Direct Loans Program (DL)
The following information summarizes the terms of the Direct Loans Federal Stafford Loan Program (Unsubsidized) and the Direct Loan Federal Graduate PLUS Loan. Direct Loans is an entity of the U.S. Department of Education. Essentially, a medical student is eligible to receive a guaranteed amount of no more than $40,500 annually through the Federal Unsubsidized Stafford Loans and is able to utilize the Graduate PLUS Loan to meet any gaps in the financial aid budget not covered by any other resources (including the Federal Unsub Stafford Loans). A medical student who has never borrowed before and will be borrowing for the first time in medical school and borrows the maximum Federal Stafford Loans over the four years of medical school, can be guaranteed a total of $175,334. The maximum aggregate that a medical student can borrow lifetime in this program is $224,000.
DL Federal Stafford Loan Program
The DL Federal Stafford Loan is obtained through U.S. Department of Education. Eligibility is based on the student’s calculated financial aid budget.
Medical Students may borrow up to $40,500 annually through the Federal Unsubsidized Stafford Loan. Over the four years at IUSM, a student is capable of borrowing $175,334 ($40,500 each year plus a supplemental amount of $6,667 each of the summers preceeding the 3rd and 4th years). The maximum aggregate total that a medical student can borrow is $224,000. Some medical students may have borrowed as an undergraduate or graduate student prior to medical school that may limit the student’s borrowing to the maximum aggregate total. If this happens, the student can use the Grad PLUS Loan to meet any gaps in the Cost of Attendance.
The interest is fixed after determining on July 1 each year based on the 10-year U.S. Treasury Note plus 3.6%, capped at 9.5%. This interest rate is for the life of the loan(s) taken out during the period of July 1 – June 30. It is entirely possible that a student who borrows for the first time beginning July 1, 2013 will have different interest rates for each year in school until they graduate. DL Federal Stafford Loan repayment begins six months after graduation or when the student withdraws or ceases to attend school. Forbearance options may extend this non-repayment period further, if a medical student graduate qualifies. Non-payment extensions includes the Internship/Residency Forbearance while in an internship or residency. Deferments are available during a graduate fellowship.
The federal government does not pay the interest accruing during the student’s in-school status and during any applicable grace periods. The number of repayment months is determined by the repayment plan that you sign up for. The standard repayment plan is determine by the total amount borrowed, not to exceed 120 months or 10 years on a standard repayment schedule. Opting to use an income driven repayment plan, your monthly payment is determined by you income, family size, and state of residency. Income driven plans can be up to 25 years in repayment unless you opt to pursue the Public Service Loan Forgiveness (PSLF) OR pay more than is required. Consolidation is available for students who wish a longer time period to repay (see Loan Consolidation). There is no prepayment penalty at any time. Loans are forgiven in the event of death or total permanent disability.
Federal Origination Fee
Students are charged an origination fee of 1.057% on the DL Federal Unsubsidized Stafford Loans. This origination fee will be deducted from each disbursement by the federal government before the funds are released to the school or university. This fee applies to loans disbursed on or after 10/1/2020 and before 10/1/2021. The origination fee may change slightly each year.
Deferments: In-school deferments on repayment of principal and interest on Federal Stafford Loans are granted for unlimited periods when the student is enrolled in full-time or part-time study. Deferments mean that the student is eligible to postpone making any required payments for specified periods of time. In-school deferments are issued by Direct Loans by grabbing enrollment information from the National Student Loan Clearing House. Enrollment information is made available to the Clearing House by the school. This is done at the beginning of each enrollment period or semester, which eliminates borrowers having to complete an in-school deferment form.
