Welcome to Citizens Bank Deposits. This site is screen reader friendly.

Skip to content Skip to main navigation Skip to main sub navigation Skip to footer navigation

Federal Direct Loans

Undergraduate and graduate students should first maximize their Federal Direct Loan options before considering private loans.

At Citizens Bank, it’s our goal to keep you as informed as possible on all of the financial aid that’s available to you such as Federal Direct Loans, which are funds that you borrow directly from the U.S. Department of Education.

There are a couple of Federal Direct Loan options depending upon your borrowing status.

The Federal Direct Stafford Loan Program includes a low-interest loan option granted to eligible undergraduate or graduate students who are enrolled at least half-time. Students can choose between two types of Stafford loans:
- Subsidized: Available only to students that demonstrate financial need, which is calculated by subtracting your overall cost of attendance from your expected family contribution, with the federal government paying the accrued interest.
- Unsubsidized: Available to all students without regard to their economic need, but the student is responsible for paying all the interest.
The Federal PLUS program is for parents of dependent students who rely on their parents or legal guardians for financial support, and for graduate/professional students who are enrolled at least half-time as well.

To apply for a Direct Loan you first start by submitting your FAFSA. Check with your school’s financial aid office to see if they require additional paperwork.

Federal Direct Stafford Loan

Federal Direct PLUS Loan

FAQs

Federal Direct Stafford Loan

Fees	0% origination fee.¹
Interest Rates	Undergraduate Students: fixed interest rate of 4.50% for subsidized portion and 6.80% for unsubsidized portion.² Graduate Students: fixed interest rate of 6.80% for both subsidized and unsubsidized portions. 0.25% interest rate reduction for automatic payment deduction from any bank account.
Annual Borrowing Limits	Dependent Students 1st Year: $5,500 (subsidized: $3,500 and unsubsidized: $2,000) 2nd Year: $6,500 (subsidized: $4,500 and unsubsidized: $2,000) 3rd, 4th, & 5th Years: $7,500 (subsidized: $5,500 and unsubsidized: $2,000) Independent Students 1st Year: $9,500 (subsidized: $3,500 and unsubsidized: $6,000) 2nd Year: $10,500 (subsidized: $4,500 and unsubsidized: $6,000) 3rd, 4th, & 5th Years: $12,500 (subsidized: $5,500 and unsubsidized: $7,000) Graduate Students Up to $20,500 (subsidized: $8,500 and unsubsidized: $12,000)
Total Borrowing Limits	Dependent undergraduate students: $31,000 (subsidized: $23,000 and unsubsidized: $8,000) Independent undergraduate students: $57,500 (subsidized: $23,000 and unsubsidized: $34,500) Graduate/Professional Student: $138,500 (subsidized: $65,500 and unsubsidized: $73,000)
Repayment Options	Repayment is deferred until 6 months after the student graduates, drops below half-time status or withdraws from school. Borrowers can choose to make interest only payments while in school. Standard 10-year repayment is what you agree to upon signing your Master Promissory Note. It means one level payment to make monthly. Other repayment options include extended repayment, graduated repayment, income contingent repayment and income-based repayment.
Disbursement	Payable to the student and the school, sent directly to the school.
Eligibility Requirements	Have a high school diploma, GED or have passed a similar independent test approved by the Department of Education. Be a U.S. Citizen or eligible non-citizen. Be enrolled with the Selective Service (if you are male, aged 18-25). Be enrolled at least half-time as a regular student in an accredited institution. Not all students are eligible for the Subsidized Stafford Loan because its awarded on the basis of demonstrated financial need, which is calculated by subtracting your overall cost of attendance from your expected family contribution.
Cosigner Requirements	None
How to Apply	Start by filling out your FAFSA. Check with your school's financial aid office for specific details.

¹ Effective July 1, 2009 – June 30, 2010 a 0.50% origination fee is charged by the federal government On July 1, 2010 the origination fee will be 0% through June 30, 2011.

² The fixed rate for subsidized Direct Stafford Loans for undergraduate students is 4.50% for loans first disbursed July 1, 2009 through June 30, 2010. Beginning July 1, 2010 through June 30, 2011 the fixed rate for subsidized Direct Stafford Loans for undergraduate students will be 4.50%. Unsubsidized Direct Stafford Loans will remain at 6.80%. Subsidized Direct Stafford Loans are offered to students with a demonstrated financial need.

Federal Direct PLUS Loan

Fees	4.00% fees charged by the federal government.
Interest Rates	The fixed rate, set by the federal government, is 7.90%. 0.25% interest rate reduction for automatic payment deductions from any bank account.
Borrowing Limits	No annual limits; may borrow up to the cost of education less financial aid, as determined by the school.
Repayment Options	PLUS loan repayment begins 60 days after the loan is fully disbursed. Parents may defer payments while their dependent, undergraduate child is enrolled in school at least half-time. Graduate students may defer payments while enrolled in school at least half-time. Borrowers may be eligible for an extended repayment term of up to 25 years.
Disbursement	Payable to the school and borrower, sent directly to the school. Usually disbursed in two equal amounts, one at the beginning of each semester.
Eligibility Requirements	For parents of dependent undergraduate students, or graduate student borrowers. Borrowers of all income/asset levels are eligible. Approval is based on borrower's good credit standing alone. No debt-to-income ratio is calculated or proof of employment is needed.
How to Apply	Start by filling out your FAFSA. Check with your school's financial aid office for specific details.

