Federal Direct Loans
Students who file the Free Application for Federal Student Aid (FAFSA) are eligible to borrow through the Direct Loan program. Depending on your financial need and the total amount of your other assistance, we will determine if you qualify for a Subsidized or Unsubsidized loan.
For a Direct Subsidized Loan, the federal government pays (or subsidizes) the interest that accrues during the time the student is consistently enrolled in college. The student will begin to incur interest after they are no longer enrolled.
For a Direct Unsubsidized Loan, the federal government does NOT pay or subsidize the interest expense. Therefore, the interest that accrues on the loan during the enrollment period is the student’s responsibility. For 2020-21 the interest rate for both Direct Subsidized and Unsubsidized Federal Loans is 2.75% fixed.
There are maximum borrowing limits for students that are determined based on the student’s earned credits and class standing:
|Class Standing||Maximum Subsidized||Additional Unsubsidized||Total Loan Eligibility||*Additional Eligibility|
*Additional eligibility for Direct Loans exists for Independent Students or for Dependent students whose parent has been denied a Federal Parent (PLUS) Loan. For more information, please contact our office.
Steps to finalize your Federal Direct Loans
- For new students, if you wish to accept the loan, you may do so in your self service portal, or by indicating “yes” next to the award on your Financial Aid Award Letter.
- Complete a Direct Loan Master Promissory Note at studentaid.gov. Log in using your FSA ID, select “Complete Loan Agreement (MPN)” then “MPN for Subsidized/Unsubsidized Loans”.
- Complete Entrance Counseling at studentaid.gov. You will sign in (or continue on from signing your Master Promissory Note) and click on “Complete Loan Counseling,” then click on “Entrance Counseling.” Continue reading the content and answering the questions until you see “Congratulations, you are finished”.
Signing the MPN and completing entrance loan counseling are federal requirements for all student loan borrowers and must be completed prior to the loan being disbursed. Once you have finished the steps above, we will be notified within 48 hours and will proceed with processing your loan. All disclosures and legal documents for the loan will be provided directly from the Department of Education, Direct Loans.
Federal Parent PLUS Loan
Parents who need additional help in financing their student’s education and who have filed the FAFSA, have the option to borrow through the Federal Parent PLUS Loan Program. A parent may borrow enough to cover educational costs, which is determined by the school. The maximum amount is the student’s cost of attendance minus any financial aid assistance the student receives.
Monmouth College processes all Parent PLUS loans directly with the Department of Education, Federal Direct Loan Program. The Parent PLUS loan requires successful completion of a credit history check. For the 2019-2020 academic year, the interest rate is fixed at 7.08% and the loan origination fee is 4.248%. The origination fee is deducted from the gross amount of the loan when it is disbursed to the student’s account.
Payment begins 60 days after the loan is fully disbursed. Deferring payments for the Parent PLUS Loan is an option if the student remains enrolled at least half time, but interest continues to accrue.
First time Parent PLUS loan borrowers must complete the following two steps. Continuing Parent PLUS loan borrowers ONLY need to complete step one.
- Complete a PLUS loan application at StudentLoans.gov. Log in using your (the parent) FSA ID and password and click on “Apply for a Direct PLUS Loan.” Then, click on “Direct PLUS Loan Application for Parents.” You will need to specify the dollar amount or choose the maximum amount you wish to borrow for the entire year. The credit decision is given immediately on the last page of the application. If your credit is denied, it is NOT necessary to complete step 2.
- Complete the MPN for the Parent PLUS loan while you are already signed in at StudentLoans.gov. Fill in all the requested parent data and submit. Monmouth College will be notified electronically, normally within 48 hours, when it is complete.
Once a parent has completed the steps above, we will process the loan electronically with the Federal Government. All disclosures and legal documents for the loan will be provided to the parent borrower directly from Department of Education, Direct Loans.
These types of loans are not part of the Federal Loan programs, but are available to students who wish to borrow through a private source. We would strongly encourage all students to take advantage of the Federal Loan programs prior to pursuing a private/alternative loan. The interest rates, terms and fees vary greatly among the private loans and often are determined by your credit rating and whether or not you have a co-signer.
Below are links to lenders that we have the most experience with when processing the private alternative loans. We have provided names of a variety of lenders from a variety of locations in an attempt to provide our students from across the country with a list of names that may sound familiar to you or that you may already do business with.
There is no benefit to the college or to college staff members if you select one of these lenders over another of your own choosing. Your reasons for selecting a particular lender should benefit you, the borrower. We encourage you to do your homework and consider a number of lenders before deciding on one.