On March 30th 2010, President Obama signed the “Healthcare and Education Reconciliation Act of 2010”. This legislation made several changes to federal student aid programs. These changes included an end to the bank based lending system for federal loans, the Federal Family Education Loan (FFEL) program and requires all schools to use the Direct Loan Program. Direct Loans are federal loan programs supported by the Department of Education. The loans are funded by the federal government and serviced through a government designated servicing agency. Students and families will no longer choose their own lender for federal student loans.
All students who want to request Subsidized/Unsubsidized or PLUS loans for 2014-2015 must complete the following steps:
- Complete and submit a 2014-2015 Free Application for Federal Student Aid (FAFSA)
- Be registered for at least 6 or more credit hours and have access to STARS online.
- Complete Direct Loan Entrance Counseling online.
- Complete a Direct Loan Master Promissory Note (MPN) online. You will need your 4-digit FAFSA PIN number to login and sign your MPN.
- Submit a Direct Loan Request form to the Financial Aid office.
Direct Loans FAQ Sheet
Federal Direct Loans
Federal Direct Subsidized and Unsubsidized loans are one of the most affordable ways to borrow money to pay for college. They offer several advantages such as low, fixed interest rates (4.66% for Subsidized and Unsubsidized for 2014-2015) and a 6-month grace period after you either graduate or cease half-time attendance (whichever comes first). No credit check is required. Please also keep in mind that before borrowing, it’s important to maximize grants and scholarships before obtaining a loan to finance a college education.
To be eligible for Direct Subsidized and Unsubsidized loans, a student must first complete the Free Application for Federal Student Aid (FAFSA). The FAFSA may currently be completed online at www.fafsa.gov. To electronically sign your FAFSA, you will also need to obtain a PIN number from www.pin.ed.gov. Students who have previously applied for and have forgotten their PIN number can also request a duplicate PIN number from the PIN website. After you have submitted your FAFSA, the Rhodes State Financial Aid office will send all students an official award notification, or a letter requesting more information.
After completing all requirements and registering for classes as a half-time student (6 credit hour minimum), a student can complete Direct Loan Entrance Counseling and sign a Stafford loan master promissory note (MPN) online by logging into STARS. Once logged into STARS, you will click “Financial Aid”, then “Direct Loans”. On this page, you will see a link for Direct Loan Entrance Counseling and a Direct Loan MPN. You will need to have your 4-digit FAFSA PIN number available for this process. After you have completed entrance counseling and a new Direct Loan MPN, you must click the Direct Loan Request Form. You will need to fully complete this form and return it to the Financial Aid Office or submit electronically in order for your loan to be processed.
After you’ve signed the MPN online and submitted your loan request form, it can take up to 10-14 business days for the Financial Aid Office to process your request and send out an updated official award letter.
Proceed to STARS Online!
*Effective July 1, 2013, the law limits borrowing of subsidized loans to 150% of the stated program length for first time loan borrowers, those who have never borrowed or previous borrowers who have a zero loan balance per the National Student Loan Data System (NSLDS). Students in two-year programs will be limited to borrowing subsidized loans for three academic years. Students who transfer from a four-year program to a two-year program may have no subsidized loan eligibility and would only be able to borrow unsubsidized loans. Eligibility will be calculated by determining the periods of time in which the student borrowed a subsidized loan rather than by all the periods that a borrower is enrolled. Eligibility will also be calculated based on enrollment of less than full time.
Federal Direct PLUS Loans
Parents of dependent undergraduate students may borrow a Direct PLUS loan for students who are in need of additional financing for college beyond Direct Subsidized and Unsubsidized loans. Like Subsidized/Unsubsidized loans, PLUS loans have a fixed interest rate (7.21% for 2014-2015) and it is also possible to defer payments while the student is in school. PLUS loans differ from Subsidized/Unsubsidized loans in that they require a credit check on the parent borrower for approval.
Students and their parents should complete the FAFSA online following the above steps to determine a student’s financial need and to take advantage of any grants and Direct Subsidized/Unsubsidized loans first. After a student has registered for classes as a half-time student (6 credit hour minimum), the online PLUS application process and MPN may be completed. The parent borrower will need a FAFSA PIN number to sign in and electronically sign the PLUS MPN online. Once logged in, click to start the “PLUS Application Process” and complete all steps. You will sign the PLUS MPN after you have completed the initial application.
After you’ve signed the PLUS MPN online and requested a loan amount, it can take up to 10-14 business days for the Financial Aid Office to process your request and send out an updated official award letter to the student.
Students and their families should always maximize federal aid programs such as grants and Direct Subsidized/Unsubsidized and PLUS loans before considering private loans. Private loans are credit based educational loan programs that in most cases will require a co-signer for credit approval and determination of the interest rate. Terms of the loan itself and loan repayment details vary by lender, so please review all pertinent information before applying for a private loan. The Rhodes State College Financial Aid office does not house any applications for private loans or preferred lender lists, so a student and their family may contact any participating lender of their choice.
Students may consolidate their loans with Direct Lending after leaving school. Loan consolidation can ensure that the student is paying one low monthly payment to one servicer. This is a very useful tool for students who might have student loans borrowed from the Federal Family Education Loan (FFEL) program. Keep in mind that while loan consolidation can lower your monthly loan payment, it could extend the length of time that you have to repay your loan, meaning that you will pay more money in interest over the life of the loan. Also keep in mind that when you consolidate, you waive your 6-month grace period until repayment begins, so consider waiting to apply for a consolidation loan until you have used up much of your grace period.
To apply for a consolidation loan, please click on “Loan Consolidation” in the Loan Links and Resources section below. It would be useful to access your “Student Loan History” as well before starting a consolidation loan application.
Additional Loan Links and Resources