Limits, Cancellation and Repaying
Last updated on June 28, 2020
The maximum amount you can borrow each year in Direct Subsidized and Unsubsidized Loans depends on your grade level and on whether you are a dependent student or an independent student. The following table shows the maximum amount of money you may borrow each academic year in Direct Subsidized and Unsubsidized Loans as well as the total or aggregate amount you may borrow:
Direct Stafford Loan Limits (Subsidized and Unsubsidized)
$5,500 (maximum $3,500 may be subsidized)3
$9,500 (maximum $3,500 may be subsidized loans)
$20,500 Unsubsidized Only
$6,500 (maximum $4,500 may be subsidized)
$10,500 (maximum $4,500 may be subsidized)
3rd- and 4th-year
$7,500 (maximum $5,500 may be subsidized)
$12,500 (maximum $5,500 may be subsidized)
$31,000 (maximum $23,000 may be subsidized)
$57,500 (maximum $23,000 may be subsidized)
$138,5005 (maximum $65,500 may be subsidized)
1Except those whose parents are unable to borrow a PLUS loan.
2These limits also apply to dependent students whose parents are unable to borrow a PLUS loan.
3The numbers in parentheses represent the maximum amount that may be subsidized.
4Graduate and professional students are not eligible to receive Direct Subsidized Loans for loan periods beginning on or after July 1, 2012.
5The aggregate amounts for graduate students include loans for undergraduate study.
The actual loan amount you are eligible to receive for an academic year is determined by the school and may be less than the maximum annual amounts shown in the chart above. With a Direct PLUS Loan, a graduate/professional student or the parent of a dependent student can borrow up to the cost of the student's attendance minus other financial aid the student receives.
Prorated Annual Loans Limits
Annual loan limits for Direct Loans (subsidized and unsubsidized) are prorated (adjusted) for the undergraduate students who are enrolled in programs that are:
- Shorter than one academic year (fall-only, spring-only, or summer-only); or
- Remaining period of study is shorter than one academic year
- For example, if you are an undergraduate student in a 4 year Bachelor’s degree program graduating at the end of the fall semester (which is a halfway through the academic year), you are eligible to borrow half of the annual loan limit for your grade level-senior. Loans will be prorated based on the number of credits for which you are enrolled. This means that you may not be eligible to receive your maximum annual loan limit.
Half time students are eligible for the same annual loan limits as full time students.
Note: The prorated annual loans limit regulation does not affect Parent Plus loan limits. It does not apply to Graduate students.
How to cancel a Federal Direct Loan?
Students have the right to cancel all or part of your federal loan disbursement for each semester within 120 days of disbursement. Please be advised that cancelling your loan disbursement could cause a balance to be due on your student account which you will be responsible for paying.
Loan cancellation before disbursement:
Before your loan money is disbursed, you may cancel all or part of your loan at any time by notifying the Financial Aid Office in writing via email. The request for the return of federal Stafford loans must include:
- Full name
- AUC student ID
- Type of loan to cancel (subsidized, unsubsidized, Graduate Plus/Parent Plus)
- Term (spring/fall semester)
- The loan amount
Cancellation request received within the 14-day period or before the first day of classes, whichever occurs last:
You may cancel all or part of your loan if you notify the Financial Aid and Student Accounts Office within 14 days from the date you receive official notification that loan funds have credited to your student account, or before the first day of classes, whichever occurs last.
No interest will be charged and loan fees will be returned to the loan holder. AUC must receive the cancellation request in writing from the student.
Cancellation request after the 14-day period but within 120 days of disbursement:
- You may cancel all or part of your loan by returning the funds yourself to the U.S. Department of Education within 120 days of the loan disbursement date. The disbursement date is the date the funds were applied to your AUC student account. Contact the Direct Loan Servicing Center for guidance on how and where to return your loan money.
- You do not have to pay interest or the loan fee on the part of your loan(s) that you return within these time frames.
- AUC is not required to cancel all or part of your loans within the required timeframe. However AUC FA office may do so as per your request.
Repayment AFTER the designated time period - more than 120 days after disbursement:
- You cannot cancel your loan disbursement if the designated time period described above has already passed (More than 120 days after disbursement). Instead, you can make a payment. The student will be responsible for any interest that may have accrued and/or any loan fees.
Cancelling future loan disbursements:
- You (the student) must submit in writing the request to cancel future loan disbursements by contacting the Financial Aid Office prior to 10 days before the start of classes for the next semester(s).
- Once the loan has been disbursed for the next semester(s), then you must follow the procedures described above.
After you graduate, leave school, or even drop from AUC below half-time enrollment, you have a period of time before you have to begin repayment. Grace periods vary depending on loan type. You should also immediately submit an online Exit Counseling
Federal Stafford Direct Loan Borrowers - Subsidized and Unsubsidized
After you graduate, leave school, or drop below half-time enrollment you will have six (6) months before you have to begin repayment. During that period you don't have to pay any principal. If you have an unsubsidized loan then you will be charged interest during the grace period, however, you can either pay the interest or it will be capitalized.
