We know that most families want to maximize the amount of grant and scholarship assistance for which they are eligible each year. However, we also know that many families will still have some level of unmet need even after all grant and scholarship awards have been applied. Student loans provide an opportunity for additional assistance in covering the immediate costs associated with remaining educational expenses.
While no student or family should enter into debt without careful planning, most experts agree that educational loans are what we would call “good debt.” Much like using a mortgage to buy a home, paying for higher education may be an instance where the leveraging power of a small loan puts you in the best long term overall financial position. The careful use of loan assistance allows you to invest in education now, with the understanding that a degree will likely help to increase overall lifetime earning potential, making repayment in the future possible.
It is vitally important that you and your family carefully consider the amount of loans that are truly needed to pay for necessary and legitimate educational expenses, and that you not borrow one penny more than is needed. Loans, unlike grants, federal work-study, or scholarships, are borrowed funds that must be repaid. Although payment is usually deferred while you are enrolled at least half-time, failure to pay when the loan is due will damage your credit rating and can carry substantial penalties.
Budgeting is very important when considering how much to borrow, so make sure you and your family have set realistic borrowing levels that will ensure that you will be able to repay your student loans after you graduate.
A variety of direct student loans are available through the US Department of Education. These loans carry low interest rates, and allow you to borrow directly from the federal government. In most cases, you will have a single loan servicer for repayment, regardless of whether you received multiple types of direct loans at multiple institutions. It’s important that you and your family carefully review all information related to loan borrowing, and that you make good decisions regarding the type and amounts of loans received.
In general, Federal Direct Student loans are available as a subsidized loan for undergraduate students with demonstrated financial need, or as an unsubsidized loan for undergraduate or graduate students without demonstrated financial need. Federal PLUS loans are low-interest federally funded loans available to the parents of dependent children or to graduate students who qualify through a credit check.
Federal Direct Student Loans are made available through the William D. Ford Federal Direct Loan Program. This program offers two types of Federal Direct Loans: subsidized and unsubsidized. These loans must be used for educational expenses during attendance at Middle Tennessee State University.
There is a grace period of 6 months after graduation or dropping below half-time attendance before repayment of the principal of the Federal Direct Student Loan begins. Loan amounts are awarded based on dependency status and grade level and cannot exceed the established cost of attendance for the school, including other aid received. Your MTSU financial aid awards may include both subsidized and unsubsidized loans.
Federal Direct Subsidized Loan
Subsidized loans are awarded to undergraduate students on the basis of financial need as determined by the Financial Aid Office. With a subsidized loan, the federal government pays interest on the student loan while you are enrolled at the university on at least a half-time basis, and during the six-month grace period after you are no longer enrolled on at least a half-time basis. For Direct Subsidized loans disbursed between July 1, 2012 and June 30, 2014, the student is responsible for paying the interest during the grace period.
Federal Direct Unsubsidized Loan
Student borrowers may qualify for this type of loan regardless of need or income. Both undergraduate and graduate students may be eligible. With unsubsidized loans, you are responsible for interest that accrues on the loan from the time the loan is disbursed until it is paid in full. You may choose to pay the interest as it accrues while you are enrolled, or you may defer the interest payments and allow them to accumulate (capitalize). If you choose to pay the interest as it accumulates, you will ultimately repay less. If you defer the interest, it will capitalize, which will result in an increase in student loan debt and monthly payments.
Federal Direct Direct Loan Eligibility
In addition to filing the FAFSA, the following eligibility requirements must be met in order to qualify for a Federal Direct Student Loan:
- Half-time enrollment at an eligible institution, such as MTSU, in an eligible degree seeking undergraduate or graduate program (Graduate Certificate programs are not eligible)
- Be a U.S. citizen or eligible non-citizen
- Maintain Satisfactory Academic Progress (SAP)
- Not be in default on an educational loan or overpayment on an educational grant
- Not have Title IV student loans that exceed the annual or aggregate loan limits
Federal Direct Student Loan Application Process
- Complete the Free Application for Federal Student Aid (FAFSA)
- Once your FAFSA has been processed, you will receive a valid Student Aid Report (SAR) which will summarize all of the information you provided on your FAFSA and your federally calculated Expected Family Contribution (EFC) that is used in determining your eligibility for federal student aid. An electronic copy of your SAR will automatically be sent to the Office of Financial Aid of the school(s) listed on your FAFSA.