Common Financial Aid Sources and Their Annual Maximums
|Direct Loan Unsubsidized Federal Stafford Loan Program||Beginning each July 1 Variable-Fixed Rate based on 10-year T-Bill plus 3.6% 1st year: $40,500 2nd year: $40,500 3rd year: $47,167 4th year: $47,167 Total: $175,334|
|Direct Loan Graduate PLUS Loan||Beginning each July 1, Variable-Fixed Rate based on 10-year T-Bill plus 4.6% 1st year: Fills in Budget Gaps 2nd year: Fills in Budget Gaps 3rd year: Fills in Budget Gaps 4th year: Fills in Budget Gaps Total: Depends on the need of the student|
|Federal Primary Care Loan||5% Interest Rate 1st year: Up to cost of attendance 2nd year: Up to cost of attendance 3rd year: Up to cost of attendance 4th year: Up to cost of attendance Total: Preference given the final two years of medical school.|
|Loans to Disadvantaged Students*||5% Interest Rate 1st year: If funding allows, will replace Grad PLUS eligibility 2nd year: If funding allows, will replace Grad PLUS eligibility 3rd year: If funding allows, will replace Grad PLUS eligibility 4th year: If funding allows, will replace Grad PLUS eligibility Total: Varies|
* Review of parental information is required. The Federal Primary Care Loan is awarded to third and fourth-year medical students with demonstrated financial need.
DL Federal Additional Unsubsidized Stafford Loan Program
Only medical students can borrow the DL Additional Federal Unsubsidized Stafford Loan of up to $20,000. This amount together with the $20,500 through the DL Federal Unsubsidized Stafford Loan gives a medical student the total of $40,500 annually they can borrow. The Cost of Attendance (COA) limits the student’s borrowing to the standard or adjusted COA. The terms of the DL Federal Additional Unsubsidized Stafford Loan are the same as the terms for DL Federal Unsubsidized Stafford Loans.
Interest Payments The federal government does not pay the interest on DL Federal Unsubsidized Stafford Loans, as it does with DL Federal Subsidized Stafford Loans. Students have the option to make payments on the interest that accrues on unsubsidized loans during the time they are enrolled in school, during the grace period, and during any periods of deferment or repayment.
If you have any questions about applying for the DL Federal Subsidized or Unsubsidized Stafford Loans, please contact MSA-SFS at 317 274-8568 or e-mail us email@example.com.
DL Federal Graduate PLUS Loan Program
The DL Federal Graduate PLUS Loan is the equivalent of a federal private loan. Beginning, July 1, 2013, the interest is fixed after determining on July 1 each year the interest based on the 10-year U.S. Treasury Note plus 4.6%, capped at 10.5%. This loan is also through the U.S. Department of Education. The amount is based on the Cost of Attendance minus other financial aid. There is no maximum aggregate limit like there is with the DL Federal Unsubsidized Stafford Loans.
Deferments on interest and principal are handled in the same manner as the DL Federal Unsubsidized Stafford Loan Program, and for unlimited periods where the student is enrolled at least half-time. (Repayment begins six months after graduation or separation from school.)
This loan is based on credit-readiness, which means the borrower must have a clean credit history to be approved for the loan. If the borrower has a negative mark on their credit history and is unable to get the situation corrected, the borrower is able to bring in an endorser to get approved for the loan, but the endorser must also be credit-ready. It is highly encouraged that borrowers view their credit history once a year to make sure there is nothing negative on them.
Federal Origination Fee
Students are charged an origination fee of 4.228% on the DL Federal Grad PLUS Loan. This origination fee will be deducted from each disbursement by the federal government before the funds are released to the school or university. This fee applies to loans disbursed on or after 10/1/2020 and before 10/1/2021. The origination fee may change slightly each year.
To view your credit report for free annually, go to Annual Credit Report webpage.
Requesting a Credit Report
The DL Federal Graduate PLUS Loan requires a credit report check before the Feederal Government will approve funding. Instead of waiting and being surprised, you should request a copy of your credit history report before entering the loan application process. It is common for people to receive reports that have errors or something long forgotten. Clearing up mistakes or improving your credit report could take months, so get a report early. Credit reports are free if you were denied insurance, credit or employment in the last 60 days due to bad credit: otherwise a nominal fee is charged. By law, you are eligible for one free credit report from each credit bureau. Several agencies prepare credit reports:
- Free Credit Report at http://www.annualcreditreport.com
- Experian (888) 397-3742; www.experian.com
- Equifax (800) 865-1111; www.equifax.com
- Transunion (800) 888-4213; www.transunion.com
Federal Loans to Disadvantaged Students
The purpose of the LDS program is to provide low-interest rate loans to eligible individuals from disadvantaged backgrounds that are enrolled full-time in good standing at an eligible health professions school.
