Federal Direct Loan Program

Demonstrated Financial Need
Sources of financial aid can include both need-based financial aid and non-need based aid. Need-based aid may be awarded up to a student’s demonstrated financial need which is the student’s cost of attendance (COA) minus their estimated family contribution (EFC). Need-based aid may consist of both institutional and federal sources of financial aid. Some financial aid award types such as the federal Pell grant, work study, and direct subsidized loans are need based. Others are not which means you can receive them even if you do not have financial need. 

Federal Loans

Loans are borrowed funds that must be repaid with interest. You are automatically considered for federal direct subsidized and unsubsidized loan funds by completing your FAFSA.

William D. Ford Federal Direct Loan Program:
Prescott College participates exclusively in the William D. Ford Federal Direct Loan program in which borrowers obtain Federal Direct, Parent PLUS and GradPLUS loan funds directly from the US Department of Education rather than from private lenders. We believe that the Direct Loan program offers our students and parents a more stable, streamlined, and predictable borrowing experience.

Federal Direct:
Federal Direct loans are the most common source of student loan funds made available to students seeking a degree or certificate. Federal Direct Loans must be repaid with interest. Federal Direct Loans offer deferments of principal payments while a student is in school and allow a six-month grace period after leaving school, before repayment begins. Depending on a student's need as calculated by U.S Department of Education, a Federal Direct Loan may be offered as a subsidized or unsubsidized loan, or as a combination of the two.

Subsidized Federal Direct loans are need-based. With a Subsidized Federal Direct Loan the Department of Education will pay the interest while the student is in school and during the grace and deferment periods. The fixed interest rate for Undergraduate loans first disbursed on or after 7/1/2017 and before 7/1/2018 is 4.45%.

All qualified students, regardless of their income or assets, may take out Unsubsidized Federal Direct loans. Students must meet all of the same requirements as those for Subsidized loans, except they do not need to demonstrate financial need. With an Unsubsidized Federal Direct Loan the student is responsible for interest that accrues throughout the life of the loan. A student may elect to defer interest payments while in school; however, this interest will be added to the principal balance of the loan upon repayment. Therefore, we strongly recommend students pay interest on a monthly or quarterly basis to keep their loan debt under control. The fixed interest rate for Undergraduate unsubsidized loans first disbursed on or after 7/1/2017 and before 7/1/2018 is 4.45%.  The fixed interest rate for Graduate or Professional student unsubsidized loans first disbursed on or after 7/1/2017 and before 7/1/2018 is 6%.

Federal PLUS:
Federal PLUS loans are available to either parents of undergraduate dependent students or to graduate or professional students.  Students must be enrolled at least half time (minimum 6 credits per term) to receive a Federal PLUS loan.  Borrowers must pass a credit check and may borrow the full "cost of attendance" for the student minus other forms of financial aid received.  The cost of attendance is the average cost for students in each program for direct costs such as tuition, fees, and on-campus housing, as well as indirect costs such as books and supplies, transportation, and room and board. Apply at studentloans.gov.

Parent PLUS:
The Parent PLUS Loan has a fixed interest rate of 7% for all loans disbursed on or after July 1, 2017 and before July 1, 2018. Interest will begin to accrue with the first disbursement to the school. Repayment of principal and interest will begin sixty days after the loan funds are fully disbursed to the school, however, parents may opt to defer repaying both principal and interest on a Parent PLUS loan while their student is enrolled at least half-time and for an additional six months after the student graduates, leaves school, or drops below half time. Apply at studentloans.gov.

Graduate PLUS:
Graduate PLUS loans have a fixed interest rate of 7% for loans first disbursed after July 1, 2017 and before July 1, 2018. Students may apply for deferments while enrolled at least half-time. Apply at studentloans.gov.



Other Important Information Regarding Borrowing

Students should first complete the FAFSA so that eligibility for the federal loan programs (Federal Direct, Parent PLUS and Graduate PLUS) can be determined before considering a private educational loan. Students who apply for a private loan prior to having federal loan eligibility determined will be asked to complete a FAFSA.

Students should only borrow what they need and should carefully scrutinize whether they should borrow the full amount of what was offered in their award letter.

Prescott College partners with various organizations in an effort to best serve our students’ needs with respect to student borrowing. These organizations include lenders who offer private educational loans. In establishing and maintaining these relationships, faculty and staff should always be cognizant of what is in the best interest of our students. In this regard, faculty and staff are expected to maintain a commitment to exemplary standards of professional conduct and ethical behavior.