A loan origination fee is charged by the government to the student or parent borrower to compensate for the cost of processing and lending loan funds.

The federal government uses the origination fee to defray the cost of managing and lending loans to students (Direct Stafford loans) or parents (Direct PLUS loans).

Fees vary by loan type. The origination fees, beginning July 1, 2012 are:

1. Direct Stafford Student Loans (Stafford hereafter): 1.0% fee
   • 1.0% origination fee
   • A loan origination fee of 1.0% is deducted from the Direct Stafford loan funds at the time of disbursement.
2. Direct Parent PLUS Loans (PLUS hereafter): 4.0% fee
   • 4.0% origination fee
   • A loan origination fee of 4.0% is deducted from the Direct Parent PLUS loan funds at the time of disbursement.

The federal government automatically deducts these fees from the loan amount at the point of disbursement.

See examples for each loan type below:

1. Direct Stafford Student Loan Example: Annual loan for $3,500 split over two terms ($1,750 per term).
   

   $1,750	Loan principal amount for the term (amount to be repaid)
   - 18	1.0% loan origination fee
   $1,732	Actual term disbursement credited to the student’s account

   
   Student loans have annual loan limits; however, if you want you can reduce the annual amount borrowed from the standard amount offered on your financial aid eAward. To calculate the amount you wish to borrow, take the amount you NEED and divide by .99 -- this gives you the amount to borrow.
   
   
2. Direct Parent PLUS Loan Example: Annual loan for $10,000 split over two terms ($5,000 per term).

   $5,000	Loan principal amount for the term (amount to be repaid)
   - 200	4.0% loan origination fee
   $4,800	Actual term disbursement credited to the student’s account

   
   Calculating your Parent PLUS Loan: If you want you can reduce the annual amount borrowed from the standard amount offered on your financial aid eAward. To calculate the amount you wish to borrow, take the amount you NEED and divide by .96 -- this gives you the amount to borrow.

Please take these examples into account when determining how much you would like to borrow to cover expenses for the school year.

The payment plan options already take into account the anticipated fees related to the loan(s) you have accepted as part of your payment plan.