An individual from a disadvantaged background is defined by the U.S. Department of Health and Human Services as someone who:
- Comes from an environment that has inhibited the individual from obtaining the knowledge, skill and abilities required to enroll in and graduate from a health professions school; or
- Comes from a family with an annual income below a level based on low-income guidelines according to family size published by the U.S. Bureau of the Census, adjusted annually for changes in the Consumer Price Index, and adjusted by the Secretary ofHealth and Human Services for use in health professions and nursing programs.
Eligible students must also be:
- A citizen, national or a lawful permanent resident of the United States or the District of Columbia, the Commonwealths ofPuerto Rico or the Marianas Islands, the Virgin Islands, Guam, the American Samoa, the Trust Territory of the Pacific Islands,the Republic of Palau, the Republic of the Marshall Islands and the Federated State of Micronesia.
Application: To apply for the LDS loan the student needs to complete the Free Application for Federal Student Aid. For consideration,the parental data must be included on the FAFSA regardless of dependency status. Students must also submit copies of both their and their parents Federal Tax returns. Application submission priority date: June 1st with July 1st deadline.
Amount: Varies. If funding allows, this will replace the Grad PLUS loan eligibility.
Interest rate: 5% fixed interest. Interest does not accrue while in school or during residency.
Federal Primary Care Loan Program
What is the Primary Care Loan Program?
The Primary Care Loan (PCL) program is a low cost federal loan program for medical students committed to primary health care practice. The interest rate is 5 percent and begins to accrue following a one year grace period after you cease to be a full-time student. When compared to other federal student loans and the grad PLUS loans, the PCL provides significant savings. The loan also offers deferment of principal and interest during residency training not found in other loan programs.
How much can I borrow?
Your financial aid office will determine how much you can borrow based on your eligibility, the amount of PCL funds available and other criteria. The maximum award is the cost of attendance (including tuition, educational expenses, and reasonable living expenses).
How Do I Qualify for a PCL?
- You must be enrolled as a full-time student in a degree program leading to a doctor of medicine or doctor of osteopathy.
- You must be a United States citizen or eligible non-citizen.
- You must provide financial information about your parents.
- You must demonstrate financial need.
- You must not owe a federal grant refund or be in default on any federal loan.
- You must maintain good academic standing.
- You must register with Selective Service if required by law.
Why must I provide financial information to obtain a PCL?
To assist schools in allocating limited PCL funds, the Department of Health and Human Services requires information from all students to determine financial need without regard to age, tax, marital or independent status.
Is there a service requirement for PCL?
- You must enter a residency training program in family medicine, internal medicine, pediatrics, combined medicine/pediatrics, preventive medicine, or osteopathic general practice.
- You must complete your residency program within four years of graduation.
- You must practice in primary health care until the loan is paid in full.
What are some examples of primary health care and non-primary care residency and practice activities for the PCL Program?
|PRIMARY HEALTH CARE: ACCEPTABLE||NON-PRIMARY HEALTH CARE: NON-ACCEPTABLE|
|Clinical Preventive Medicine||Cardiology|
|Public Policy Fellowship||Surgery|
|Senior Residencies in one of the above||Dermatology|
|Faculty administrators / policy makers certified in one of the primary health care discipline||Radiology|
|Adolescent Medicine||Emergency Medicine|
Are there exceptions to the primary health care service obligation?
YES, however, your loan repayment obligation remains.
- Your primary health care service obligation may be waived if you terminate studies before graduating and do not later resume studies.
- Your primary health care service obligation may be suspended for the period you are not enrolled because you have terminated studies before graduating; your obligation is resumed when you return to medical school to complete your studies.
What if I do not fulfill the primary care service obligation?
At the point you fail to fulfill your service obligation, the outstanding loan balance will be computed at an interest rate of 18 percent from the date of noncompliance, compounded annually retroactive to the first date of issuance.
What if I accept PCL and change my mind about primary health care?
If you are not firmly committed to the practice of primary health care, you should not accept a PCL.
What if I want additional certification?
