Students who are borrowing Federal Direct Loans for the first time at MSOE must complete both Entrance Counseling and a Master Promissory Note. Please scroll down this page after the types of loans to learn more about these mandatory steps.

To be eligible for Federal Direct Loans a student must meet the following eligibility criteria:

  1. Be enrolled at least 1/2 time (6 credits undergraduate or 3 credits for graduate).
  2. Not be in default on another student loan.
  3. Be a U.S. citizen or eligible non-citizen.
  4. Maintain Satisfactory Academic Progress.
  5. Subsidized Loans Only: Demonstrate financial need as determined by the FAFSA.
  6. Not meet or exceed annual or aggregate loan limits.
  7. Not be concurrently enrolled and receiving Title IV financial aid from another institution of higher education.
  8. Be otherwise eligible for federal student aid.

Comprehensive information about the Federal Direct Loan programs can be found at the Federal Student Aid website.

Types of Direct Loans

Federal Direct Subsidized Loan

Need-based loan with a fixed interest for the life of the loan. No interest accrues while the student is enrolled at least half-time. Repayment begins six months after the student ceases half-time enrollment. To view borrowing limits and to learn more about this loan, please visit the Dept. of Education’s website.

Federal Direct Unsubsidized Loan
Non-need based loan with a fixed interest rate for the life of the loan. Interest accrues while the student is enrolled. Repayment begins six months after the student ceases half-time enrollment. To view borrowing limits and to learn more about this loan, please visit the Dept. of Education’s website.

Interest Rates and Origination Fees

Loan Type Borrower Type Fixed Interest Rate (For Loans disbursed between 7/1/2020 - 6/30/2021 Fixed Interest Rate (For Loans disbursed between 7/1/2021 - 6/30/2022 Origination Fee (For Loans originated between 10/1/2020 - 9/30/2022)
Direct Unsubsidized Loans and Direct Subsidized Loans Undergraduate Student 2.75% 3.73% 1.057%
Direct Unsubsidized Loans Graduate Student 4.30% 5.28% 1.057%

Loan Limits

There are limits on the amount in subsidized and unsubsidized loans that students may be eligible to receive each academic year (annual loan limits) and limits on the total amount that they may borrow for undergraduate and graduate study (aggregate loan limits). The actual loan amount students are eligible to receive each academic year may be less than the annual loan limit. These limits vary depending on:

  • what year the student is in school and
  • whether the student is a dependent or independent student

Dependent students whose parents are ineligible for a Direct PLUS loan may be able to receive additional Direct Unsubsidized Loan funds.

The following chart shows the annual limits for subsidized and unsubsidized loans:

Year in School Dependent Students (Except students whose parents are unable to obtain PLUS Loans) Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans)
First-Year Undergraduate $5,500 – No more than $3,500 of this amount may be in subsidized loan. $9,500 – No more than $3,500 of this amount may be in subsidized loan.
Second-Year Undergraduate $6,500 – No more than $4,500 of this amount may be in subsidized loan. $10,500 – No more than $4,500 of this amount may be in subsidized loan.
Third Year and Beyond Undergraduate $7,500 – No more than $5,500 of this amount may be subsidized loan. $12,500 – No more than $5,500 of this amount may be subsidized loan.
Graduate or Professional Not applicable $20,500 (unsubsidized only)

The following chart shows the aggregate limits for subsidized and unsubsidized loans:

Degree Level Dependent Students (Except students whose parents are unable to obtain PLUS Loans) Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans)
Undergraduate $31,000 - No more than $23,000 of this amount may be in subsidized loan. $57,500 - No more than $23,000 of this amount may be in subsidized loan.
Graduate Not applicable

$138,500 – no more than $65,500* of this may be in subsidized loan. The graduate aggregate limit includes all federal loans received for undergraduate study.

*Effective for periods of enrollment beginning on or after July 1, 2012, graduate and professional students are no longer eligible to receive Direct Subsidized Loans. The $65,500 subsidized aggregate loan limit for graduate or professional students includes subsidized loans that a graduate or professional student may have received for periods of enrollment that began before July 1, 2012, or for prior undergraduate study.

Final Steps to Complete the Direct Loan Process

First-time borrower at MSOE who wish to utilize the Federal Direct Loan Program, are required to complete all the steps below. Continuing borrowers will only need to complete step three annually. Students will need their Federal Student Aid ID to log in to complete both steps.  Both steps will only need to be completed once while attending MSOE. 

Step 1: Complete the Federal Direct Loan Entrance Counseling Online

Students are asked to review the terms and conditions of the Direct Loan program and then are 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. It is important for the student to complete this process to ensure the understanding of borrowing federal funds.

Step 2: Complete the Federal Direct Loan Master Promissory Note Online

Students are required to sign a Federal Direct Loan Master Promissory Note (MPN). 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 Federal Direct Loan program and agrees to the repayment terms and conditions. All first time MSOE Federal Direct loan recipients who have received a Financial Aid Award Offer and have accepted the Federal Direct Loan(s) are required to complete the online Federal Direct Loan Entrance Counseling and to sign a Federal Direct Loan Master Promissory Note prior to the school receiving the funds.

Step 3:  Complete the Annual Student Loan Acknowledgment: This step will not be required for academic year 2021-2022. You may still elect to do this step if you'd like.

All students may complete the Annual Student Loan Acknowledgment before their Federal Direct Loans can disburse. This step is a yearly acknowledgment of the loan debt that the student has incurred, and will serve as an educational tool for student borrowers. If this is your first time accepting a federal student loan, you are acknowledging that you understand your responsibility to repay your loan. If you have existing federal student loans, you are acknowledging that you understand how much you owe and how much more you can borrow. Students must complete this before receiving direct loan funds on their MSOE Student Account.

Federal Loan Processing Overview

  • The U.S. Department of Education will notify MSOE electronically after students have completed the Entrance Counseling, MPN, and Annual Student Loan Acknowledgment.
  • Students will receive a disclosure statement from the U.S. Department of Education providing specific information about their loan, including loan amount, fees and the expected disbursement dates.
  • Students’ direct loans must be accepted and both steps above must be completed to ensure that the loan disbursement will be credited to their bill each term.
  • The loan disbursement will be posted to the student account during the 2nd week of each term. Once posted to their student account, students will be notified via MSOE email when their loan funds have been disbursed.  Federal student loans will have an origination fee which will be subtracted from the amount offered so the amount on the bill will be less than the amount on the financial aid offer.
  • Students must complete the steps above prior to or during the academic year.  Per federal regulations, loan applications cannot be processed after the academic year ends or if the student ceases to be enrolled at least half-time.
  • Students may also be required to submit final high school transcripts to MSOE's Admissions Office before federal aid can be disbursed to their account.
  • The National Student Loan Data System (NSLDS) is the U.S. Department of Education's (ED's) central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, the Pell Grant program, and other Department of ED programs. You can find a detailed history of your federal student loans on this site. MSOE is required to inform student/parent borrowers that the loan will be submitted to NSLDS and will be accessible by guaranty agencies, lenders, and institutions determined to be authorized users of the data system.

  • For a full review of the terms and disclosures regarding the Federal Direct Subsidized and Unsubsidized Loans, please read the linked Plain Language Disclosure.

Loan Repayment/Exit Counseling Information

Students can visit this page to access their loan repayment information, find their lender’s/servicer’s contact information, and complete the Federal Direct Loan Exit Counseling.