Limits, Cancellation and Repaying U.S. Federal Loans

The maximum amount a student may borrow each academic year through the Federal Direct Loan Program depends on the student's grade level, dependency status, enrollment status, and eligibility under federal regulations.

Dependent Undergraduate Students

Independent Undergraduate Students

*Eligibility for Direct Subsidized Loans is based on financial need as determined under federal student aid regulations.

Aggregate Loan Limits

Students may not exceed the applicable annual or aggregate federal loan limits. Actual loan eligibility may be reduced based on Cost of Attendance (COA), other financial assistance received, enrollment status, and federal eligibility requirements.

Federal Direct Loan Limits for Graduate Students

Eligible graduate students may borrow up to $20,500 per academic year through the Federal Direct Unsubsidized Loan Program, subject to federal annual and aggregate loan limits. Students are not required to borrow the maximum amount offered and may choose to accept all, part, or none of their eligible loan funding. Graduate students who require additional funding beyond their Direct Unsubsidized Loan eligibility may apply for a Federal Direct Graduate PLUS Loan. Graduate PLUS Loans require a credit check by the U.S. Department of Education. Eligible graduate and professional students may borrow up to the Cost of Attendance (COA) minus all other financial assistance received during the academic year.

Aggregate Loan Limit

Graduate and professional students may borrow up to a combined aggregate limit of $138,500 in Federal Direct Loans, including any federal loans borrowed as an undergraduate student. No more than $65,500 of this amount may be in Direct Subsidized Loans. Actual loan eligibility may be reduced based on Cost of Attendance (COA), other financial assistance received, enrollment status, and federal eligibility requirements.

Prorated Annual Loan Limits

Federal regulations require annual Direct Loan limits (Subsidized and Unsubsidized) to be prorated for undergraduate students when:

• The student's program is shorter than an academic year; or
• The student's remaining period of study is less than an academic year.

For example, a student graduating at the end of the fall semester may be eligible to borrow only a portion of the annual loan limit for their grade level. Students enrolled at least half-time remain eligible for Federal Direct Loans.

Note: Prorated annual loan limits apply only to undergraduate Direct Subsidized and Direct Unsubsidized Loans. They do not apply to Parent PLUS Loans, Graduate PLUS Loans, or graduate students receiving Direct Unsubsidized Loans.

Students have the right to cancel all or a portion of a Federal Direct Loan disbursement. A borrower may request cancellation of all or part of a loan disbursement by notifying the Financial Aid Office. Requests must be made within 120 days of the date the loan funds were disbursed. If a loan disbursement is canceled within the 120-day period, the borrower will not be responsible for any loan fees or interest associated with the canceled amount. Students should be aware that canceling all or part of a loan disbursement may result in a balance due on their student account. Any outstanding balance owed to the University will become the student's responsibility.Students who wish to cancel a loan disbursement should contact the Financial Aid Office for assistance.

Before your federal loan funds are disbursed, you may cancel all or a portion of your Federal Direct Loan by notifying the Financial Aid Office in writing via email.Your cancellation request must include:

• Full Name
• AUC Student ID Number
• Type of Loan (Direct Subsidized Loan, Direct Unsubsidized Loan, Direct Graduate PLUS Loan, or Direct Parent PLUS Loan)
• Semester (Fall or Spring)
• Amount to Be Canceled

The Financial Aid Office will process your request and provide confirmation once the cancellation has been completed. Students should be aware that reducing or canceling a loan may result in an outstanding balance on their student account, which will become the student's responsibility.

You may cancel all or a portion of your Federal Direct Loan if you notify the Financial Aid Office in writing within 14 days of receiving notification that your loan funds have been credited to your student account, or before the first day of classes, whichever occurs later.

If a cancellation request is received within this period:

• No interest will be charged on the canceled loan amount.
• Any applicable loan fees will be returned.
• The canceled loan funds will be returned to the U.S. Department of Education.

Cancellation requests must be submitted in writing by the student to the Financial Aid Office. Students should be aware that canceling all or part of a loan disbursement may result in an outstanding balance on their student account, which will become the student's responsibility.

You may cancel all or a portion of your Federal Direct Loan by returning the funds within 120 days of the loan disbursement date. The disbursement date is the date the loan funds were applied to your AUC student account. Borrowers who wish to return loan funds after the 14-day cancellation period should contact either the Financial Aid Office or their federal loan servicer for guidance regarding available options and repayment procedures.If you return all or part of a loan within 120 days of the disbursement date:

• No interest will be charged on the amount returned.
• Any applicable loan fees associated with the returned amount will be canceled.
• The returned amount will be treated as though it had never been borrowed.

