A Federal Direct Student Loan is financial aid that must be paid back with interest. Merced College only participates in the Federal Direct Loan Program. 

Direct loans are low-interest education loans for students to help pay for college costs. There is no credit check or cosigner required to qualify. The lender is the U.S. Department of Education, which assigns loans to one of its contracted loan servicers throughout the country after a loan is originated by a school for a student. You can find out who your loan servicer is two weeks after your first loan disbursement is issued by the school.

Go to https://nslds.ed.gov to see your loan servicer contact information and to keep your information updated with them. Your loan servicer will be responsible for any questions you have for your loan after the funds have been distributed.

Interest rates and fees are adjusted by Congress and begin July 1 for each academic year. As per changes authorized by the Bipartisan Student Loan Certainty Act of 2013, the Direct Loan interest rate will be the sum of a uniform "index rate" plus an "add-on" that varies depending on the type of loan and the borrower's grade level. The interest rate for a loan, once established, will apply for the life of the loan -- that is, the loan is a fixed-rate loan. As a result, student borrowers who borrow in more than one award year will likely have a number of fixed-rate loans, each with a different interest rate. 

Interest. Loans must be repaid in full. In addition to the principal (the amount you borrow), interest accumulates on the loan as an expense paid by the borrower for the use of the money. The expense is calculated as a percentage of the unpaid principal amount.  

  • The intrest rate for Subsidized and Unsubsidized Federal Direct Student Loans disbursed on or after July 1, 2020 and before July 1, 2021 is 2.75% 

Origination Fees. All loans have loan fees (also called origination fees) that are deducted proportionately from each loan disbursement you receive. This means that the money you receive will be less than the amount you actually borrow. You are responsible for repaying the entire amount.

An origination fee will be automatically deducted before disbursement.

  • For loans disbursed before Oct. 1, 2020, the fee is 1.059% of the loan.
  • For loans disbursed on or after Oct. 1, 2020, and before Oct. 1, 2021, the fee amount is 1.057%.


Managing your federal student loan debt is a major responsibility, but there are many resources out there to help you along the way. Whether you are still in school at least half-time or have already left school, it is important to stay on top of your student loan debt obligations. Do you know who your lender is? What is your interest rate? What if you can't make your loan payment? Below you will find various resources to help answer these questions and more.

Loan Resources

The National Student Loan Data System Using your FSA ID you can access your entire loan history 
including balances, interest rates, and lender contact information.

Federal Student Aid Loans Access general loan information as well as copies of your MPN and loan correspondence.

US Department of Education

ATT: Applicant Services
P.O. Box 9002
Niagara Falls, NY 14302
Phone: 1.800.557.7394
Email: codsupport@acs-inc.com
Contact the Department of Education directly for questions regarding your rights and 
responsibilities or the terms and conditions of your loan.

Payment Help

Having trouble making your loan payment? Don't ignore your loan payment in the hopes that it will go away. It is a federal debt that must be repaid! If you are unable to make your loan payments, there are options out there for you to reduce or postpone your payments temporarily until you are back on your feet. Federal Student Aid website.