Direct PLUS Borrowers
The repayment period for a Direct PLUS Loan begins at the time the PLUS loan is fully disbursed, and the first payment is due within 60 days after the final disbursement. However, a graduate student PLUS Loan borrower can defer repayment while the borrower is enrolled at least half-time, and, for PLUS loans first disbursed on or after July 1, 2008, for an additional six months after the borrower is no longer enrolled at least half-time.
Managing Your Loans
Your Loan Servicer
The US Department of Education contracts with several companies to act as loans servicers. Your loan servicer will provide information about repayment and will notify you of the date the loan repayment begins. It is very important that you make your full loan payment on time either monthly (which is usually when you'll pay) or according to your repayment schedule. If you don't, you could end up in default, which has serious consequences. Your servicer will help you make any changes to your payment plans. It is important that you always contact your servicer if you ever have trouble keeping up with your loan payments. You will work together to find a solution so that your loan stays in good standing, even if you need to stop making payments.
If you can’t afford to make payments you may be eligible for:
You may always choose from different Repayment Plans that is right for you! Each plan has different monthly payment amounts, total repayment amount, and total time to repay. You can also change from one plan to another in order to make your payments affordable. Talk to your servicer about different repayment plans or all the options that are available to you!
The U.S. Department of Education's National Student Loan Data Systems (NSLDSSM) provides information on your federal loans including loan types, disbursed amounts, outstanding principal and interest, and the total amount of all your loans. To find contact information for the loans servicer please access NSLDS, go to www.nslds.ed.gov.
For more information and resources about Repayment of Loans please access this Guide
A student Direct Loan borrower who is graduating, leaving school or dropping below half time enrollment is required to complete exit counseling. The Direct Loan Exit Counseling provides you with information on how to manage your student loan repayment, including your rights and responsibilities as a borrower. The counseling tool also gives you a snapshot of how much you have borrowed and an estimate of your monthly payment amount for different payment plans.
The NSLDS includes Stafford (Direct), Parent PLUS, and Grad PLUS loans information on how much you owe and who your lenders and servicers are.
Loan counseling (also known as "Exit Interview") provides information on what to expect as you begin repaying your loans as follows:
- Reinforce the importance of repayment.
- Describe the consequences of default.
- Stress that repayment is required regardless of educational outcome and subsequently employability.
- Provide an average anticipated amount, based on borrower's indebtedness or for average debt of Direct Loan borrowers at school or in same program.
- Review repayment options (standard repayment, extended, graduated, income sensitive/contingent) and consolidation. Discuss debt management strategies that would facilitate repayment.
- Review forbearance, deferment, and cancellation options and procedures.
- Inform the student about availability of loan information through NSLDS website and the availability of the FSA Student Loan Ombudsman's Office.
- Collect the driver's license number and state of issuance, expected permanent address, address of next of kin, and name and address of employer (if known), and update any changes to student's personal information (name, so security number, etc.).
- Provide student with contact information for lender(s) and reinforce the importance of communicating change of status, etc., with the lender.
- Discuss debt management strategies and tax benefits.
For private loans, refer to your loan applications to find your lender or servicer.
Frequently Asked Questions
What if I don’t pay back my loans?
- If you stop paying your student loans your loan becomes delinquent and eventually go into default. To default means you failed to make your payments on your student loan as scheduled according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. Default occurs when you become 270 days delinquent in making a payment on your loan(s). When a loan becomes 360 days delinquent the consequences are serious (damaged credit rating, loss of eligibility for further federal student aid, withholding your wages and tax refunds, and legal actions; such as lawsuits and wage garnishment being taken against you). Read more about the consequences of default here
I have defaulted- what should I do?
- Contact the agency that is billing you and as them to work with you. Explain the situation fully. Ask what options are available to get out of default. Find out what they are here. Stay in constant touch with your lender (loan servicer) or the collection agency.
What does loan delinquency mean?
- A delinquency period begins on the first day after you miss a payment. If the delinquency goes on for nine months your loan holder will declare you in default. If borrower’s account have become delinquent and the borrower is unable to make payments, deferments or forbearances should be considered to avoid being in default.
What is a deferment?
- A deferment is a period during which repayment of the principal and interest of your loan is temporarily delayed. A temporary suspension of a borrower’s monthly loan payment. Interest doesn't accrue on subsidized federal loans during deferment period. Interest does occur on your unsubsidized loans. If you can afford it, you should consider paying the interest while you are in a deferment.
You can get the following deferments for most loans:
- In-school deferments for at least half-time study;
- Graduate fellowship deferments;
- Rehabilitation training program deferment;
- Unemployment deferment not to exceed three years;
- Economic hardship deferment, granted one year at a time for a maximum of three years; and
- Military deferment.
What is forbearance?
- If you can't make your scheduled loan payments, but don't qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans).
There are two types of forbearances:
Where to send my check?
- You can always mail your payment on your loans to the Department of Education. Make sure you include your Social Security number visible on the front of your check.
US Department of Education
Direct Loan Payment Center
P.O Box 530260
Atlanta, GA 30353-0260