All accounts are subject to individual credit approval.

FAQs about Federal Direct Loans

Why do you display FAFSA, scholarship and Federal loan information?

Have other questions about Federal Direct Stafford or PLUS Loans?
Contact your school’s Financial Aid Office or visit the Department of Education’s website.

Federal Direct Stafford Loan Questions

Federal Direct PLUS Loan Questions

Do I need to apply for a PLUS Loan each year that I’m in college?
How much can I borrow through the PLUS Loan program?
Can a PLUS Loan help pay for my books and my personal expenses while I’m at school?
When my child is finished with school, can I transfer a PLUS Loan to them?
What kind of credit is required for a PLUS Loan? When can I begin repaying a PLUS Loan?
Are there any penalties for paying a PLUS Loan off early?

Why do you display FAFSA, scholarship and Federal loan information?
At Charter One, it’s our goal to provide you with information on all of the financial aid that’s available to you (i.e. grants, scholarships, Federal Direct Loans and more) even though our bank doesn’t personally offer applications for enrollment. We offer this product information because we want to help you make the smartest financial decisions for your future.

How do I apply for a Federal Direct Stafford Loan?
The first step is to complete the Free Application for Federal Student Aid (FAFSA) but check with your school’s financial aid office to see if there is anything additional you need to complete. The FAFSA will enable your college to determine your eligibility for all types of federal aid, including the Federal Direct Stafford Loan.

Where can I get a FAFSA form to complete?
You can complete either a paper version of the FAFSA, or you can fill the form on-line at www.fafsa.ed.gov.

Do I have to fill out a new Master Promissory Note each year?
Usually, you do not have to complete a new MPN each year for your Federal Direct Loan. These forms are good for ten years. You may have to fill out a new form if you change schools.

Do I need to apply for a Direct Stafford Loan every year?
Yes. If you want to keep receiving Stafford loan funds, you need to apply each year that you’re in school. To reapply for the loan you must first renew your FAFSA, which determines your financial need, and allows your school to determine how much you’re able to receive. Check with your school’s financial aid office to see if there’s anything additional you need to complete.

How much can I borrow through the Federal Direct Stafford Loan program?
If you are a dependent student the maximum you can borrow under the Federal Direct Stafford Loan is $5,500 as a Freshman, $6,500 as a Sophomore, and $7,500 as a Junior and a Senior. If you are an independent student the maximums are $9,500 as a Freshman, $10,500 as a Sophomore, and $12,500 as a Junior and a Senior.

Can a Federal Direct Stafford loan help pay for my books and my personal expenses while I am at school?
Yes, the loan money you receive can only be used to pay for your education expenses at the school that is giving you the loan. Education expenses include school charges such as tuition, room and board, fees and indirect expenses such as books, supplies, equipment, dependent child care expenses, transportation and rental or purchase of a personal computer.

Are there Federal Direct Stafford Loan deadlines?
You can submit your FAFSA application after January 1st so we recommended submitting your application as close to or by this date, if possible. Schools generally mail award letters during the months of March and April, therefore, in order to be considered for Federal Aid you should complete your FAFSA as soon as possible after January 1 if you plan to attend college the following Fall semester.

What's the difference between unsubsidized and subsidized loans?
Subsidized Federal Direct Stafford Loans are awarded based on financial need, and the federal government pays the interest which accrues. Eligibility for unsubsidized Stafford Loans applies to students without regard to their economic need, but the student is responsible for paying all interest. These federal student loans are repaid over a period of between 10 and 25 years, and have a six-month repayment grace period after graduation

When do I receive the Federal Direct Stafford Loan funds?
The US Department of Education will make a disbursement directly to your school either quarterly or once a semester. If the loan amount disbursed exceeds the tuition cost a disbursement will be made directly to the student to cover indirect costs such a books, computers, lab fees & childcare.

Are there specific schools that accept Federal Direct Stafford Loans or PLUS Loans?
Most schools are eligible for Federal Direct Loans as long as the student is enrolled at least half-time. Be sure to check with your schools financial aid office on eligibility details.

Can I receive a Federal Direct Stafford or PLUS Loan if I have bad credit/declared bankruptcy/have late payments on credit cards?
A credit check will be done to qualify for a PLUS loan. Approval is based on the borrower’s good credit standing alone. No debt-to-income ratio is calculated or proof of employment is needed. The borrower must be considered creditworthy and be clear of any adverse credit history or bankruptcies. Credit is not required for a Federal Direct Stafford Loan.

