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Frequently Asked Loan Questions

1. What is a Direct Loan?

Federal Direct Loans and Direct PLUS Loans are offered through the Federal Direct Loan Program. The United States Department of Education funds the loan.

2. What is the difference between the Subsidized and Unsubsidized Direct Loan?

A Direct Loan is a government-guaranteed loan available to students. There are two types of Direct Loans: subsidized and unsubsidized. For a Direct Subsidized Loan, the government pays the interest while you’re in school. For a Direct Unsubsidized Loan, you are responsible for the interest that accrues while you are in school. You can either elect to pay the interest while you are in school or defer it until after graduation. You should note that if you defer the interest, it will be capitalized upon graduation and will raise the overall cost of your loan.

3. What are some benefits of a Direct Loan?

• It carries low origination fees
• There is no credit check
• Repayment of the loan does not begin until six months after you graduate or drop below half-time status
• The loan is forgiven in case of permanent disability or death

4. How much can I borrow with a Direct Loan?

Your eligibility is determined by the Office of Financial Aid. You will be notified of the exact amount you can borrow in the Financial Aid Award Notification. You can never borrow more than the cost of education minus other financial aid received, such as scholarships and grants. Below are the maximum amounts you may borrow.

If dependent, your combined subsidized and unsubsidized Direct Loan annual eligibility is as follows:

If independent, your subsidized and unsubsidized Direct annual eligibility is as follows:

5. What is the interest rate on a Direct Loan?

• Undergraduate students: For Federal Direct Subsidized and Unsubsidized loans with a first disbursement date between July 1, 2024 and June 30, 2025, the interest rate is fixed at 6.53%.
• Graduate Students: For the Federal Direct Unsubsidized loan with a first disbursement date between July 1, 2024 and June 30, 2025, the interest rate is fixed at 8.08%.
• Parents: For the Parent PLUS Loan with a first disbursement date between July 1, 2024 and June 30, 2025, the interest rate is fixed at 9.08%.

6. If I do not graduate, do I have to repay my Direct Loan?

Yes. The Direct Loan, like any other loan, must be repaid.

7. Who is my lender?

The “lender” is the U.S. Department of Education.

8. What is Student Loan Entrance Counseling? Why must I complete this process?

Entrance Counseling is required by federal regulations for all first-time borrowers at a school. The session gives an overview of the federal loan program, discussing the types of loans, interest rates, borrower rights and responsibilities, etc. Complete your Entrance Counseling . No loan monies can be disbursed to the student's account until the MPN and Entrance Counseling are both complete.

9. What is the Master Promissory Note (MPN)?

An electronic Master Promissory Note is a legal contract that states the terms of the student loan. By signing the MPN, you agree to pay back your loans and abide by any included stipulations. Entrance Counseling explains this in depth. The MPN is completed . No loan monies can be disbursed to the student's account until the MPN and Entrance Counseling are both complete.

10. What are some of the benefits of Direct PLUS and Direct Graduate PLUS Loans?

• It has no prepayment penalty.
• It has lenient credit criteria, often more lenient than with other types of loans.
• It allows you to keep other assets, such as savings, retirement, and home equity intact.
• It protects your family in case of permanent disability or death. In this case, the loan would be forgiven.

11. How much can I borrow with a Direct PLUS or Direct Graduate PLUS Loan?

One can borrow up to the cost of attendance, minus any other financial aid being received. The cost of attendance is an estimate of expenses determined by the school’s financial aid office, and usually includes tuition, room and board, books, living costs and transportation expenses. 

12. What is the interest rate on a Direct PLUS or Direct Graduate PLUS Loan?

The rate is fixed and is currently 9.08%.

13. What if I am rejected for a Direct PLUS Loan?

Your lender will notify both you and the Office of Financial Aid of their credit decision.  If you are denied for a Parent PLUS Loan, the student may be eligible for additional unsubsidized loans. If you are denied for a Grad PLUS Loan, ask the Office of Financial Aid about other options such as private loans.

14. Who receives the check for my Direct PLUS Loan?

The money goes to the school, which first applies the funds to the student’s outstanding balance. If a refund is due, it will be mailed or directly deposited to the parent borrower for a Parent PLUS Loan or to the student borrower for a Grad PLUS Loan. Refunds are processed and distributed by the Business Office.

15. Why was my loan sent back?

Students must meet certain requirements after their loan funds arrive at the school. If these requirements are not met within a certain time frame, we must return the loan funds.

16. How can I get an In-school Deferment on repayment of my loan?

Request the deferment form from your bank and have our Registrar’s Office complete it, then return it to the bank. Continue to make all payments until the bank sends you confirmation of your deferment.

17. If I am in default on a previous loan, what documents are needed to clear the default?

A letter is required from the agency, or holder of the defaulted loan, stating that the default has been cleared.

18. If I take a leave of absence, do I have to start repaying my loans?

Not immediately. The Federal Direct Loans and Direct Graduate PLUS Loans have a grace period of six months before the student must begin repaying the loan. When you take a leave of absence, you will not have to repay your loan until the grace period is used up. If you use up the grace period, however, you will have to begin repaying your loan immediately when you graduate. It is possible to request an extension to the grace period, but this must be done before the grace period has ended. If your grace period has run out in the middle of your leave, you will have to make a payment on your student loans.