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Federal Direct Loans

Important Notice for First-Time Borrowers: First-time loan borrowers through the Federal Direct Loan program must complete entrance counseling and sign a Master Promissory Note to receive your money. These processes are required only one time and help borrowers better understand the responsibilities of having student loans. 

What is the Federal Direct Loan Program?

The Federal Direct Loan is not a grant awarded by Capital University. It is a loan and will require repayment. To apply for a Federal Direct Loan, you must complete the Free Application for Federal Student Aid (FAFSA). Even though the unsubsidized Federal Direct Loan is available to all students regardless of financial need, you must still submit the FAFSA to be eligible. You can receive a subsidized loan and an unsubsidized loan for the same period. For more information, see the Student Loan Fact Sheet.

The Federal Direct Loan Program provides low-interest loans to students to assist with educational expenses. It is federally guaranteed, which means you do not need to pass a credit check to obtain funding through this program. There are four minimum criteria that a student must meet to receive a Direct Loan:

  • You must be a US citizen or eligible non-citizen.
  • You must not be in a current default status on a previous federal education loan.
  • You cannot have exceeded your annual maximum for loans, including all loans you may have borrowed at another institution prior to coming to Capital. 
  • You must not have exceeded the aggregate Federal Direct Loan limit of $57,500 for an independent student or $31,000 for a dependent student.

Once your FAFSA has been filed and all requested documents are submitted, the Financial Aid Office will confirm that you meet these criteria and determine your eligibility. Your Financial Aid offer will provide details on the amounts and types of loans you are eligible to borrow.


  • Need-based
  • Fixed interest rate set on July 1 of each year by the U.S. Federal Department of Education.
  • No payments required while you are in school
  • Six-month grace period
  • Must be enrolled in at least six credit hours
  • This is a loan available to students with demonstrated need.
  • The federal government pays the interest on the loan while the student is enrolled at least half-time per term.
  • There is a 10 year repayment which begins 6 months after graduation or after the student is no longer enrolled at least half-time,
  • This type of loan is available to undergraduate students or those in our Education Licensure program.


  • Non-need-based 
  • Same interest rate as subsidized loan set on July 1 of each year by the U.S. Federal Department of Education.
  • Interest begins accruing at the time of each disbursement 
  • Interest does not need to be paid while you are in school 
  • Six-month grace period 
  • Must be enrolled in at least six credit hours 
  • This loan is not based on financial need, therefore, the federal government does not pay the interest while the student is in school.
  • The student has the option to pay the interest quarterly or let the interest accrue.
  • The unsubsidized Federal Direct loan may be used along with the subsidized Federal Direct loan to receive the maximum Federal Direct eligibility.
  • Independent students or students whose parents are ineligible to borrow under the Federal Direct Parent PLUS program may borrow additional unsubsidized Federal Direct loan funds during an academic year.
  • Repayment terms are the same as the Subsidized Federal Direct loan. 

Your financial aid offer will indicate the maximum loan amount available for the academic year. If you plan to attend in the summer term in addition to the fall and spring, the total loan amount would be divided between three terms. Please also note that any loans borrowed will be reported to the National Student Loan Data System (NSLDS), a secure federal website that houses all student aid information. This site may be accessed by authorized agencies, lenders and institutions.

Disbursement of Loan Funds

Capital University disburses all loan funds to our undergraduate students approximately seven days prior to the start of each semester. Funds can only be disbursed once the student has completed the two required steps indicated below. If we are unable to disburse the loan seven days before the term begins, we will disburse the funds as soon as the student has completed the Master Promissory Note and Entrance Counseling.

Actions Required to Receive Your Loan Money

New Capital students or first-time new borrowers at Capital MUST complete a promissory note and entrance counseling.

Direct Loan Exit Interview