2022 Guide to the William D. Ford Act “Complete forgiveness of Federal Loans”


The US government initiated several programs to help students in financing their education through different loan programs. Overall loans can be classified into two groups: Federal Loan programs and Private Loan programs. The second class programs are narrower and mainly speculated for specific students regarding their field of study. Many of them finance future farmers, bankers, and public workers. They offer a loan in diverse interest rates and trying to implement regulations that everybody is consent.


William D Ford Act is one of many federal loan program and is called with different names such as Direct Loan, Stafford Loan and Ford Loan in various universities. The idea of the program is that the US Department of Education gives a determined amount of money. The pros of the William D Ford Act is that it is directly linked to the Department of Education.

This regulative party is the main contractor in every agreement you make.


Almost every single high school student would love to continue his education in a bachelor degree, if not in a master degree. But unfortunately, not every one of them can afford the cost of this education. All accredited university students can be eligible and obtain up to $31.000. The William D Ford Act has two parts of the subsidized, and unsubsidized part and each kind have own terms and conditions.

What does William D Ford Act stand for?

The US government is a provider and guarantee of the direct loan. That’s why the credit is distributed with the low-interest rate to satisfy all students and meet expectations of parents. Any payment in advance is forbidden on loan and if you confront with similar cases mind to give information to the Department of Education. Instead, students ought to pay deferment charge after graduating or any other type of leaving, including dropping off. The strict rules for the Direct Loan were implemented, and students must fill Free Application for Federal Student Aid (FAFSA) first.


Interest rates of the loan are not rigid and can be changed from one student to other, also from bachelor to graduate degree.

Variable rate loans are regulated based on Treasury bill. Loans with these terms mainly start on the last Monday of May to the 1st of July, and it is a 91-day loan. The interest rate for the variable 91-day loan was 1.91% in 2008 – 2009. Depends upon the year, interest rate changes and currently the fixed interest rate for unsubsidized loans is 6.8% and 3.4% for subsidized loans. Interest rates are changeable as well. If you consolidated one portion of your loan, not another and each his interest, you could sum up them in the way that suits your budget.

In the archive, 6.8% demonstrated as an interest rate for both subsidized and unsubsidized loans. To be eligible for the subsidized or unsubsidized loan the student must enroll at least half of the semester. Unlike PSLF you cannot afford for the mortgage with one course, all eligible students are those who admitted for the degree or certificate.

William D Ford Act & Subsidized or Unsubsidized loans


Subsidized Direct Loans does not increase while you are paying it. In this case, you are paying what you borrowed. The interest rate is flexible, and the amount of money student can acquire restricted. You can give up to $0.00 in a month. Because it is income-based, the month you got a low salary, you will pay a more moderate amount.


Unsubsidized loan requirements match with the Subsidized one, but there are several differences. FAFSA is the primary requirement for both of the loans. However, it is not based on the financial need, and you should pay for interest payment. Overdue interest payments should be paid during the school or after deferment.

William D Ford Act & Direct subsidized loan

Because it is Direct loan, the federal government is responsible for paying interest rates of your loan. The government pays while you are at school or if you keep it for the later time, as forbearance or deferment, the regulating party will pay it later.

If a first-year college takes $15.000 Direct Subsidized Loan when he graduates he will have $15.000 loan.


  • the government are responsible for interest rates if you are still enrolled
  • The government will pay forbearance and other similar costs after graduation
  • You are free to pay until half a year after graduating


  • If a student graduated, then he is not eligible. Undergraduate students are eligible.
  • Students without financial need are not eligible
  • $23.000 is the total amount that can be obtained, and it is $8.000 less that unsubsidized one

William D Ford Act & Unsubsidized Direct Loan

Unsubsidized direct loans do not facilitate the process with additional financial assistance. As the student take a loan, the interest rates must be paid by the student. Just in case, the student cannot afford to pay interest rate they will be added up later. So your debt can be $19.000 even if you borrowed $15.000.



  • Both grad and bachelor students can obtain the loan
  • Students can get $31.000 out of the investment.
  • If you borrowed and it is reflected in your account, then you don’t need to prove it with additional documents.


There is no six-month rule, and the interest must be paid in that period as well.

Overlapping of both direct loan types.

  1. In both types, the amount of money is defined by the school. The procedure is the same: you collect your documents and submit them to the school. Amount of the loan suggested by the school and you choose whether it will be subsidized or unsubsidized.
  2. If your study period is five years, the loan can be no more than 7.5 years.
  3. Interest rates for bachelor students are 4.45% and for graduate 6.2%

What is the maximum amount of money I can borrow?


