Federal Direct Stafford Loans are low-interest loans for eligible students to help cover the cost of higher education and loan awards are based on the information you provided on the FAFSA.
Federal Direct Subsidized Loans
Federal Direct Subsidized Loans are awarded to undergraduate students based on financial need as determined by the FAFSA. For the 2011-2012 year, the Undergraduate annual interest rate is fixed at 3.4% and the Graduate interest rate is 6.8%, for loans made prior to July 1, 2012. These loans also have a 1/2% fee. The federal government pays the interest on the loan while the student is enrolled at least half-time in a degree-seeking program, until repayment begins and during authorized periods of deferment.
For loans made after July 1, 2012 and for the 2012 - 2013 year, the subsidized interest rate for undergraduate loans will be 6.8%, and the fee will be 1%. Graduate and Professional students are not eligible for subsidized loans as of July 1. 2012.
Federal Direct Unsubsidized Loans
Federal Direct Unsubsidized Loans are not need-based and have a fixed interest rate of 6.8%. Interest accrues once the loan is disbursed and until it is paid in full. Students may elect to pay the interest while enrolled in school or request to defer payment on the interest. If you defer the interest, it will be added (capitalized) to the principal.
Federal Direct Loan Yearly and Aggregate Limits
The chart below shows the federal maximum yearly amount of Direct Subsidized and Unsubsidized Loans and the total aggregate limit for these loans:
DEPENDENT UNDERGRADUATES |
SUBSIDIZED |
TOTAL (SUB AND UNSUB) |
Freshman (0-29 earned credits) |
$3,500 | $5,500 |
Sophomore (30-59 earned credits) |
$4,500 | $6,500 |
Junior (60-89 earned credits) |
$5,500 | $7,500 |
Senior (90+ earned credits) |
$5,500 | $7,500 |
Certificate Programs |
$5,500 | $7,500 |
INDEPENDENT UNDERGRADUATES (AND DEPENDENTS WHOSE PARENTS ARE UNABLE TO BORROW PLUS) |
SUBSIDIZED |
TOTAL (SUB AND UNSUB) |
Freshman (0-29 earned credits) |
$3,500 | $9,500 |
Sophomore (30-59 earned credits) |
$4,500 | $10,500 |
Junior (60-89 earned credits) |
$5,500 | $12,500 |
Senior (90+ earned credits) |
$5,500 | $12,500 |
Certificate Programs |
$5,500 | $12,500 |
GRADUATE/PROFESSIONAL |
$20,500 | |
AGGREGATE LIMITS |
SUBSIDIZED |
TOTAL (SUB AND UNSUB) |
Dependent Undergraduates |
$23,000 | $31,000 |
Independent Undergraduates |
$23,000 | $57,500 |
Graduate/Professional |
$138,500 |
Federal Direct Graduate Plus Loans
Federal Direct Graduate PLUS Loans are awarded to graduate students who are enrolled in at least six credits in a degree-seeking program. There is no annual loan limit for the Graduate PLUS Loans but students cannot borrow in excess of their cost of attendance. Students who apply for Graduate PLUS Loans are subject to a credit check to evaluate creditworthiness. Before the Graduate PLUS Loan can be awarded, students must first apply for their maximum loan eligibility in Federal Direct Unsubsidized Loans. The interest rate for the Graduate PLUS Loan is fixed at 7.9% with a 2.5% loan fee (for loans made prior to July 1, 2012) or 4% (for loans made after July 1, 2012.. To apply for the Graduate PLUS Loan go to www.studentloans.gov, use your FAFSA PIN to sign in, and then click on the Request PLUS Loan link. You must also complete a Graduate PLUS Master Promissory Note (MPN) and Graduate PLUS Entrance Counseling at the same Website.
Federal Perkins & Nursing Student Loans
A Federal Perkins or a Nursing Student Loan is a fixed low-interest (5%) loan for students with exceptional financial need. MSU awards Federal Perkins and Nursing Student Loans primarily from funds generated from former students repaying these loans. As a Perkins Loan and/or Nursing Student Loan borrower, you are not charged a loan fee. If you accept a Nursing Student Loan and then withdraw from the Nursing Program, your Nursing Loan will be canceled and you will begin repayment immediately.
If you are a first-time Federal Perkins Loan borrower at MSU, you must sign a Perkins Master Promissory Note and complete a Loan Information Questionnaire and Statement of Responsibilities. These documents will be mailed to you the first time you accept a Perkins Loan. For students that accept a Nursing Student Loan, a Promissory Note and other loan documents will be mailed to you each year you accept a Nursing Student Loan.
You will have a nine month “grace period” after you graduate, withdraw, leave school, or drop below half-time enrollment (less than six credits), before repayment of your Federal Perkins Loan and/or Nursing Student Loan begins. At the end of your grace period, interest begins to accrue and you will have up to 10 years to repay the loan. There is never any penalty for prepaying on your loans. The total cost of borrowing a Perkins or Nursing Loan based on an annual loan amount of $2,000 with the fixed rate of 5% over a 10-year repayment period is $2,545. If you have any questions, please contact the Perkins and Nursing Loan Servicer at 406-994-2702.
Alternative Loans
Alternative Loans are available from some private lenders and used as a last resort to fill unmet need between what you have received from federal financial aid sources and the cost of attendance. Alternative Loans are not federally funded. The terms and conditions on alternative loans vary widely and we strongly recommend you research the various rates, fees, and repayment options. We also recommend the following independent Website: Student Lending Analytics, which compares rates and other variables before you pursue any alternative loan.
At Montana State University, we encourage students and families to make informed decisions about financial aid. We highly recommend that you borrow only the amount of loans you need to successfully complete your education.
Last updated 3/12
