Loan Overview

  • What is a loan?

    A loan is money you borrow to buy or pay for something that you cannot afford to pay for up front. You are assuming that over time you will be able to pay the money back. Typically, you will also be charged interest on the loan, which is calculated by the agreed upon interest rate. This interest charge will then be added to the original amount you borrowed, called the principle. You will then repay the loan, both interest and principle, over an agreed amount of time based on the terms of the loan.
  • What kinds of student loans are there?

    Broadly speaking, there are two types of student loans -- federal direct loans and private/alternative loans. Under the Federal Loan umbrella, there are different loan programs. These programs are Direct Subsidized, Direct Unsubsidized, Direct PLUS and Perkins loans. Private/alternative loans are not handled by the government, and do not adhere to government-set interest rates or terms.
  • What is interest?

    Interest is the amount you have to pay to borrow money. When you take out a loan, interest charges will be added to your original loan amount and you will owe both the interest plus the original amount of the loan itself. The amount of interest owed is determined by the interest rate and the length of time you have the loan. The interest rate may be fixed, which means it does not change over time; or it may be variable, which means it can fluctuate.
  • What is the difference between interest and principal?

    Interest is the amount of money that you are charged by your lender to borrow money. You must pay this amount in addition to the original amount of money you borrow. This original amount is known as the principal.
  • How do I apply for federal loans?

    You need to complete the FAFSA to be considered for Federal Direct Subsidized and Unsubsidized Loans. You will also need to complete a Master Promissory Note (MPN). The FAFSA can be found at: The federal website for Federal Direct Loans where you can complete your MPN can be found at:
  • Do I have to accept the student loan on my Award Letter?

    No, you do not. If you do not want the student loan on your award letter, you do not have to accept it. Also, if you do not want the full amount of the loan on your award letter, you can work with the Financial Aid Office to borrow a smaller amount. Remember, be prudent about how much you borrow. Borrow only what you need to attend school.
  • If I accept my Federal Direct loan award, how will this affect other forms of student aid?

    Accepting a Federal Direct Subsidized and/or Unsubsidized Loan that is included in your financial aid award package should not affect other types of aid you have been awarded.
  • What happens to my Federal Direct loan if I do not attend school at least half-time?

    What happens to my Federal Direct loan if I do not attend school at least half-time? The government pays the interest on a Federal Direct Subsidized Loan as long as you are enrolled in school at least half-time. If you drop below half time status, your six-month grace period will begin. During the grace period, you will not have to make loan payments. Federal Direct Subsidized loans that were first disbursed on or after July 1st, 2012 and before July 1st, 2014 were not eligible for the interest rate subsidy during the 6 month grace period. Effective July 1st, 2014 for Federal Direct Subsidized loans disbursed on or after July 1st, 2014, this interest subsidy has been reinstated. This means that the interest on these loans will start to accrue after the six month grace period, not during. If you resume to over half-time enrollment status within the six month grace period window, your grace period will be reset to six months to begin the next time you fall below a half time status. If you do not resume at least half-time during this period, your loan will go into repayment at the end of the six month grace period. It is important to check the enrollment status requirements at your school to be certain you are enrolled at least half-time.
  • If I have already completed a Direct Loan MPN for another school, do I need to complete another one?

    No, if you currently have a valid Direct Loan Master Promissory Note (MPN) on file, you do not need to complete a new one. To retrieve a copy of your MPN, go to
  • What is the 150% Loan limit rule regarding federal direct subsidized loans?

    Beginning July 1st, 2013, any first time borrower, (which is defined as someone who has either never borrowed a federal student loan previously, or has borrowed previously but currently has a zero balance), will only be able to borrow federal direct subsidized loans for a maximum of 150% of the published program length in which he/she is enrolled. Once a student reaches the 150% mark, he/she will not be able to borrow further subsidized loans, however he/she may be eligible for unsubsidized loans. Additionally, those subsidized loans that had been borrowed up to the 150% point will lose further government subsidy and interest on these loans will begin to accrue. From the 150% point forward, these subsidized loans will become unsubsidized loans. For example, if the published length of a program is the equivalent of four years, a student may borrow subsidized loans for the equivalent of six years while in the same program, if all other eligibility requirements are met.