Federal Loans are Educational Loans and Must be Repaid Once a Student is no Longer Enrolled at Least Half Time.
There are four main loan types, described below.
Federal Direct Subsidized and Unsubsidized Loans
(William D. Ford Direct Student Loans)
The FAFSA is the application for these loans.
Federal Direct Parent Loan for Undergraduate Students (PLUS)
- The PLUS program allows parents of a dependent student to borrow funds. Eligible parent borrowers must be either biological or adoptive parent(s), or stepparent(s) if listed on the FAFSA.
- Parents can borrow up to the cost of attendance less financial aid.
- Parent must apply online at studentaid.gov (Log in using parent FSA ID). When choosing school please select campus student will attend or Vermont Technical College (VTC) for all others.
- Parent must complete a Master Promissory Note (Log in using parent FSA ID).
- A credit check is required to borrow from this loan program. The credit check is valid for 180 days, and applications are available starting May 1 for the upcoming academic year. In the event the credit check expires before the loan can be processed the credit will be pulled again and the result may be different from the original based on borrower credit history.
- In the event that the parent credit is denied, the parent borrower will be presented with options which include obtaining an endorser (co-signer), appealing the credit decision, or canceling the PLUS Loan. If the parent chooses to cancel the loan, the student is eligible for an additional unsubsidized loan (up to $4,000 for the year for students with less than 60 cumulative credits or up to $5,000 for the year for students with 60 or more cumulative credits). If the parent chooses to get an endorser or appeal the credit decision, the parent will be directed to complete parent PLUS Loan counseling, which must be completed in order to process the loan after the endorser is obtained or the credit appeal granted.
- Repayment begins 60 days after the second disbursement.
- Parents may choose to defer payments until six months after the date the student ceases to be enrolled at least half-time or may pay accruing interest monthly or quarterly, or allow interest to be capitalized quarterly. To request an in-school deferment (after the first disbursement) you may contact Direct Loan Borrower Services at 800-848-0979.
- There are three repayment options: Standard Repayment, Graduated Repayment, and Extended Repayment Plan.
- Parents are given a choice of repayment plans prior to their first payment.
- Repayment periods range from 10 to 30 years depending on repayment option selected.
- Information about federal loan interest rates can be found on the Federal Student Aid website.
Federal Direct Plus Loan for Graduate Students
- The Direct Grad PLUS Loan is for creditworthy graduate students enrolled at least halftime. Graduate students must apply for the maximum amount of Federal Stafford Loans first.
- Must apply online (Log in using FSA ID). When choosing school please select campus you will attend or Vermont Technical College (VTC) for all others.
- Must complete a Master Promissory Note.
- A credit check is required to borrow from this loan program. The credit check is valid for 180 days, students cannot apply until May 1 for the upcoming year. In the event the credit check expires before the loan can be processed the credit will be pulled again and the result may be different from the original based on borrower credit history.
- If the borrower is denied credit they have the option of reapplying with a creditworthy endorser. If they choose to do this, the student will be directed to complete Grad PLUS Loan counseling, which must be completed prior to the loan being processed with an endorser.
- Payments are deferred until six months after the student ceases to be enrolled at least halftime. Interest accrues during this time. The student may choose to make interest payments while the loan is deferred.
- There are three repayment options: Standard Repayment, Graduated Repayment, and Extended Repayment Plan. You may contact Direct Loan Borrower Services at (800) 848-0979 for more information on repayment options.
- Information about federal loan interest rates can be found on the Federal Student Aid website.
Cohort Default Rate
The Cohort Default Rate is defined as the percentage of a college’s student borrowers who enter repayment on Federal Direct Loans during a specific fiscal year and default on those loans within the cohort default period. It is calculated annually by the U.S. Department of Education. A student defaults on a federal loan after at least 270 days (nine months) of non-payment.
Vermont State University Cohort Default Rate: 0%
National Average: 0%
For the third straight year, the national cohort default rate (CDR) for federal student loans that entered repayment in fiscal year (FY) 2022 remained at 0%, continuing to reflect the payment pause as a result of the COVID-19 pandemic.
FY 22 covers the date range of October 1, 2021, through September 30, 2022. During this period, more than 3.5 million borrowers entered repayment, which was 4.3% fewer than in FY 21.
Next year’s CDR, FY 23, will capture the end stages of the student loan payment pause, as most borrowers had their first payment due in October 2023.
