- The Berkeley MBA Advantage

Federal Loan Options

The University of California, Berkeley participates in the William D. Ford Federal Loan Program, which allows students enrolled at least half-time (6 units) to borrow money directly from the federal government at a fixed interest rate (6.8% for Direct Loans; 7.9% for the Grad PLUS Loan).

Federal Direct and Grad PLUS loans are not processed through a bank; therefore, bank loan applications are not required. A Free Application for Federal Student Aid (FAFSA) must be filed each year that a student intends to borrow a loan. The loans must be paid back beginning six months after graduation or dropping below half-time attendance. The standard repayment term for the loans is ten years.

The Budget Control Act of 2011 was passed by Congress and signed into law in August 2011. This law removes subsidies on all graduate Federal Loans disbursed on or after July 1, 2012. (There is an exception for teacher credential programs which is not applicable to graduate business students.) This means that the option of a partial subsidy on the $20,500 Direct Loan will go away for the 2012-2013 academic year. No graduate business students will be offered the $8,500 subsidized loan after the 2011-2012 academic year. Additionally, the rebate on Federal Loan fees will go away. This means that the Direct Loan will have a 1% fee and the Grad PLUS loan will have a 4% fee.

Federal Direct Loans

Federal Direct Loans are non-need-based loans. All students who meet general eligibility requirements may qualify for Federal Direct Loans. Interest begins to accrue on the portion disbursed but no payments are due until six months after your graduate or drop below half-time enrollment. The interest that accrues is not compounded or capitalized during periods of enrollment. Students can borrow up to $20,500.

Federal Direct Grad PLUS Loans

Federal Direct Grad PLUS Loans are non-need-based loans. Grad PLUS Loans are credit-based loans which require a credit check. To be eligible for a Grad PLUS loan you must meet the other general eligibility requirements for the Federal Student Aid Programs, and must not have an adverse credit history (i.e., currently no more than 90 days late on any debt and no bankruptcies or tax liens within the past five years; no defaults or adverse actions on any prior education debt). Students can borrow a Grad PLUS Loan up to the remaining total cost of education each year, minus any other expected financial aid.

Related Links

Further information on federal loan options
FAFSA Guide for Haas Students (PDF format)