Direct Loans for Undergraduates
The largest source of low-interest loans administered by the U.S. Department of Education is the Federal Direct Loan program. Federal Direct Loan funding is available to all undergraduate students who have completed the FAFSA, enrolled as a matriculated student in an eligible degree program, registered for at least six credit hours per term, are U.S. citizens or resident aliens, and who are not in default on a prior student loan. Creditworthiness is not a requirement for the Direct loan.
Direct loans are either subsidized (e.g., the loan does not accrue interest while the student is enrolled in at least six credit hours) or unsubsidized. Subsidized loans are awarded on the basis of financial need as determined by the financial data provided by the student on the FAFSA and in conjunction with other forms of financial aid awarded to the student. Unsubsidized loans are available to students who may not have “need,” as described previously, but who would benefit from having access to a low-interest student loan program. Unlike the subsidized loan, the government does not pay the interest that accrues for unsubsidized loan borrowers, even while they are enrolled in at least six credit hours in an eligible program of study.
Amounts
Through either subsidized or unsubsidized loans, students can borrow the following maximum annual amounts:
- $5,500 for undergraduate students who have completed fewer than 29 credits, with no more than $3,500 in the subsidized loan
- $6,500 for undergraduate students who have completed 29 to 56 credits, with no more than $4,500 in the subsidized loan
- $7,500 for undergraduate students who have completed more than 56 credits, with no more than $5,500 in the subsidized loan
In addition to the Federal Direct Loan limits listed above, independent students (or dependent students whose parents are unable to borrow a Federal Direct PLUS Loan) may borrow additional amounts under the unsubsidized Federal Direct Loan program, as follows:
- $4,000 per year for undergraduate students who have completed fewer than 56 credits
- $5,000 per year for undergraduate students who have completed more than 56 credits
In addition to annual borrowing limits, students are also limited in the total amount they can borrow from the Federal Direct Loan program during their undergraduate and graduate academic careers. These limits are referred to as aggregate loan maximums and will vary depending on the student’s dependency status and degree being sought. The aggregate amount a dependent undergraduate student may borrow from the subsidized and unsubsidized loan programs combined is $31,000 (with no more than $23,000 in the subsidized loan.) Independent undergraduate students or dependent students whose parents are unable to borrow a Federal Direct PLUS Loan may borrow a total of $57,500 (with no more than $23,000 in the subsidized loan.) On average, students who graduated from Monmouth University during 2014-15 borrowed approximately $22,650 in Direct loans with an expected monthly payment of $228.
Application
The University’s Financial Aid Office will notify the student when to sign their Electronic Master Promissory Note (E-signature MPN) for their Direct loans. The student need not seek a loan application from a private banking institution.
Disbursement
Monmouth University is responsible for delivering the funds to the student; funds will be transferred electronically to the student’s account. All first-time Federal Direct Loan borrowers must participate in a loan counseling session before receiving the first disbursement of their loan proceeds. For your convenience, you are able to complete this session online. Begin the entrance counseling session.
Interest and Fees
The interest rate for both the Subsidized and Unsubsidized loans for 2018-19 is fixed at 5.05%.
Borrowers are charged, by the federal government, an upfront origination fee of 1.062% of the principal amount of the loan.
For students who borrow under the unsubsidized loan program, the interest must be paid by the borrower. This can be done in one of two ways. While the student is enrolled, the borrower can pay the interest as it accrues. Alternatively, rather than pay the interest during periods of enrollment, borrowers can have that interest capitalized, which means adding it to the principal amount borrowed. All capitalized interest must be repaid. The important thing to note here is that capitalized interest becomes principal in this process. Thus, students who use this second option end up paying interest on accrued (and then capitalized) interest.
For all Direct loan borrowers, repayment of principal and interest begins six months after graduation or termination of enrollment on at least a half-time basis. The federal government requires that students complete an exit counseling session when they graduate, withdraw, or drop below half-time attendance (i.e., less than six credits). For your convenience, you are able to complete this session online. Please use this link to begin the exit counseling session. To get an idea as to what your repayment amounts may look like, please take a look at the standard repayment table.
Master Promissory Note and Entrance Counseling
Master Promissory Note Instructions
The Federal Department of Education has developed an electronic signature process that will expedite the processing of your Master Promissory Note (MPN), which is required for all student loan borrowers. All new first-time borrowers of Federal Direct Loans, are required to complete a MPN. Please read and follow all instructions carefully in order to ensure that your funds will be processed and credited to your student account.
