: The Federal Direct Subsidized Loan is a need-based loan that does not accrue interest while the student is enrolled in school at least half-time. For the 2012-2013 school year, the Federal Direct Subsidized Loan had a 3.4% fixed interest rate with interest beginning to accrue at the time at which a student entered their 6 month grace period. For the 2013-2014 school year the interest rate is expected to be fixed at 6.8%.
What is Entrance Counseling and a Master Promissory Note for the Federal Direct Loan program?
In order to receive federal loan funding, students are required to complete both the Federal Direct Loan Entrance Counseling and a Federal Direct Loan Master Promissory Note (MPN). The Federal Direct Loan Entrance Counseling is a 20 minute tutorial where the student reviews the terms and conditions of the Direct Loan program and goes over their rights and responsibilities as a borrower of a Direct Loan. Students are then required to complete an exam which asks a series of questions related to the loan program, repayment, the student's responsibilities as a loan borrower, etc. The MPN is a signed contract between the student and the U. S. Department of Education stating that the student understands the terms and responsibilities of borrowing from the Direct Loan program and agrees to the repayment terms and conditions of the loan. You can complete both the Entrance Counseling and MPN online at www.studentloans.gov.
What is a Federal Direct PLUS Loan?
A Federal Direct PLUS Loan is a federally insured loan that parents of dependent students can borrow to assist with their student's educational expenses. This loan has a fixed 7.9% interest rate and can have up to 4% in loan fees. Interest will start accruing on this loan when the funds are disbursed. A Federal Direct PLUS Loan enters repayment 60 days after it is fully disbursed; however, parents can elect to defer those payments until 6 months after their student graduates or ceases half-time enrollment. Parents will need to apply for this loan annually and can apply online by visiting www.studentloans.gov * Please note that this loan is in the parent's name and cannot be transferred into the student's name at any time.
Can I apply for an alternative loan?
An alternative loan is a loan that is borrowed through a private lender. This loan is in the student's name and is used to assist with the student's educational expenses. These loans have variable interest rates and may have loan fees. Interest will start accruing on this loan when the funds are disbursed. An alternative loan typically enters repayment 6 months after a student graduates or leaves school; however, some lenders may charge a monthly payment while the student is enrolled. Most alternative loans require the student to have a credit worthy co-signer. MSOE encourages students to maximize their institutional, state, and federal financial aid eligibility before borrowing alternative loan funds and not to borrow more than necessary. Please click here for more information on Alternative Loans.