There are two types of student loans; federal loans and private loans.
- The federal government makes Federal Direct Subsidized and Unsubsidized and PLUS loans directly available to students through schools across the country. No banks or guarantee agencies are involved. The U.S. Department of Education is your lender.
- Private loans are available from private lenders, such as banks, savings and loan associations or credit unions. Depending on your or your cosigner’s credit strength, these loans may cost more than federal loans. Private loans may have different eligibility requirements than federal and state loans.
The U.S. Department of Education's federal student loan program is the William D. Ford Federal Direct Loan Program, commonly referred to as the Direct Loan Program. With this program, the U.S. Department of Education is the lender and students apply annually by submitting the FAFSA.
There are four types of Direct Loans:
- Direct Subsidized Loans are available to eligible undergraduate students who demonstrate financial need as determined by the FAFSA. The U.S. Department of Education pays the interest while the student is enrolled for at least six credits per semester, during the grace period, and during periods of loan deferment. Principle and interest payment begin six months after the student drops below six credits.
- Direct Unsubsidized Loans are available to eligible graduate and undergraduate students. Students are required to submit a FAFSA, but financial need is not a factor in determining eligibility. Interest accrues while the student is enrolled, but payment is not required. Principle and interest payments begin six months after the student drops below six credits.
- Parent Loan for Undergraduate Students (PLUS)/Grad PLUS is available to graduate students and parents of dependent undergraduate students. Applicants can borrow up to the student cost of attendance (determined by MSUM) minus any other financial assistance. These loans have a fixed interest rate set annually by the U.S. Department of Education and are not subsidized, meaning that interest accrues while the student is enrolled. Principle and interest payments begin (and are required) once the loan is fully disbursed. Deferments are available upon request. Interest will continue to accrue during the deferment period. Applicants with adverse credit history have the option to obtain an endorser or document to the U.S. Department of Education extenuating circumstances relating to the adverse credit history.
- Direct Consolidation Loans allow borrowers to combine their federal loans into a single loan with a single services.
Note: The Federal Perkins Loan program ended September 30, 2017. Contact ECSI at 1.866.313.3797 for information. Direct payments to: Department of Education, ECSI Federal Perkins Loan Services, P.O. Box 6200-31, Portland, OR 97228-6200
Undergraduate students may borrow from $5,500 to $12,500 per academic year through subsidized and unsubsidized loan programs depending on their year in school.
Graduate students can borrow up to $20,500 per academic year.
Maximum borrowing limits are based on combined borrowing through the subsidized and unsubsidized loan programs.
Students are encouraged to complete the Free Application for Federal Student Aid (FAFSA) to determine eligibility for federal and state aid. If federal and state aid are not sufficient to cover the cost of attendance, a private loan is another option. Private loans are non-federal loans made by private entities such as banks, credit unions and state-based or state-affiliated organizations. They are often a more expensive way to borrow then federal student loans. Their terms and conditions are set by each lender. Interest rates can be fixed or variable rates. Co-signers and credit checks are often required. Make sure applicants and cosigners understand the terms of a private loan before pursuing this option.
A link to several private loan programs used by MSUM students in recent years is below. Use this list as a starting point to compare private loan options.
Students who elect to borrow a private loan without submitting the FAFSA will need to understand and complete a waiver certifying they are forfeiting their eligibility to federal need-based and non-need-based aid.
Entrance Loan Counseling & Master Promissory Note
To ensure students understand the responsibility they are assuming when borrowing student loans, the U.S. Department of Education requires first-time borrowers to complete Entrance Loan Counseling.
Borrowers are also required to complete a Master Promissory Note, a legal document where students promise to repay their loans and any accrued interest and fees to the U.S. Department of Education.
Use the links above or visit studentaid.gov to complete Entrance Loan Counseling and the Master Promissory Note.
For more information on federal student loan deferments or student loan repayment options, visit studentaid.gov.
Minnesota State University Moorhead values the integrity in the actions of employees. The position an employee holds within the University is evidence of the trust we have in them. Compliance with all applicable laws, regulations and University policies, and performance of duties according to the highest standards of honesty and integrity are expected by all.