Loans will be reported to the National Student Loan Data System (NSLDS). NSLDS provides a centralized, integrated view of Title IV loans and grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or grant data. You can see your Title IV aid history by going to nslds.ed.gov.
Students should receive repayment information from their loan servicer approximately 3 months after they leave school. If you do not receive this information, it is your responsibility to contact the US Department of Education or loan servicer before the end of your grace period to arrange for the repayment of the loan. It is important that you plan for the repayment of your loan. You will have the opportunity to estimate your monthly repayments as you progress through the online exit counseling session at StudentLoans.gov.
There are several repayment plans you can choose from and typically you will have between 10 and 25 years to repay your loan. To get an early look at which repayment plans you may be eligible for and see estimates for how much you would pay monthly and overall, you can use the Federal Student Aid Repayment Estimator. There is no prepayment penalty on any of the Direct Loan types. You can make payments, including interest-only payments, while in school. Making interest payments while in school will save you money in the long run.
Once you are no longer enrolled at least half-time in an eligible program, you will receive a 6-month grace period on your Direct Subsidized and Unsubsidized Loans during which you are not required to make loan payments. Your loan servicer will contact you regarding the repayment of your Direct Loan(s). Any information that LAU has regarding your Direct Loans will be reported to the National Student Loan Data System (NSLDS). The NSLDS provides a centralized, integrated view of Title IV loans and grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or grant data.
You must begin repayment at the end of your grace period. You should note that the 6 month grace period commences from the date of course completion as opposed to your graduation date. You must check with the US Department of Education for full details on the repayment of your loan.
If you default on your loan (fail to make repayments) and are delinquent for more than 270 days, a report is filed to all national credit bureaus which may result in potential garnishment of wages, inability to secure other forms of credit which include credit cards, mortgages or other loans. You will also remain ineligible for all other forms of financial aid in the U.S. It is important to note that defaulted loans are reported to the Internal Revenue Services and the US Department of Education may proceed with an action in order to recover defaulted loans.
If you have trouble making payments on your loans you should contact your loan servicer as soon as possible. You may be eligible for a deferment or forbearance. In a deferment or forbearance period, you will not be required to submit payments and there will be no penalties. A deferment is a temporary suspension of loan payments for specific situations such as re-enrollment in school, unemployment, or economic hardship. Forbearance is a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty. You can receive forbearance if you’re not eligible for a deferment. You should contact your loan servicer if you need more information on these options.
- You must notify the US Department of Education of any changes in your status including enrollment, graduation, changes to their address, telephone number and email.
- You must notify the Financial Aid and Scholarships Office of any change to your semester dates, permanent correspondence address, and telephone number.
- You must notify the US Department of Education if you fail to enroll at LAU.
- You must notify the Financial Aid and Scholarships Office if you withdraw your Federal Aid application before the start of the semester or withdraw/take leave of absence from LAU after enrollment.
- You must complete Exit Counselling once you graduate or withdraw from your course of study.
- You must maintain Satisfactory Academic Progress.