In this paragraph, I will restate terms regarding the year of the student.


From now on, the dependent student category involves students whose parents cannot utilize from PLUS (Parent Loans for Undergraduate Student) loans.  

The maximum money the first year undergraduate dependent student can borrow is $5.500. Only $3.500 of it can be subsidized.

Independent students can get $9.500 and still $3.500 of it can be subsidized.

The Second-year students.

All dependent students except those having their parent of benefitted from Plus Loans can get $6.500, and only $4.500 can be free from interest rates. The left $2000 must be involved in interest rate, and if the student cannot afford for that, the amount most surely will grow steadily.


To compare with dependent students, independent students are luckier, in the way that they can take a loan of $10.000, but interest rate free amount is the same.

The Third-year students and seniors

For those whose parent pay for their education, the amount they can borrow is $7500, and $5500 of it can be interest rate free. While students who can take care of their tuition fee themselves may take $12.500 and subsidized amount is the same with their dependent counterparts.


Graduates are less luckier in the sense that their loans cannot be subsidized. It is unsubsidized and what it means is that if any misconduct happens, the money could rise. $20.500 is what they can strive for.

Aggregate loan limit


Dependent students can take $31.000, and it is only possible to secure $23.000 of it with Federal Aid. The independent undergraduates, on the other hand, can receive $57.500 and less than half of it, $34.500 will be with interest rate. Independent graduates can get $138.500 which consist of $73.000 unsubsidized loan.

Aggregate loans are loans which include the second financial aid. Let’s say, your first loan is $24.500 and the second is $35.000. Your aggregate loan is $59.500. One advantage of the aggregate loan is that they can be consolidated. The total loan limit covers the William D Ford Act loan.

Students who want to apply in 2019, should meet the criteria of taking loan after 2012. The professionals, graduate students, must comply with these criteria as well. Only terms with $65.500 are different, in the way that students who take the loan before 2012, 1 June can be eligible. The $65.500 can be a loan taken during undergraduate degree.

If the total loan you took is slightly less than the aggregate limit, you cannot take another. But your previous payment history can make up the scene and if you have made several successful payments, and decrease the amount you are qualified to take another loan. One exception is, graduate students who are professionalized in health-related fields and those can get additional aid from the state as well. If you are admitted into the faculties like nursery or orthopedics, talk to your service office and ask about the aggregate limit, additional financial aid, and other options that considered as your privilege.

What is the latest date for me receiving the loan?


According to the regulations, first-time borrowers who take loan after 2013, 30 June have limits only for Direct Subsidized Loan. If your loan is unsubsidized or Direct Plus loan, then there is no limit in receiving money. The threshold for the Direct Subsidized is 150% of your study length. If your study period is five years, you can benefit from the loan up to 7.5 years. Associate degree program students, which took two years to complete, can utilize the credit 3 years. In case you change your degree, the amount of loan you can make changes. In the following examples, you have to pay for your interest accrues even if your program is subsidized.

  1. Staying enrolled but not being qualified for the Direct Subsidized because of different reasons
  2. Not being eligible for the Subsidized Direct Loan program, but continuing the second program at the same time.
  3. Changing your program to a new program which is short in length, and losing your eligibility for the Direct Subsidized Loan program does not free you from accrues.

You are not responsible for interest rate extending of your the William D Ford Act Subsidized loan if,

  • You enrolled in a more extended program than your previous, but you are not eligible for the Direct Subsidized Loan anymore.
  • You gave up on the degree and lost eligibility
  • You enrolled in the new program, although you barely completed 150% of your loan receiving
  • You choose to study professional degree after bachelor
  • You enrolled not in a degree, but foundation or preparation of a degree that mainly involves coursework
  • Your school is not accredited, but you enrolled in a teacher certification program

What is William D Ford Federal Loan Consolidation?


Consolidating loan is multiplying two direct loans into one, that you don’t have to pay for two, but one. In addition, in that case, you have a chance of reducing the rate.

Pros of the direct loan consolidation

  • Simplified terms for the loan
  • You will have much time to pay for and the opportunity of the less monthly payment.
  • If you consolidated not the Direct Loan but other loans, you could benefit from repayment options and Public Service Loan Forgiveness.
  • Loans with any variable interest rates can be reduced into one standard.

