HDS - AFA - Loan Programs

Admissions and Financial Aid

Federal Loan Programs

The Divinity School participates in government loan programs as a way to make funds available to eligible candidates. These students may be able to borrow from the Federal Perkins Loan and/or the William D. Ford Federal Direct Loan Program (Subsidized and Unsubsidized). First-time borrowers to any federal loan program must have a loan entrance interview and either sign an entrance interview form or successfully complete an entrance interview quiz prior to the first disbursement of the loan. The quiz/form states the borrower's rights and responsibilities as well as the consequences of default. Upon receipt of a degree, approval of a leave of absence, or withdrawal from HDS, a loan exit interview is required. In this session students will receive specific information on repayment options, indebtedness levels, and other general loan information.

Federal Perkins Loan

A limited amount of loan money is available through the Federal Perkins Loan program to those students who demonstrate the greatest financial need. In reviewing financial need, previous educational indebtedness is heavily weighted. Selection of the recipients for this loan is administered within the Office of Admissions and Financial Aid. There is no separate application process for this loan and students are not guaranteed to receive funding from this program despite their ability to document financial need. The maximum annual limit for this loan is $6,000 for graduate students and varies according to need (the aggregate loan limit, including undergraduate Perkins loan borrowing, is $40,000). Generally this loan is disbursed in two equal installments. Interest is 5% per annum and the grace period is nine months for new borrowers (i.e., those who borrowed for the first time after July 1, 1987).

William D. Ford Federal Direct Student Loan Program

Harvard University has been selected by the U.S. Department of Education as a Direct Loan Program participating institution. As of July 1, 1994, HDS students have been able to borrow under this program. The terms and conditions of the William D. Ford Federal Direct Loan Program are very similar to the Federal Family Education Loan Program that has been used in the past. The major differences lie in the simplification of the borrowing process, the elimination of the commercial lender, more flexible repayment options, and the Department of Education acting as lender (rather than a bank) and provider of customer service.

No loan application is necessary. After the loan eligibility has been determined and an award acceptance received, an electronic Master Promissory Note will be generated online (students who have signed a Direct Loan Master Promissory Note prior to attending HDS may be excused of this requirement). The borrower must complete and sign this note, which requires two references. Ordinarily, this process must be complete prior to registration in September. After the note has been signed, the proceeds will be credited to the student's term bill within three business days.

Repayment usually begins six months after a student's degree is granted, enrollment is terminated, a leave of absence is approved, or enrollment drops below half-time. The student will always make payments to the same Direct Loan servicer, even if s/he receives Direct Loans at different schools. Direct Loans will not be sold and students who have received Direct loans while at different schools will not have to send deferments or forbearances to multiple lenders and/or guaranty agencies. Deferments are granted for at least half-time study at a postsecondary institution, enrollment in an approved graduate fellowship program, participation in a rehabilitation training program for the disabled, unemployment (up to three years), or economic hardship (up to three years). A borrower may choose any of the available repayment plans:

Standard Plan — fixed annual repayment amount (minimum $600) over a fixed period of time (not to exceed ten years)
Extended Plan — assumes a fixed annual repayment amount (greater of $600 or the amount of interest due) over an extended period of time (twelve to thirty years)
Graduated Plan — annual repayment at two or more levels over a fixed or extended period of time - repayments not less than 50% or more than 150% of loan repayment if repaid under the standard plan
Income Contingent Plan — varying annual repayment amounts based on borrower's income over an extended period of time, not to exceed 25 years.

William D. Ford Federal Direct Subsidized Loan

All applicants must undergo a full financial need analysis as described under Federal Methodology requirements to determine eligibility. Eligible students may borrow a maximum of $8,500 per year up to a total of $65,500 (including undergraduate and graduate indebtedness under the William D. Ford Federal Direct Loan Program and the Federal Stafford Loan Program). Beginning with the 2006-07 school year, this loan has a fixed interest rate of 6.8%. A 1.0% loan origination fee will be deducted from the face value of the direct loan, the remaining proceeds of which will be disbursed in two equal parts to the student's e-bill.

William D. Ford Federal Direct Unsubsidized Loan

This loan has the same terms and conditions as the William D. Ford Federal Direct Subsidized Loan except that: 1) the borrower is responsible for interest that accrues while s/he is in school and 2) there is no analysis of need. The borrower may choose to make the payments or request that the interest be accrued. This loan is open to students who do not qualify for, or only partially qualify for, the William D. Ford Federal Direct Subsidized Loan. A student can borrow up to $20,500 per year from this loan program less the amount received under the William D. Ford Federal Direct Subsidized Loan. Total borrowing under the William D. Ford Federal Direct Subsidized Loan, William D. Ford Federal Direct Unsubsidized Loan, Federal Stafford Loan, and Federal Supplemental Loan for Students for both undergraduate and graduate education cannot exceed $138,000.