A loan is money that must be repaid, even if you do not complete your program of study. By completing the FAFSA, a student is automatically applying for consideration for federal loans. There are two federally funded Federal Direct loan programs. The amount that the student is able to borrow each year is determined by their status as independent or dependent and their number of credit hours accrued in school.
Tip: The key to applying for financial aid is timing and having financial need. It is critical to complete your FAFSA as early as possible after October 1 before the fall semester you will attend. Keep in mind it does take a few weeks to process your financial aid application.
The Federal Direct subsidized loan program is based on financial need and the borrower does not pay interest while enrolled at least half-time.
The Federal Direct unsubsidized loan program is not need based, but the borrower will accrue interest while he or she continues to be enrolled at least half-time. The interest will begin to accrue with the initial disbursement. You can pay the interest while you are in school, during grace periods and deferment/forbearance periods, or you can allow it to accrue.
Subsidized and Unsubsidized Loan Interest Rate
The Federal Direct loan interest rates change annually. The current rate can be found at studentaid.gov (be sure to scroll down the page to view the rates).
Parent Loan for Undergraduate Students (PLUS)
The PLUS for undergraduate students allows parents to borrow up to the total cost of education less any other aid received by the student. The PLUS loan is credit based, however a FAFSA is required. For more information please refer to our Parent Information Page.
The PLUS interest rates change annually. The current rate can be found at studentaid.gov (be sure to scroll down the page to view the rates).
Private Alternative Loans
Private or alternative loans are available to students who are not eligible for federal loans or who need assistance beyond their federal financial aid eligibility. These loans are made through banks and private lenders and are subject to their terms. For more information on private alternative loans go to elmselect.com.
The FSA ID gives you access to Federal Student Aid’s online systems such as the FAFSA and loan information. This can also serve as your legal signature. The FSA ID replaces the PIN that was used in the past. You can apply for an FSA ID online. Once this has been established, you do not need to apply for one each year. It is very important to keep your user name and password, as you will need these in future years.
Loan Agreement (Master Promissory Note)
The Master Promissory Note (MPN) is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s); for instance, it will include information on how interest is calculated, when interest is charged, available repayment plans, and deferment and cancellation provisions.
It is important to understand that when you sign an MPN you’re promising to repay all loans that are made under that MPN. As stated on the MPN, you must repay your loan even if you do not complete your education or you unable to find a job after you leave school.
Before, or at the time of, the first disbursement (payment to you or on your behalf) of your loan(s), you’ll receive a disclosure statement that gives you information about any loan that the school plans to disburse under your MPN, including the loan amount, fees, and the expected disbursement dates and amounts.
Each student that accepts a subsidized or unsubsidized loan must complete Loan Counseling. This can be accomplished at Federal Student Aid using your FSA ID. This will only need to be completed one time by the student.