- Once your financial aid file has been completed, the Financial Aid Office will notify you by campus email to view your awards on PipelineMT. Federal Student Loans will either be “offered” on your PipelineMT account or you will have an option to submit a Loan Request Sheet.
If Federal Direct Student Loans are “offered” on PipelineMT, you will have the option to accept or decline your student loan awards and have the option to accept a lesser amount than was awarded. Always accept a subsidized loan before accepting an unsubsidized loan!
- Please remember that you will need to determine what your expenses and resources will be for the upcoming year before accepting or refusing a loan. Do not borrow more than you need! If you do not need a loan, select 'Decline' under the ‘Accept Award’ column and then click ‘submit decision’.
- One semester only loans will require a Loan Request Sheet to be turned in to the MT One Stop.
- All first-time borrowers at MTSU must complete an online Loan Entrance Counselingbefore receiving any loan funds.
- You must complete your Federal Direct Loan Master Promissory Note (MPN)before loan funds can disburse onto your account. Once completed, your MPN is generally
valid for ten years.
- 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.
6. **Exciting Opportunity **Students have the ability to complete an Annual Student Loan Acknowledgment through the https://studentaid.gov You will log into this site with your FSA username and password.
- What Is It? : The Annual Student Loan Acknowledgment will allow student borrowers the opportunity to view and confirm their total federal loan balance, provide insight to what your anticipated monthly payments and median salary may be after graduating, and break down basic loan concepts such as interest accrual and capitalization and the difference between private and federal student loans.
- When Is It Needed?: The Annual Student Loan Acknowledgment is not a federal loan requirement at this time; however, you are strongly encouraged to take advantage of this tool in order to become a more informed borrower.
- This online tool is currently available and within a matter of minutes, you can be on your way to understanding educational debt and how it can affect your financial future.
7. Student loan funds are disbursed to accounts approximately three days before classes begin “if” all of the above steps have been completed. Students who have signed up for direct deposit will generally receive a refund (if applicable) within the first week of classes. Otherwise, student loan funds are disbursed to accounts throughout the semester as the above steps are completed, and students will receive refunds as applicable.
Eligibility for all Federal Direct Loans will be based on cost of attendance, the Expected Family Contribution (EFC) as determined by FAFSA, other aid received, and the loan limits set by the U.S. Department of Education. Students may never qualify for more than the cost of attendance for the college or the annual loan limit. The charts below show the maximum amounts you may borrow.
Maximum Annual Loan Limit
Undergraduate loan limits for dependent students
Undergraduate loan limits for independent students or dependent students with a Parent PLUS denial
Graduate loan limits for graduate and professional students
|Graduate Yearly Loan Maximum|
Maximum Aggregate Loan Limits
Federal Direct maximum aggregate limits
|Dependent Undergraduate||Independent Undergraduate|
|$31,000 (no more than $23,000 of which can be subsidized)||
$57,500 (no more than $23,000 of which can be subsidized
|$138,500 (no more than $65,500 of which can be subsidized)|
Additional bachelor’s degree
Undergraduate students enrolled at least half-time while taking coursework toward an additional bachelor's degree may qualify for a Federal Direct Student Loan provided they have not reached their aggregate limit. Before a loan can be processed and/or disbursed, you must submit a Request for Federal Financial Aid for Additional Coursework form to the MT One Stop.
Students who have completed an undergraduate degree and are enrolled for the sole purpose of attaining teacher licensure may be eligible for Federal Direct Student Loans at the undergraduate level, provided they have not reached their undergraduate aggregate loan limit. To receive aid, you must be enrolled at least half-time in required teacher certification coursework. You must submit a copy of your Program of Study and a Request for Federal Financial Aid for Additional Coursework form to the MT One Stop. The yearly maximum loan amount available is a Senior loan limit for independent students. For dependent students working on a Teacher’s Certification program, the maximum loan amount cannot exceed $5,500.
Graduate Students Required to take Undergraduate Prerequisites
Graduate students admitted into a graduate program who are required to enroll in undergraduate prerequisite courses may qualify for Federal Direct Student Loans at the graduate level, provided they have remaining hours up to the maximum 30 remedial hours allowed at MTSU. Before the loan can be processed, you should submit to the MT One Stop a Request for Federal Financial Aid for Additional Coursework form and complete the Prerequisite Verification Form with the College of Graduate Studies.