Students are encouraged to contact the Financial Aid Office before returning funds to ensure that the return is processed correctly and that they understand any impact on their student account balance.

If more than 120 days have passed since the loan disbursement date, you may no longer cancel the loan disbursement. However, you may make a payment directly to your federal loan servicer at any time to reduce or repay your outstanding loan balance. Unlike loan cancellations or returns completed within the 120-day period, payments made after 120 days will not reverse loan origination fees, and interest that has accrued on the loan remains the borrower's responsibility. Students who wish to make a payment should contact their federal loan servicer for information regarding payment options and procedures.

Students may request cancellation of all or a portion of a future Federal Direct Loan disbursement by submitting a written request to the Financial Aid Office. To ensure that a scheduled disbursement can be canceled before funds are released, requests should be submitted no later than 10 days before the start of the semester for which the loan is scheduled to be disbursed.

The written request should include:

• Full Name
• AUC Student ID Number
• Type of Loan (Direct Subsidized Loan, Direct Unsubsidized Loan, Direct Graduate PLUS Loan, or Direct Parent PLUS Loan)
• Semester (Fall or Spring)
• Amount to Be Canceled

If the loan funds have already been disbursed, students must follow the applicable loan cancellation or loan return procedures  Students should be aware that canceling a future disbursement may result in an outstanding balance on their student account, which will become the student's responsibility.

After you graduate, withdraw from the University, or drop below half-time enrollment, you will be required to begin repaying your federal student loans according to the terms of your loan program.Before leaving AUC or dropping below half-time enrollment, all federal student loan borrowers are required to complete Exit Counseling through the U.S. Department of Education. Exit Counseling provides important information regarding repayment responsibilities, repayment plans, deferment options, and borrower rights and responsibilities.

Federal Direct Subsidized and Unsubsidized Loans

Students who receive Federal Direct Subsidized Loans or Federal Direct Unsubsidized Loans are entitled to a six-month grace period after they graduate, withdraw, or drop below half-time enrollment. During the grace period, borrowers are not required to make principal payments. For Direct Unsubsidized Loans, interest accrues during the grace period. Borrowers may choose to pay the interest as it accrues or allow it to be capitalized and added to the principal balance of the loan.

Federal Direct PLUS Loans

Graduate PLUS Loan borrowers may defer repayment while enrolled at least half-time and for an additional six months after they cease to be enrolled at least half-time.

Parent PLUS Loan borrowers may request a deferment while the student on whose behalf the loan was borrowed remains enrolled at least half-time and for an additional six months after the student graduates, withdraws, or drops below half-time enrollment.

If a deferment is not requested, repayment on a Direct PLUS Loan generally begins once the loan has been fully disbursed, with the first payment due shortly thereafter as determined by the loan servicer. Interest accrues on Direct PLUS Loans during all periods of deferment. Borrowers may choose to pay the interest as it accrues or allow it to be capitalized.

The U.S. Department of Education contracts with several loan servicers to manage federal student loans. After your loan is disbursed, your assigned loan servicer will help you manage repayment and will notify you when repayment begins. It is important to make your loan payments on time and according to your repayment schedule. Failure to make payments may result in delinquency or default, which can have serious financial consequences. If you experience difficulty making your loan payments, contact your loan servicer immediately. Your servicer can explain available options and help you identify solutions that may allow you to remain in good standing. Depending on your circumstances, you may be eligible for:

• • Deferment and Forbearance
  • Loan Forgiveness
  • Loan Consolidation
  • Alternative Repayment Plans

Federal student loan borrowers may choose from several repayment plans. Each repayment plan has different monthly payment amounts, repayment periods, and total repayment costs. Borrowers may change repayment plans if their financial circumstances change. Your loan servicer can help you determine which repayment option best meets your needs.

You can view information about your federal student loans, including loan balances, disbursement amounts, loan servicer contact information, and repayment status by logging into your Federal Student Aid account at StudentAid.gov using your FSA ID. Students are encouraged to regularly review their federal student loan information and keep their contact information up to date with both the U.S. Department of Education and their loan servicer.

Federal regulations require all Federal Direct Loan borrowers who graduate, withdraw from the University, or drop below half-time enrollment to complete Exit Counseling. Exit Counseling helps borrowers understand their rights and responsibilities and prepares them for repayment of their federal student loans. The counseling session provides important information about:

• Repayment responsibilities and timelines
• Estimated monthly loan payments
• Available repayment plan options
• Loan consolidation opportunities
• Deferment and forbearance options
• Consequences of delinquency and default
• Loan forgiveness, cancellation, and discharge programs
• Strategies for successful loan repayment

The Exit Counseling tool also provides a summary of your federal student loan borrowing and an estimate of your monthly payment under various repayment plans.

