Federal Direct and Alternative Student Loans
Loans allow students and their parents to borrow money in addition to scholarships and grants. As part of funding options at Medaille, you may wish to consider one or more federal loans through the William D. Ford Federal Direct Loan program or an alternative loan.
Federal Direct Subsidized Loans
Direct subsidized loans are made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school. This is a need-based loan. To qualify, a student must have a financial need as defined by federal regulations. The federal government pays the interest on this loan for the student while enrolled at least half time in school and until the student begins repayment six months after leaving school. Interest will also be paid during qualified deferment periods.
How to Apply for a Direct Subsidized Loan
Complete the Free Application for Federal Student Aid (FAFSA).
You will be sent an award letter by the Financial aid Office. Follow the instructions and accept, decline, or accept a partial amount of the offered loan.
Once you have confirmed the amount that you want to borrow, we will electronically transmit the loan application data to the U.S. Department of Education.
First-time Direct Stafford Loan borrowers must complete an Electronic Master Promissory Note (e-MPN). This can be done online by visiting studentloans.gov. You will need your PIN to sign in; this is the same PIN used to complete the FAFSA.
Federal regulations require that first-time Stafford borrowers complete Loan Entrance Counseling before receiving any loan proceeds. To complete the Direct Stafford Loan Entrance Counseling, visit studentloans.gov. You will need your PIN to sign in; this is the same PIN used to complete the FAFSA. The Financial Aid Office will be notified when you have completed your Entrance Counseling.
Annual and Aggregate Loan Limits for Direct Subsidized Stafford Loans
| Year | Dependent Undergraduate Students | Independent Undergraduate Students (and dependents whose parents cannot borrow PLUS loans) |
|---|---|---|
| Freshman | $3,500 | $3,500 |
| Sophomore | $4,500 | $4,500 |
| Junior & Senior | $5,500 | $5,500 |
| Aggregate Loan Limits | $23,000 | $23,000 |
Federal Direct Unsubsidized Loans
Direct unsubsidized loans are made to eligible undergraduate, graduate, and professional students, but in this case, the student does not have to demonstrate financial need to be eligible for the loan. This loan is available to all eligible students regardless of financial need. The student is responsible for paying the interest as soon as the loan is disbursed. He or she can elect to defer interest payments and have them added to the loan balance at the time the loan enters repayment. The principle payments are deferred:
While the student is enrolled at least half time
For six months after the student leaves school
During qualified deferment periods
How to Apply for a Direct Unsubsidized Loan
Complete the Free Application for Federal Student Aid (FAFSA).
You will be sent an award letter by the Financial aid Office. Follow the instructions and accept, decline, or accept a partial amount of the offered loan.
Once you have confirmed the amount that you want to borrow, we will electronically transmit the loan application data to the U.S. Department of Education.
First-time Direct Stafford Loan borrowers must complete an Electronic Master Promissory Note (e-MPN). This can be done online by visiting studentloans.gov. You will need your PIN to sign in; this is the same PIN used to complete the FAFSA.
Federal regulations require that first-time Stafford borrowers complete Loan Entrance Counseling before receiving any loan proceeds. To complete the Direct Stafford Loan Entrance Counseling, visit studentloans.gov. You will need your PIN to sign in; this is the same PIN used to complete the FAFSA. The Financial Aid Office will be notified when you have completed your Entrance Counseling.
Annual and Aggregate Loan Limits for Direct Unsubsidized Stafford Loans
| Year | Dependent Undergraduate Students | Independent Undergraduate Students (and dependents whose parents cannot borrow PLUS loans) |
|---|---|---|
| Freshman | $5,500 | $9,500 |
| Sophomore | $6,500 | $10,500 |
| Junior & Senior | $7,500 | $12,500 |
| Aggregate Loan Limits | $31,000 | $57,500 |
Federal Direct PLUS Loans (for parents of undergraduate students)
The Federal Parent Loan for Undergraduate Students or PLUS is a federal loan program that allows parents of dependent undergraduate students to take out a loan to cover the difference between a student aid package and the actual costs of the College.
Facts About PLUS
Interest rate is fixed and new interest rates are determined annually.