The Federal Direct PLUS loan is a low-interest federally funded loan for parents of dependent students and for graduate students. These loans enable parents and/or graduate students with good credit histories to borrow funds to pay educational expenses. The amount of the loan may not exceed the cost of attendance minus other financial aid the student will receive.
Federal PLUS Direct Loan Eligibility
A parent or graduate student (the borrower) is eligible to apply if he or she is:
- The natural parent, adoptive parent, or step-parent (If step-parent's income and assets are considered on the FAFSA) of an eligible dependent Undergraduate student. Grandparents, foster parents, legal guardians, aunts and uncles are not considered parents unless they have legally adopted the student.
- A U.S. citizen, U.S. national or eligible non-citizen.
- Not in default on any Title IV loan program.
- Must have a good credit history. Any adverse credit may cause the application to be
Also, in the case of a Federal Direct Parent PLUS, the student for whom the parent is borrowing must be a dependent student (as defined by FAFSA) who is enrolled at least half-time and is maintaining Satisfactory Academic Progress.
The interest rate on a Federal Direct PLUS Loan is variable and is adjusted annually on July 1. The Federal Student Aid website publishes the most recent updates regarding current interest rates. The Federal PLUS Loan carries an origination fee, which is paid to the U.S. Department of Education to help offset the cost of operating the Federal Direct PLUS Loan Program. We recommend that, if possible, parents request the loan period of two semesters, to ensure availability of funds for the full academic year.
For fall/spring Federal Direct PLUS loan periods, loans will be disbursed in two equal payments at the beginning of each semester. The loan funds are credited to the student’s account. Any amount owed to MTSU will be deducted from the loan funds. If the loan proceeds are more than what is owed, a Federal Direct PLUS refund will be given to the parent or student (if the parent authorizes).
Federal Direct PLUS Loan application process
Parents and students should begin completing the Free Application for Federal Student Aid (FAFSA) in January or as early as possible in each calendar year. If the proceeds of the Federal PLUS Loan are needed to pay for tuition and fees by the scheduled August payment deadline dates, the Federal PLUS Loan should be completed online by mid-June. However, graduate students and parents may still apply for the Federal Direct PLUS Loan even after the semester begins as long as the student is enrolled at least half-time.
- The results from the Free Application for Federal Student Aid (FAFSA) must be on file in the Financial Aid Office. If you have not completed the FAFSA, you may apply online.
- To determine if the graduate student or parent is eligible for a Federal Direct PLUS Loan, a request for the loan must be submitted on the https://studentaid.gov/ website. The graduate student or parent borrower will log into the site using his/her FSA username and password. Once the request is submitted online, the US Department of Education will initiate a credit check and the borrower will immediately be provided with the credit decision for the Plus loan. Please submit your completed online application at least 45 days prior to the time loan funds are needed.
- If the Federal Direct PLUS loan is approved, the graduate student or parent must sign the Master Promissory Note (MPN) with the Federal Direct loan program. The Federal Direct PLUS Master Promissory Note must be completed for the first Federal PLUS Loan processed, but not for subsequent loans (unless a co-signer has been used for the loan to be approved.) Additionally, if the Federal Direct PLUS borrower changes, the new borrower must complete a MPN using his/her FSA username and password.
- **Exciting Opportunity** Parent borrowers have the ability to complete an Annual Student Loan Acknowledgment through the https://studentaid.gov website. You will log into this site with your FSA username and password.
- What Is It? : The Annual Student Loan Acknowledgment will allow parent borrowers the opportunity to view and confirm their total federal loan balance, provide insight to what your anticipated monthly payments, and break down basic loan concepts such as interest accrual and capitalization and the difference between private and federal loans.
- When Is It Needed?: The Annual Student Loan Acknowledgment is not a federal loan requirement at this time; however, parent borrowers are strongly encouraged to take advantage of this tool in order to become a more informed borrower.
- This online tool is currently available and within a matter of minutes, you can be on your way to understanding educational debt and how it can affect your financial future.
What happens if the Federal Direct PLUS loan is denied?
Credit approval or denial for a Federal Direct PLUS Loan is determined by the federal government; not Middle Tennessee State University. Questions regarding credit denials of a Federal Direct PLUS Loan can be directed to the Loan Origination Center at 1-800-557-7394.