Disadvantages of consolidating the William D Ford Act loan

  • Unless your monthly payments reduce, you will pay a more extended period. If in the typical case you should spend ten years, after consolidation it can plummet to 15 years. Everything depends on how much you should pay, reducing the interest rate. The overall amount you ought to pay does not change drastically though.
  • In the case of a consolidated loan, the interest rates added to your primary balance. The problem is that the additional loan debt comes from interest rate increases your stability and can cause further rising with interest rates
  • Having your loan consolidated may come up with losing your interest rate paid by the government (in the case of subsidized Direct Loan).
  • If your previous payment was income-based or paid in accordance with PSLF regulation, consolidating your loan can cause you losing credits for past payments.

If you decided to consolidate, but terms and conditions do not satisfy you, you can merge one part of your loan. Let’s say if you applied for Direct Loan, you could choose not to include this loan into your consolidation.


The consolidation option seems excited, but you are afraid of the negative impact of consolidation, you may look for the forbearance and deferment options. You might want to convert to income-based repayment as well.

What types of loans can be consolidated?

  • Subsidized Direct Loan
  • Unsubsidized and Non-subsidized Federal Stafford Loan
  • The PLUS program as FFEL (Federal Family Education Program) program subsection
  • Health Professions Student Loan
  • Health Education Assistance Loan
  • Nurse Faculty Loans
  • Federal Insured Student Loans
  • Federal Perkins Loans
  • National Direct Student Loans
  • National Defense Student loans
  • Parent Loans for Undergraduate Students
  • Auxiliary Loans to Assist Students

If you took a private student loan, such as Sallie Mae, you can not strike for loan consolidation. However, having some student loan test would help you to be aware of the length of your payment duration. Also, a parent who has a Direct Plus loan in his account, cannot consolidate his loan with any of the federal student loans.

Does consolidation of the loan have any requirement?


Every consolidation program has the eligibility requirements that students have to meet:

  • Only repayment loans or loans in grace period can be eligible. A grace period is a period after your graduation or dropping off. It is the responsibilities of every student to pay the loan accrued by the interest rate. Otherwise, you can see your original loan extended beyond your expectations.
  • You need to sign for the second loan to be eligible for the loan consolidation. Students with at least two loans qualify for the alliance.
  • If you fit in particular regulations, you can consolidate your William D Ford Act loan with FFEL.
  • To consolidate the previous loan, you have to make sure that you have paid at least three monthly payment.
  • If you are not complying with the 4th letter, later it is necessary to select Pay As You Earn, Income-based, Income-contingent or Revised Pay As You Earn or repayment plan.
  • If your loan is paying with wage garnishment or taken from you according to the court law, then you are not eligible for the consolidation of your investment. You will be qualified only after the law against you lost its credibility.

If you are qualified for the Public Service Loan Forgiveness, you can consolidate your FFEL loan. The interest rate is half of both of the consolidated loans together.


The first payment has to be no late than 60 days the first loan given to you. The servicer, in most cases, the Education Department notifies you when is the first payment time. If your first payment date is within your grace period, then you can ask from your services to put off after the end of the grace period.



FAFSA is an abbreviation which can be prolonged into Free Application for Federal Student Aid. The deadline for submitting your FAFSA varies from state to state and even among universities. It also determines the amount you can take a loan of and grants you can obtain and also your eligibility to get aid from the education center you are studying. FAFSA application is 18 months based and demand you submit prior 12 months tax payment and income plan.

Who needs to fill FAFSA?

High school students who are going to graduate in 2019 should submit FAFSA. Students who can cover their tuition or are dependent need to declare their FAFSA application in order to get financial aid.

FAFSA Deadlines

Deadlines are not fixed and depend upon the state and even the college. But later you apply, less chance to get aid or any assistantship for your federal loan.

Generally, 30 June 2019 is the deadline for FAFSA. The latest application submission is 30 June, at 12 am. However, you can change some things in the application or add some information to your application until 14 September.


The university deadlines are different. As soon as you get an acceptance letter from the university, you will be asked for the FAFSA application. It is for financial issues and payment you are going to made need to be determined as soon as possible. The equivalent application is CSS. Up to 400 universities require CSS which is using to go through both federal programs like the William D Ford Act, and private loan forgiveness or repayment plans.

Requirements for State Level Consideration.

  • Submit the application until the deadline stated in the form
  • Upload additional documents if required
  • Be aware of the deadline for your state and university. Take the time difference into account.

2016 – tax return, W-2s, bank statements, and record of assets are the required documents for the FAFSA.  State-dependent FAFSA deadlines are enlisted in the link from where you can roughly know the latest possible day for application.

For your first application to the William D Ford Act, you might be asked to fill the entrance counseling tool and sign a contract which implies that you agree with all terms. After you receive the loan, your loan servicer will contact you and will inform you about the overall procedure, updates, and other useful information.

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