You may obtain additional certification in primary health care while fulfilling your service obligation, as long as you complete your primary health care residency program within four years after graduation. For example, if your primary care residency is completed in three years after graduation, you may obtain certification in an area of training to enhance your primary health care practice (i.e., OB, geriatrics, sports medicine, palliative care) at anytime, and it will be considered an acceptable activity for fulfillment of your service obligation. However, you may not do additional training or obtain certification in any non-primary health care sub-specialty.
When does repayment begin and end?
- Repayment begins following a twelve-month grace period after you cease to be a full time student.
- Interest at 5 percent is computed on the unpaid principal balance and begins to accrue upon expiration of your grace period unless you are eligible to defer payment.
- Loans are repayable over a period of not less than ten years nor more than twenty five years, at the discretion of the institution.
May payment of my PCL be deferred?
- Up to four years in an eligible primary health care residency program.
- Up to three years as a volunteer under the Peace Corps Act practicing in an eligible primary health care activity.
- Up to three years as a member of a uniformed service. To be eligible for deferment, you must be on sustained full-time active duty practicing in an eligible primary health care activity in the Army, Navy, Air Force, Marine Corps, Coast Guard, National Oceanic and Atmospheric Administration Corps or the U.S. Public Health Service Commissioned Corps.
- For periods of advanced professional training in primary health care.
Is a PCL eligible for consolidation?
PCL is not eligible for consolidation because of the service obligation.
What happens to my PCL in the event of death or disability?
Your obligation to repay the loan will be canceled upon receipt of the required documentation in the event of your death or permanent and total disability.
How should I explore whether PCL is right for me?
- Talk to primary health care faculty.
- Talk to your financial aid office about eligibility and terms and conditions.
- Attend primary health care interest group meetings.
Example of Borrower Penalty: A borrower receives $10,000 under the PCL program. After graduating, the borrower enters a primary heath care residency program, which is completed. During the residency, repayment of the PCL was deferred. The borrower begins practicing primary health care and repaying the PCL. Interest on the loan begins accruing at the rate of 5 percent per year. After one year, the borrower decides to pursue a cardiology fellowship. The balance due on the PCL (the date the borrower ceases practicing primary health care), is $9,000. The interest on the $9,000 balance is recomputed at a rate of 18 percent per year, compounded annually. The PCL continues to accrue interest at the 18 percent rate, compounded annually, until it is paid in full. Repayment can be extended to 25 years upon request.
Other Aid Programs Through IUPUI-OSFAS
Child of Certain Veterans and Public Safety Officers Supplement Grant Program
The Child of a Disabled Veteran Program and Public Safety Officer Supplemental Grant Program (CVO) provides tuition and fee assistance for eligible children of disabled Indiana veterans, eligible children and spouses of certain members of the Indiana National Guard killed while service on state active duty, and eligible children and spouses of certain Indiana public safety officers killed in the line of duty. The grant pays 100% of undergraduate tuition and the General Fee (IUPUI) or Technology Fee (IUPUC) as a supplement to other state financial aid.
- Students seeking CVO benefits are required to file the Free Application for Federal Student Aid (FAFSA) for each aid year they wish to receive CVO. The March 10 FAFSA Priority Receipt Deadline does not apply to CVO eligibility determination.
- A completed and correct FFASA must be submitted at least 7 to 10 business days before you apply for a CVO grant. CVO grants apply tuition and regularly assessed fees at the undergraduate rate for up to 124 credit hours
- Students must not be in default or overpayment on a government loan or grant.
- Students must meet the residency requirements of the Indiana institution they are attending.
- The veteran must have, at some time, been a resident of Indiana for 36 consecutive months.
- Students must meet Satisfactory Academic Progress standards.
- Student should submit all documentation prior to the beginning of the semester of enrollment. Submission must occur during the semester for benefits to be awarded. Submission during the last three to four weeks of classes of a semester may be too late for an award to be processed.
- A break of attendance for two consecutive semesters requires the submission of a new original and certified application.
You can find more information about CVO grants at the Indiana Commission for Higher Education. If you’re interested in being considered for a CVO grant, submit your application and all necessary documentation to the Indiana Department of Veterans Affairs through ScholarTrack at least 30 days before the start of the semester in which you plan to enroll.