To begin the process, you will need your FSA ID – a username and password. The FSA ID has replaced the Federal Student Aid PIN and must be used to log in to certain U.S. Department of Education websites. Your FSA ID confirms your identity when you access your financial aid information and is used to sign legally binding Federal Student Aid documents electronically. It has the same legal status as a written signature.
Do not give your FSA ID to anyone. Sharing your FSA ID could put you at risk of identity theft! If you do not already have an FSA ID, you can create one when logging in to https://studentaid.gov.
Once you have your FSA ID, you may then complete your MPN at https://studentaid.gov. Please read and follow all instructions carefully. You must allow enough time complete the entire process in a single session. If you exit the website before submitting the signed MPN and return later, you will have to start over from the beginning. To successfully sign and complete your MPN, you must CONFIRM ACCEPTANCE OF ALL TERMS and SUBMIT the MPN.
Entrance Counseling Instructions
Federal regulations also require all first-time Federal Direct Loan borrowers to participate in a one-time loan entrance counseling session. The purpose of this counseling is to provide students with information that will help them understand their rights and responsibilities and may be completed online at https://studentaid.gov. You must allow enough time to complete the entire process in a single session. If you exit the website before completing the entrance counseling and return later, you will have to start over from the beginning.
The signed master promissory note (MPN) and entrance counseling must be completed prior to any loan funds being disbursed to your student account.
We strongly recommend that you complete the MPN and entrance counseling electronically. However, if you do not have access to a computer or simply prefer to complete a paper promissory note and entrance counseling, you may request both by contacting the Financial Aid Office at (732) 571-3463 or emailing the office atdorsey@monmouth.edu. You may also visit the Financial Aid Office in person in Wilson Hall, Room 108.
Federal Direct Loans for Graduates
Eligibility
The largest source of low-interest loans administered by the U.S. Department of Education is the Federal Direct Loan program. Federal Direct Loan funding is available to all graduate students who have completed the FAFSA, enrolled as a matriculated student in an eligible degree program, registered for at least six credit hours per term, are U.S. citizens or resident aliens, and who are not in default on a prior student loan. Creditworthiness is not a requirement for the Loan.
Graduate students are eligible to borrow the Unsubsidized Loan. The Unsubsidized Loan is not based on need, and interest is charged during all periods including in school, grace, and deferment.
Amounts
Students can borrow up to $20,500 per year through the Unsubsidized Loan. In addition to annual borrowing limits, students are also limited in the total amount they can borrow from the Federal Direct Loan program during their undergraduate and graduate academic careers. These limits are referred to as aggregate loan maximums and will vary depending on the student’s dependency status and degree being sought. Graduate students may borrow a lifetime maximum of $138,500 from the Direct Loan program with no more than $65,500 in the Subsidized Loan. These amounts include all Direct Loan borrowing at the undergraduate level.
Application
Monmouth University’s Financial Aid Office will notify the student when to sign their Electronic Master Promissory Note (E-signature MPN) for the Unsubsidized Loan. The student need not seek a loan application from a private banking institution. Borrowers should be aware that their loan will be submitted to the National Student Loan Data System (NSLDS) and will be accessible by authorized agencies, lenders, and institutions.
Disbursement
Monmouth University is responsible for delivering the funds to the student; funds will be transferred electronically to the student’s account. All first-time Federal Direct Loan borrowers must participate in a loan counseling session before receiving the first disbursement of their loan proceeds. For your convenience, you are able to complete this session online. Please use the link to begin the entrance counseling session.
Interest And Fees
Loans first disbursed on or after July 1, 2018 have a fixed interest rate of 6.60% as well as an origination fee of 1.066%. The origination fee is charged by the federal government and is applied to the principal amount of the loan.
Repayment
For students borrowing under the Unsubsidized Loan program, the interest must be paid by the borrower. This can be done in one of two ways. While the student is enrolled, the borrower can pay the interest as it accrues. Alternatively, rather than pay the interest during periods of enrollment, borrowers can have that interest capitalized, which means adding it to the principal amount borrowed. All capitalized interest must be repaid. The important thing to note here is that capitalized interest becomes principal in this process. Thus, students who use this second option end up paying interest on accrued (and then capitalized) interest.
Repayment of principal and interest begins six months after graduation or termination of enrollment on at least a half-time basis. To see what your repayment may be, you can look at the standard repayment table. The federal government also requires that students complete an exit counseling session when they graduate, withdraw, or drop below half-time attendance (e.g., less than six credits). For your convenience, you are able to complete this session online. Please use the link to begin the exit counseling session.