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Direct Loans

The Federal Direct Loan is available through the Department of Education to help both undergraduate and graduate students pay for their education. There are two types of Direct Loans: subsidized and unsubsidized.

Subsidized Direct Loan

Loan Eligibility for subsidized loans is based on financial need as determined by federal guidelines. A loan is called "subsidized" because the government pays interest for the student during at least half-time enrollment in school.

Unsubsidized Direct Loan

This type of loan is available to students regardless of income or need. With an unsubsidized loan, you are responsible for all interest that accrues during in-school, grace and deferment periods. You may choose to pay the interest portion only while in school, which would keep your loan balance at principal. If you choose to defer such payments, the interest will be capitalized, resulting in an increase in both total debt and the amount of monthly payments.

Advantages of the Direct Loan

  • It carries low origination fees. Fees range from $0 and up. Many other loans have significantly higher fees.
  • Repayment of the loan does not begin until you graduate or drop below half-time status. 
  • In cases of economic hardship, payments may be deferred, extended, or reduced.
  • The loan is forgiven in case of permanent disability or death.

Direct Loan Rates (2023-2024 School Year)

Loan Rate
Direct Subsidized Loans (Undergraduates) 5.50%
Direct Unsubsidized Loans (Undergraduates) 5.50%
Direct Unsubsidized Loans (Graduate or Professional Students) 7.05%
Direct PLUS Loans (Parents and Graduate or Professional Students) 8.05%

Loan Origination Fee Rates

 Loan Beginning October 1, 2019
Direct Subsidized Loans 1.059%
Direct Unsubsidized Loans 1.059%
Direct PLUS Loans 4.236%

Loans are usually issued for a single academic year, and both eligibility and amount are redetermined annually throughout your academic career.

Eligibility for Direct Loans

Your Direct Loan eligibility is determined by the Office of Financial Aid and is based on information you provided in the Free Application for Federal Student Aid (FAFSA) . 

Federal criteria include:

  • Enrollment in an eligible school at least half-time in a degree program
  • U.S. citizenship, permanent residency, or eligible non-citizen status
  • Satisfactory academic progress (as determined by the Office of Financial Aid)
  • No unresolved defaults or overpayments owed on Title IV educational loans and grants
  • Satisfaction of all Selective Service Act requirements

How Much Can I Borrow?

Borrowing limits are based on your dependency status and year in school. You are considered independent if:

  • you turned 23 before January 1st of the current year (or are at least 24 years old)
  • you are working on a master's or doctorate program
  • you are married
  • you have dependents other than your children/spouse who live with you and who receive more than half of their support from you
  • you have children who receive more than half of their support from you (documentation required)
  • both of your parents are deceased, or you (or you were until 18) are a ward/dependent of the court
  • you are or were an emancipated minor as determined by a court in your state of legal residence
  • you are or were in legal guardianship
  • you are an unaccompanied youth who was homeless or at risk of being homeless
  • you are a veteran of the U.S. Armed Forces
  • you are currently serving on active duty in the U.S. Armed Forces for purposes other than training

If any of these statements apply to you, you are considered an independent student. Be prepared to provide documentation as proof.

If none of these statements apply to you, you are considered "dependent" for FAFSA purposes.

You can never borrow more than the cost of education, less other financial aid received (special rules apply for recipients of Montgomery Chapter 30 VA benefits and Americorps benefits). Below are the maximum amounts you may borrow. 

If dependent, your combined subsidized and unsubsidized Direct Loan annual eligibility is as follows:

  Freshman Sophomore Junior Senior Graduate
Subsidized $3,500 $4,500 $5,500 $5,500 N/A
Unsubsidized $2,000 $2,000 $2,000 $2,000 N/A
Total $5,500 $6,500 $7,500 $7,500 N/A
If independent, your subsidized and unsubsidized Direct Loan annual eligibility is as follows:
Subsidized $3,500 $4,500 $5,500 $5,500 $8,500
Unsubsidized $6,000 $6,000 $7,000 $7,000 $12,000
Total $9,500 $10,500 $12,500 $12,500 $20,500

If graduate/professional, your loans are unsubsidized only and the annual eligibility is $20,500.

The cumulative maximum amount that may be borrowed as dependent undergraduate is $31,000 ($23,000 maximum subsidized) and for an independent is $57,500 ($23,000 maximum subsidized).

The Application Process

  1. Complete a Free Application for Federal Student Aid (FAFSA) application online at the Department of Education's website
  2. Once your FAFSA is processed, you will receive a Student Aid Report (SAR) documenting your financial resources and expected family contribution towards educational costs. An electronic copy will be sent to the Office of Financial Aid of the school listed on your application. Mississippi College’s school is code is 002415.
  3. Check your SAR for accuracy. If there are errors, follow the correction process indicated on the SAR or as instructed by the Office of Financial Aid.
  4. From the information obtained in the SAR and other supporting documents, we will generate an online Financial Aid Award Notification documenting the financial aid available to you including Federal Direct Loan eligibility.
  5. The student may accept all or a part of the aid by accepting and confirming the Financial Aid Award Notification online or returning the Direct Loan Acceptance Form.
  6. The student must complete Loan Entrance Counseling on the Web if they have not had a prior Stafford loan at Mississippi College.
  7. Once the Financial Aid Award Notification has been accepted and submitted and Loan Entrance Counseling has been completed, you may sign your school-certified Federal Direct Loan application/Promissory Note online. You will need to e-sign a new Master Promissory Note for the Federal Direct Program.
  8. You will receive a Notice of Guarantee and Disclosure Statement. This is your notice of loan approval, and it contains essential information about the terms and conditions of your loan. It also tells you the amount of your loan and an estimated date for the arrival of funds. 

Disbursement of Funds

An Electronic Funds Transfer (EFT) will be sent directly to our school. The amount of the proceeds will be the loan amount less the fees. Funds will credit first to your Bursar bill and if there are any excess funds the Bursar’s Office will notify you.