search search close close

Financial Aid

Federal Direct Loan Information

The Federal Direct Loan Program provides students the opportunity to be awarded Subsidized and Unsubsidized loan funds. The Department of Education acts as the lender, providing funds for the Direct Loan Program and transferring those dollars to Minnesota West to be applied toward your account. Students must be registered at least 6 credits at the time your loan is certified and discursed by Minnesota West.

To accept the Subsidized or Unsubsidized Loans that you have been awarded, you must:

  1. Login in to your e-Services Student Account, using your StarID and password.

  2. Under the Financial Aid Tab, select "Loan."

  3. Read and follow all steps.

  4. Take the necessary steps to complete your Master Promissory Note and the Entrance Counseling.


Additional Federal Direct Loan Information

Subsidized and Unsubsidized Differences:

  • Subsidized Federal Direct Loans are need-based, long-term loans. Interest and principle on subsidized loans are deferred as long as the student carries at least a half time credit load. The interest rate is 5.5%.

  • Unsubsidized Federal Direct Loans are similar to Subsidized Federal Direct Loans except that only the principle is deferred while the borrower is enrolled in school. The interest must either be paid during the in-school period or the interest will accrue and be added to the principle balance. The interest rate is 5.5%.


A Federal Direct Loan is a loan, not a grant. This loan must be repaid. Before you borrow, determine your budget. Do you need loan funds to meet your educational costs? How much do you need? Don’t just borrow because the funds are available.  Remember, you will have to repay these funds.

Fees: A loan fee of  1.057% of the principle amount will be deducted from the loan disbursement. The fee helps reduce the cost of making these low-interest loans. The loan amount you receive will be less than the amount you have to repay.

Repayment of Principle: When a student graduates or ceases to be enrolled at least half time, a six-month grace period begins. During the grace period, interest begins to accrue on Unsubsidized Student Loans.

Loan Eligibility:
  -  Your loan eligibility is based on the types of aid you will be receiving on your award letter. If you become eligible for additional funding such as scholarships, third party funding, etc., your loan eligibility may decrease. As a result, you may have to repay part of your loan funds to the college if you have already received the loan funds, or may see future loan amounts decreased.

  -  Your loan may require proration (a reduction in what you are eligible to borrow) if your final period of enrollment at Minnesota West is just one semester or your program length is less than 24 credits. Therefore, the amount listed on your award letter may be higher than your actual remaining eligibility. The amount will be revised at the time the college certifies your loan.

First Time Loan Borrowers:  Federal Regulations require that the first disbursement of your loan be delayed until after the 30th day of the semester. After accepting your loan(s), please review the disclosure statement sent from the Department of Education.

Loans Accepted for One (1) Semester:  Must be released in two disbursements - one at the beginning of the term and another at the mid-point of the term. If you accept a loan for one semester, please plan accordingly. Note:  Summer semester loans will always be disbursed in two payments.

Limits

Borrowing Limits for Federal Direct Loans are determined by the federal government and are the same at all education institutions. The combined Subsidized and Unsubsidized Federal Direct Loan limits per year per grade level are:

  • Freshmen - $5,500 (subsidized may not exceed $3500)

  • Sophomore - $6,500  (subsidized may not exceed $4500)

Independent students may borrow additional funds under the Unsubsidized Federal Direct Loan program.

Aggregate Federal Direct Loan Limits: The Federal government limits the total amount of loan funds students are allowed to borrow throughout their educational career. These limits are a combination of Subsidized and Unsubsidized Federal Direct Loans. 

  • Dependent Undergraduate Student - $31,000 (subsidized may not exceed $23,000)

  • Independent Undergraduate Student - $57,500  (subsidized may not exceed $23,000)

*Note - Grade classification is determined by the number of earned credits at the time your award letter is prepared, not how many years you have attended college.  0-29 credits = Freshman, 30+ credits = Sophomore


Questions?
Contact a Resource Specialist or the Communication Center.