Office of Admissions and Financial Aid >

Financial Aid

DIRECT LOAN

The Direct Loan is the primary loan source for most students.

Description

Federal student loan available to graduate/professional students

ELIMINATION OF SUBSIDY ON DIRECT LOAN

The Budget Control Act eliminates subsidized interest on Direct loans to graduate and professional students, after July 1, 2012.


Eligibility
Requirements
  • US citizen or permanent resident
  • Enrolled at least half-time in degree program
  • Not in default on prior education loan
Annual Loan Limits

MS1 $44,942

MS2 $47,167

MS3 $47,167

MS4 $40,500

Aggregate Loan Limits $224,000
Interest Rate
  • 6.21% fixed rate
  • Interest begins to accrue after first disbursement and may be paid quarterly while in school  or capitalized
Fees origination fee of 1.072%
Source U.S. Department of Education
Disbursement

Twice per loan period (once in the fall and once in the spring). All funds will be applied directly to your student account to cover any University charges.  If the amount of your loan disbursement exceeds your charges, you will be issued a refund (via Direct Deposit or paper check) for the difference which you can then use to cover your living expenses.

Repayment
 

6 months after graduation or withdrawal from the University with the option to capitalize accrued in-school interest (add it to the total amount borrowed) or to begin interest payments while in school

Standard Repayment

Payment amounts will generally be equal throughout the term of the loan which is 10-years. The Standard plan requires higher monthly payments, but results in lower interest costs. Standard Repayment is the plan that allows borrowers to pay education debt in the most aggressive least costly manner.

If you fail to notify your servicer otherwise, the Standard Repayment plan is the default plan for loan repayment.

Best Option For: Borrowers whose primary goal is to minimize the repayment time period and the total interest cost of their student loan debt.

Extended Repayment

The Extended Repayment plan allows you to stretch your current repayment term to up to 25 years (lowering the required monthly payment amount). The qualifications for Extended Repayment include:

• You must have an outstanding balance of principal and interest totaling more than $30,000 in either Federal Family Education Loans or Direct Loans
• All loans must have been issued on or after October 7, 1998

Before opting to extend your repayment term, consider the degree to which this option will negatively impact the overall interest cost of your debt.

Best Option For: Borrowers seeking to lower their monthly payment
(without consolidating).

Graduated Repayment

The Graduated Repayment plan allows you to begin with smaller monthly payments that will be scheduled to increase one or more times during your repayment term. Often, the amount of the required payment in this plan is equal to the amount of interest accruing each month, making it potentially an interest-only payment.

Though Graduated Repayment offers monthly payments that are initially lower than Standard Repayment, it may lead to higher interest costs over the life of the loan because the principal of the loan is not paid off as quickly.

Best Option For: Borrowers seeking temporary relief from high loan payments but expecting an increase in their income in the next few years.

Income-Contingent Repayment (ICR)

When you select Income-Sensitive (FFEL option) or Income-Contingent (DL option) as a repayment plan, you must provide documentation of your expected income – the monthly payment amount will be based on a percentage of the expected total gross monthly income received from all sources.

This plan must be reapplied for each year and income documentation will be required. If this plan does not meet your needs, Income-Based Repayment may offer additional flexibility with lower payment amounts.

Best Option For: Borrowers that have a lower income, or are experiencing a financial hardship, and need assistance making their monthly payment.

Income-Based Repayment (IBR)

This is the plan that many medical residents consider during residency because it offers several appealing features:

1. This plan often offers the lowest required monthly payment (comparatively)
2. There is a partial subsidy available on the subsidized loans
3. This plan is acceptable under Public Service Loan Forgiveness

The Income-Based Repayment (IBR) plan was designed specifically to help those experiencing “a partial financial hardship” (PFH), by capping the monthly payment at 15%of discretionary income (see the example below). Once you no longer demonstrate a PFH, the maximum required monthly payment amount under IBR may not exceed what the standard 10-year repayment amount is based on the loan balance at repayment or at the start of making www.aamc.org/FIRST
20 IBR payments. In other words, under IBR even when your income goes up, your required payment amount cannot be more than the Standard Repayment amount.

Under IBR, the monthly payment will be adjusted each year according to changes in your income and family size. IBR also offers a partial interest subsidy during the first 3 years. During this period, any accruing interest on your subsidized loans that is not covered by your scheduled monthly payment will be paid by the federal government. You may choose to remain in IBR for the maximum 25 years, at the end of which, any remaining federal loan balance will be discharged/forgiven – though, after 25-years in IBR, it is most likely that a physician will have already repaid their student loans in full. For more information, visit www.IBRinfo.org.

Best Option For: Borrowers who need a lower monthly payment. This option works well for residents, those pursuing careers in public service or anyone that has a lower income and needs assistance in making their monthly payments.

Recommended
Deadline
June 15 or as soon after notification from the SFS Loan Office in order to receive credit on the fall bill.

Preliminary Steps For Entering Students

Step 1: Create a Penn Key and Password

Step 2: Set up Direct Deposit

Refer to the directions on the Orientation Tab of the Accepted student website for instructions.

 

DIRECT Loan Process For FIRST TIME BORROWERS

Step 1: Submit 2014-15 FAFSA (Free Application for Federal Student Aid) Perelman School code is 003378

Step 2: The Student Loan Office will notify you of your maximum Direct loan eligibility for the academic year via e-mail. This notification will instruct you to complete a Master Promissory Note (MPN). Follow the instructions to complete the Direct Loan process. A Direct Loan Master Promissory Note is valid for 10 years. If you have already signed a MPN for a Direct Loan as an undergraduate student you do not need to file an additional MPN at this time.

The loan office will automatically process your loan for the maximum eligible amount. Students may reduce the loan amount by logging onto the Penn Loan System or contacting our office.

If you have received scholarship or loan funds from the school, review your loan eligibility to make certain that your loan eligibility reflects the receipt of these funds.

Step 3: Federal law requires that you complete an Entrance Counseling session prior to loan disbursement. You may complete this requirement online after your file your MPN.

All financial aid (scholarship and loan) cannot exceed the student budget.

 

Direct Loan Process for continuing Borrowers

Step 1: Submit 2014-15 FAFSA (Free Application for Federal Student Aid) Perelman School code is 003378

A Renewal Free Application for Federal Student Aid (FAFSA) is designed for students who applied for aid the previous year.

To access your Renewal FAFSA data, you will also need your Federal Student Aid PIN. If you have previously received a PIN but have lost or forgotten it, Request a Duplicate PIN. You will receive an e-mail notification with a link to your duplicate PIN within 4 hours.

If you do not have a PIN, select this link to fill out an original FAFSA on the Web application.

The loan office will automatically process your loan for the maximum eligible amount. Students may reduce the loan amount by logging onto the Penn Loan System or contacting our office.

Page Updated: 03-Jun-2014