Payments begin 60 days after the final disbursement of the loan in the year it was borrowed. Parents can request that payments be deferred while the student is still attending school. Loan has a standard 10-year repayment schedule but no penalty for early repayment.
Origination fees (up-front loan processing fees) are determined annually.
How to Apply for a Direct Parent PLUS Loan
Complete the Free Application for Federal Student Aid (FAFSA).
Visit and sign in to studentaid.gov, then select Request a PLUS Loan. You (the parent) will need a PIN to sign in; this is the same PIN used to complete the FAFSA. A borrower who does not have a PIN can request one at pin.ed.gov. During the PLUS application process, when asked for the loan amount, we recommend you indicate the specific amount you want to borrow. If help is needed in determining the amount, please contact the Financial Aid Office. Also, a credit check will be done during the process; you will be notified immediately of the credit approval or denial. Time permitting, we suggest that you do the PLUS Request Process after the Financial Aid Award Letter has been received.
If you are approved, wish to borrow the PLUS Loan, and are a first-time Direct Parent PLUS Borrower, continue on to complete the PLUS Master Promissory Note (e-MPN). If you (the parent) have previously borrowed a Direct PLUS Loan for the student, you should not have to complete a new e-MPN.
We will receive electronic notification of the credit decision. If approved, we will process the PLUS Loan. If denied, the student may be eligible for additional Direct Unsubsidized Stafford Loan. We will send a revised award letter showing the additional Unsubsidized Stafford Loan eligibility.
Federal Student Loan Interest Rate Information
Congress has passed and the President has signed the Bipartisan Student Loan Certainty Act of 2013, which ties federal student loan interest rates to financial markets. Under this Act, interest rates will be determined each spring for new loans being made for the upcoming award year, which runs from July 1 to the following June 30. Each loan will have a fixed interest rate for the life of the loan.
About Federal Student Loan Fees
Most federal student loans have loan fees that are a percentage of the total loan amount. The loan fee is deducted proportionately from each loan disbursement you receive. This means the money you receive will be less than the amount you actually borrow. You’re responsible for repaying the entire amount you borrowed and not just the amount you received. See current federal student loan fees.
View Current Federal Student Loan Interest Rates and Fees
Please note, in order to be considered for any of these direct loans, you must file the Free Application for Federal Student Aid (FAFSA).
Commonly referred to as private loans, alternative loans are commercial loans offered by banks and other private lenders to cover the costs of college beyond financial aid.
We strongly encourage students to explore all funding options—scholarships, grants, work study and federal loans—prior to applying for a private loan.
If you determine that an alternative loan option is the right choice for you, we encourage you to explore the loan programs to find the one that best suits your needs.
How Alternative Loans Differ From Federal Loans
These loans are not guaranteed. Both the student and co-signer (if needed) will be subject to a credit check.
Interest rates on these loans may be higher than the federal rate. There are several places to find the current rates for Prime, T-bill, LIBOR and the other instruments that lenders use to set their interest rates, but we suggest you bookmark bankrate.com. When you visit, there will be many indexes listed. The three main indexes for private loans are: Wall Street Journal (WSJ) Prime, 91Day T-bill, and the one-month LIBOR plus a certain percent.
There are no interest rate caps on these private loans, unlike federal loans. While alternative loans typically defer payments while you are in school and offer a grace period afterwards, interest continues to accrue during these time periods. Make sure to read and understand loan conditions and terms prior to signing the promissory note.
How to Apply for an Alternative Loan
To apply for an alternative loan, start with our alternative loans list. If you are approved through one of our alternative loans, we will certify the amount of loan that you are eligible for and transmit this information back to the lender for a final guarantee. Please understand that you have the right and ability to select the lender of your choice, are not required to use any of the lenders on our alternative loans list, and will suffer no penalty for choosing a lender that is not on our list.
If an alternative loan is listed on your award letter in an offered status, it is only a recommended amount, and you must apply each school year and receive a credit approval to be eligible for the loan. Also, if there is a specific alternative loan lender listed on your award letter, it is the lender that you used in the past. However, you are free to use any lender you wish.