Students must complete Exit Counseling online at StudentAid.gov using their FSA ID (username and password). Students can review their federal student loan history, loan balances, servicer information, and repayment status by logging into StudentAid.gov.

Private Education Loans: Students who have borrowed private education loans should contact their lender or loan servicer directly regarding repayment terms, repayment schedules, and borrower responsibilities.

If you stop making payments on your federal student loans, your loan will become delinquent. Delinquency occurs when a scheduled loan payment is missed. If you remain delinquent for 270 days (approximately nine months), your Federal Direct Loan will generally enter default. Default means that you have failed to repay your loan according to the terms of the Master Promissory Note (MPN), the legally binding agreement you signed when you borrowed the loan. The consequences of default can be severe and may include:

• Damage to your credit history and credit score.
• Loss of eligibility for additional federal student aid.
• Collection costs added to your loan balance.
• Withholding of federal and state tax refunds.
• Wage garnishment.
• Legal action by the federal government.
• Difficulty obtaining future credit, housing, or employment opportunities.

If you are having difficulty making your loan payments, contact your loan servicer immediately. Your servicer can help you explore options such as alternative repayment plans, deferment, forbearance, loan consolidation, or other programs that may help you avoid default. 

For additional information about the consequences of default, visit StudentAid.gov.

If your federal student loan is in default, do not ignore the situation. Contact your loan holder, loan servicer, or collection agency as soon as possible to discuss your options. Explain your financial circumstances and ask about programs that may help you resolve the default and return your loans to good standing.

Options may include:

• Loan Rehabilitation
• Direct Loan Consolidation
• Repayment in Full
• Other repayment arrangements offered by the U.S. Department of Education

It is important to remain in regular communication with your loan holder, servicer, or collection agency and respond promptly to any requests for information. Students can identify their loan servicer and review their federal loan information by logging into their Federal Student Aid account at StudentAid.gov.

Additional information about resolving a defaulted federal student loan is available at Getting Out of Default on StudentAid.gov.

A federal student loan becomes delinquent on the first day after a scheduled payment is missed. If a borrower fails to make payments for an extended period, the delinquency will continue to increase. For most Federal Direct Loans, a loan enters default when the borrower becomes 270 days delinquent in making required payments. If you are experiencing difficulty making your loan payments, contact your loan servicer immediately. Your servicer can explain available options that may help you avoid default, including:

• Alternative repayment plans
• Deferment
• Forbearance
• Loan consolidation, if eligible

Taking action early can help protect your credit and prevent the serious consequences associated with loan default.

A deferment is a temporary postponement of federal student loan payments granted under specific circumstances established by federal regulations. During a deferment, repayment of the principal balance is temporarily delayed. For Direct Subsidized Loans, the U.S. Department of Education generally pays the interest that accrues during eligible deferment periods. For Direct Unsubsidized Loans and Direct PLUS Loans, interest continues to accrue during deferment. Borrowers who can afford to do so may wish to pay the interest that accrues during deferment to avoid capitalization and additional repayment costs.

Common types of deferment include:

• In-School Deferment (for students enrolled at least half-time)
• Graduate Fellowship Deferment
• Rehabilitation Training Program Deferment
• Unemployment Deferment
• Economic Hardship Deferment
• Military Service and Post-Active Duty Student Deferment

Eligibility requirements and deferment periods vary depending on the type of deferment requested and the borrower's circumstances. Students and borrowers should contact their loan servicer for information regarding deferment eligibility and application procedures.

If you are unable to make your scheduled federal student loan payments and do not qualify for a deferment, your loan servicer may be able to grant a forbearance. Forbearance is a temporary period during which your loan payments are reduced or postponed. In most cases, a forbearance may be granted for up to 12 months at a time. During a forbearance, interest continues to accrue on all federal student loans, including: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans. If you do not pay the interest as it accrues, the unpaid interest may be capitalized and added to your principal loan balance, increasing the total amount you repay over the life of the loan.

There are two types of forbearance:

• Discretionary Forbearance – Granted at the discretion of your loan servicer based on your financial circumstances or other qualifying situations.
• Mandatory Forbearance – Required by federal law when a borrower meets specific eligibility criteria established by federal regulations.

Students and borrowers should contact their loan servicer to discuss eligibility requirements and application procedures for forbearance.