How can I bridge the financial gap between the total cost of education (including room and board, fees, books) and the amount of financial aid I was awarded?
Charter One, like other responsible private lenders, encourages students and parents to first exhaust Federal Direct Loan options, grants and scholarships before looking into private loans from financial institutions. Still, for most students, these federal financial aid programs, however comprehensive they may seem, simply will not be enough to cover the total cost of their education. That's where private student loans, which are sometimes called alternative loans, come in. They help fill the gap, and cover such education-related expenses as: tuition, room and board, books, computers and other crucial technology, lab fees, student travel, and other education related expenses

What are the repayment options for a Federal Direct Stafford or PLUS Loans?
There are a number of options The Department offers for repayment on a loan. You can change your repayment plan at any time if your financial situation changes or you return to school.

Standard repayment - The student is required to pay a fixed amount each month until the loans are paid in full, with up to ten years to repay. Monthly payments must be at least $50.
Extended repayment - The borrower pays a fixed, annual or graduated repayment amount over a period not exceeding 25 years. The fixed monthly payment is lower than under the standard student loan repayment plan, but the total that is repaid is higher, due to the accumulation of interest over a longer period.
Graduated repayment - Payments can begin low—covering at least the interest that accrues between payments—and are ratcheted up every two years, during which time the student's income will presumably be increasing. Student loan repayment is accomplished in a period of up to ten years.
Income-based repayment- Monthly payments are capped at an amount intended to be affordable for families, based on their size and income.
Income Contingent Repayment (not available for parent PLUS loans) - This plan gives you the flexibility to meet your repayment obligations by making monthly payments calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans.

What are the penalties for early payment or if the loan is paid in full before scheduled (deferred) payments begin?
There are no penalties for making prepayments on a Direct Loan.

What are the Federal Direct Stafford and PLUS Loan cancellation polices?
Under certain circumstances a loan can be canceled. Conditions for canceling all or part of your loan may include Teacher Service, Public Service, school-related charges, disability, bankruptcy, or death, and consolidation.

Do I need a co-signer to apply for a Federal Direct Loan?
A cosigner is not required to apply for a Federal Direct Loan

What happens to my loan if I change my enrollment status by transferring schools or dropping out?
Once your enrollment status drops below half-time it will trigger the 6-month grace period prior to your loan repayment period. So dropping out of school or graduating will trigger this. A loan can not be transferred to a different school because student aid is institution-based. You will need to re-file the FAFSA and go through the loan process with your new school. You will still be responsible for repaying both loans.

What happens to my loan if I miss a payment?
Your account will first be flagged as “delinquent” and a notice of the late payment will be sent to you as a reminder. You will immediately be required to repay the entire unpaid amount. If you stop making payments there are serious consequences for default that could affect your credit standing and ability to borrow from any lender in the future, among other things.

Are there any tax advantages?
Many people are unaware that the federal government offers tax benefits for education-related expenses. Significant tax benefits may apply to taxpayers who are repaying student loans or currently paying for post-secondary education. Therefore, it is important to keep organized records to take advantage of these tax benefits. For more information visit www.irs.gov.

What is entrance and exit counseling? Do I need this?
Under federal law, schools must counsel borrowers upon entering school on the initial responsibilities of taking on a loan obligation. They also need to counsel them upon exiting, on the responsibilities when they graduate and when they need to begin repaying the loan. You should take advantage of these mandated student loan counseling sessions to learn the things that will help you handle these loans responsibly, which will in turn lay the foundation of your positive financial future.

Federal Direct PLUS Loan Questions

Do I need to apply for a PLUS Loan each year that I’m in college?
Yes, you must apply for a PLUS loan each year that you wish to borrow it.

How much can I borrow through the PLUS Loan program?
There are no annual limits. You may borrow up to the cost of your education less financial aid. The amount must be certified by the school.

Can a PLUS Loan help pay for my books and my personal expenses while I’m at school?
Yes. A PLUS Loan can be used to help pay for your indirect costs while you are enrolled in school.

When my child is finished with school, can I transfer a PLUS Loan to them?
No. PLUS Loans are not transferable to students. The parent is the borrower and therefore responsible for repaying the loan.

What kind of credit is required for a PLUS Loan?
PLUS Loans are based on good credit standing alone, no debt-to-income ratio is calculated or proof of employment is needed.

When must I begin repaying a PLUS Loan?
PLUS loan repayment begins 60 days after the loan is fully disbursed. Parents may defer payments while their dependent undergraduate child is in school at least half-time. Graduate students may defer payments while in school at least half-time.

Are there any penalties for paying a PLUS Loan off early?
There are no prepayment penalties.

Have student loan questions? Call our Student Services team.

1-800-721-3969

Student banking questions?

1-877-867-7283

Find a Local Branch
Over 1,480 branches close by.

Receive Email Updates