St. Cloud State University
Types of Financial Aid - Federal
Direct Loan
Beginning in fall 2009, St. Cloud State University will participate in the William D. Ford Federal Direct Loan Program. The Direct Loan Program is a guaranteed student loan, which may be subsidized, unsubsidized, or both. Until summer 2009, St. Cloud State University (SCSU) participated in the Federal Family Education Loan (FFEL) Program in which students selected a lender.
Under the Direct Loan program students will apply for and receive their loan funds directly from the U.S. Department of Education rather than through a private lender. All students borrowing a Direct Loan for 2009-2010 must complete a new Master Promissory Note (MPN).
Information on the federal Direct Loan program is available at www.direct.ed.gov/student.html. A list of Frequently Asked Questions is available at www.stcloudstate.edu/financialaid/documents/DirectLendingFAQ_000.pdf
Apply for Your Loan
Once your financial aid application is complete, we will prepare and notify you of your official award letter. When you are notified of your on-line financial aid award letter, you may apply for your federal Direct Loan. We will verify your loan eligibility based on financial need and your enrollment status.
There are three steps to apply for your federal loan:
- Complete entrance loan counseling (required of first-time borrowers only).
- Complete Master Promissory Note (MPN) if you have not completed one under the Direct Loan program.
- Request your loan amount
If you have not yet applied for financial aid, please complete the two step application process: 1) Free Application for Federal Student Aid (FAFSA) and 2) SCSU Application for Financial Aid
Interest Rates
The federal Stafford Loan is a guaranteed student loan, which may be subsidized, unsubsidized, or both.
- The subsidized Federal Direct Loan is a need-based loan. The federal government pays the interest on the subsidized loan while you are in school at least half-time (6 credits) and during the 6 month grace period. You can borrow up to your financial need as determined by the federal financial aid formula or up to the program maximum, whichever is less.
- The unsubsidized Federal Direct Loan is similar to the subsidized loan except the federal government does not pay the interest while you are enrolled. You are responsible for paying all of the interest that accrues on this loan during the in-school period, the grace period, and periods of repayment or deferment. The interest may either be paid periodically or capitalized and added to the principal amount of the loan.
The current fixed interest rates for undergraduate students are 5.6% for the subsidized Direct Loan and 6.8% for the unsubsidized Direct Loan. Graduate students have a 6.8% interest rate for both the subsidized and unsubsidized Direct Loan.
Loan Limits
| Direct Loan Limits per Grade Level | Dependent Student | Independent Student |
| Grade level 1 (0-29 semester credits completed) | $5,500 | $9,500 |
| Grade level 2 (30-59 semester credits completed) | $6,500 | $10,500 |
| Grade levels 3 or 4 and 5 (post-baccalaureate) | $7,500 | $12,500 |
| Grade levels 6 or 7 (graduate student) | $8,500 | $20,500 |
The maximum aggregate Direct Loan limits are specified by federal law. Federal regulations also stipulate that a student cannot receive financial aid in excess of the cost of attendance. Therefore, some students are not able to borrow the full amounts listed.
- Dependent Undergraduate: $31,000 (only $23,000 subsidized)
- Independent Undergraduate: $57,500 (only $23,000 subsidized)
- Graduate and Professional Students: $138,500 (only $65,500 subsidized)
Loan Counseling
All borrowers under the Direct Loan program are required to complete loan entrance and exit counseling.
Entrance Counseling:
If you have not previously borrowed under the Direct Loan program, you must complete loan entrance counseling before the first loan disbursement can be made. Loan entrance counseling takes approximately 25 minutes and provides a good overview of your rights and responsibilities as a student borrower.
If you have previously borrowed and completed entrance counseling under the FFELP Program, you are not required to complete entrance counseling again. Only new borrowers in Fall 2009 are required to complete entrance counseling.
Exit Counseling
If you graduate, withdraw, or enroll less than half-time (6 credits), you must complete loan exit counseling. The loan exit counseling takes approximately 25 minutes and will help you understand your loan repayment terms and options.
Loan Proration
Students graduating within the academic year and attending less than a full academic year are required by federal law to have their Direct Loan amount prorated. Example: A senior graduating after fall semester cannot receive more than $2,750 (one-half of the annual $5,500) in a subsidized Direct loan.
Loan Repayment
Repayment begins 6 months after you graduate, withdraw, or enroll less than half-time (6 credits). Minimum monthly payments of $50 are made to the lender and may increase depending on the total amount borrowed. A Loan Repayment Calculator may be a helpful resource to determine how much interest you will pay and what your monthly payments will be based on the amount that you borrowed. To retrieve your federal loan information, visit the National Student Loan Data Services (NSLDS) website at https://www.nslds.ed.gov/nslds_SA/. You will need your 4-digit federal Personal Identification Number (PIN) to retrieve the data.
At times, personal situations may make it difficult for students to repay their student loan. In such cases, you may be eligible for a loan deferment that allows you to postpone payment of principal for a specific period of time. To arrange a deferment, contact your lender regarding eligibility and deferment forms. Additional information on loan repayment may be found at Federal Student Aid (http://studentaid.ed.gov/PORTALSWebApp/students/english/index.jsp).You may also want to consider loan consolidation to combine or possibly reduce your monthly loan payments.
The Income Based Repayment (IBR) is available for borrowers of federal student loans. The IBR helps borrowers to keep their loan payments affordable with payment caps based on their income and family size. The IBR is available to federal student loan borrowers in both the Direct Loan and Federal Family Education Loan (FFEL) programs. The IBR does not apply to PLUS loans made to parent borrowers. Additional information on the IBR may be found at www.IBRinfo.org*
*IBRinfo.org is a nonprofit, independent source of information on IBR and Public Service Loan Forgiveness. The site, created by the Project on Student Debt, is not managed by St. Cloud State University or the SCSU Financial Aid Office. SCSU is not liable or responsible for the information contained on the IBRinfo website.
Teacher Loan Forgiveness
The Teacher Loan Forgiveness Program is intended to encourage individuals to enter and continue in the teaching profession. Information may be found at the federal Student Aid on the Web at http://studentaid.ed.gov/PORTALSWebApp/students/english/cancelstaff.jsp The Teacher Cancellation Low Income Directory may be found at https://www.tcli.ed.gov/CBSWebApp/tcli/
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St. Cloud State University is an affirmative action/equal opportunity educator and employer.
St. Cloud State University is a member of the Minnesota State Colleges and Universities system.
