The Federal Direct Loan program is a federally funded loan program. The maximum loan amount varies depending on your year in school. Repayment of the Federal Direct Loans begins 6 months after the student graduates, withdraws from school, or is enrolled less than half-time. By completing the FAFSA each year, you are automatically applying for the Federal Direct Loans. Borrowers must complete a Federal Direct Loan Master Promissory Note (MPN) and first-time borrowers must also complete Federal Direct Loan Entrance Counseling.