If denied the Federal Direct PLUS Loan due to adverse credit history, the borrower may appeal the credit decision or a co-signer may be used for the loan to be approved. Borrower who are not initially credit approved for the Plus loan, but qualify by appealing or obtaining a co-signer/endorser, must complete Plus Counseling at the StudentAid.gov website before the loan can be disbursed.
If a Plus Loan is denied for a parent, the student will then become eligible to receive additional Federal Direct Unsubsidized Loans. Freshmen and sophomores may apply for up to $4,000, and juniors and seniors may apply for up to $5,000 in these additional Unsubsidized Direct Loans.
The student may need to request the additional unsubsidized amount by notifying the MT One Stop and completing the Loan Request Sheet (LRS).
When does the Federal Direct PLUS loan have to be repaid?
The Federal Direct PLUS Loan will begin accruing interest once the loan disburses and repayment will begin approximately 60 days after the full loan has been disbursed, unless the borrower requests a deferment.
To request a deferment, the borrower may contact the loan servicer. You can identify your loan servicer by reviewing your loan disclosure or online at studentaid.gov. The borrower will need his/her FSA username and password to access this site.
The loan must be repaid within 10 years and the minimum monthly payment is $50.00, or higher depending upon the total amount borrowed. All or a portion of a Federal PLUS Loan may be repaid at any time without penalty.
The federal government wants to make sure that you fully understand your responsibilities as you assume a loan, and again when you leave MTSU and begin repayment of your loan. You will be required to complete entrance counseling as a pre-condition to receiving your Federal Direct Subsidized, Federal Direct Unsubsidized, or Federal Graduate PLUS loan. The link for entrance counseling is at StudentAid.gov, under the section titled Complete Aid Process.
Once you graduate or drop below half-time status, you will need to make plans to begin repayment of your loan. You will also be required to participate in Exit Loan Counseling whenever you drop below half-time enrollment status, withdraw from the university, or graduate. In most cases, you’ll have a grace period of six months after you graduate or withdraw from the university before you must begin making payments for your federal student loans. The link for exit counseling is at StudentAid.gov, under the section titled Manage Loan.
Finally, you’ll want to carefully review options that may be available to you for various types of loan consolidation, loan forgiveness, or loan discharge. For more information, go to StudentAid.gov and review the section titled Managing Loans.
The federal Higher Education Opportunity Act (HEOA) of 2008 established a code of conduct applicable to financial aid employees and universities as they administer the Title IV Loan program. In general, the Code prohibits any financial aid employee or university from participating in any revenue-sharing arrangements with any lender, or from receiving gifts from any lender, guarantor or loan servicer in exchange for providing Loan Funds to its student population.
Private Loans should be considered as a last resort when financing your college education. We strongly encourage you to borrow from the Federal Student Loan program before considering Private Loans. Additionally, graduate students are encouraged to apply for a Federal Graduate PLUS Loan before applying for Private Loans.
Generally, you will receive a better interest rate on Federal Student Loans than with Private Loans. However, if you need additional funding beyond your Federal Student Loan eligibility, Private Loans may help you cover unmet educational expenses.
Private Loans are made by banks and other financial institutions and are subject to their terms. Eligibility for these loans requires a credit check and students are often required to have a co-signer to qualify
Middle Tennessee State University does not endorse or recommend any specific private loan product. In determining which private loan is best for your needs, we recommend you research and compare loan interest rates, fees, repayment options, and eligibility requirements.
Private loan application process
- Many Private loan lenders provide an online application. After you carefully compare
the different lenders' loan information, you may want to verify the following information
with the lender.
- Does the lender process Private Loans with Middle Tennessee State University?
- What will my interest rate be?
- Are there any fees that are deducted from the loan before I receive my loan funds?
- Am I required to start repaying the loan while I am in school?
- How many hours must I be enrolled to receive the loan?
- After you apply, the lender will send you three separate disclosures during the Private Loan process. You must sign and return these disclosures to the lender in a timely manner. You will be required to complete a Self-Certification Form.
- After you are pre-approved for the Private Loan and have returned any required paperwork to the lender, the lender will send a certification request either by paper form or electronically to the MTSU Financial Aid Office. The Financial Aid Office certifies maximum loan eligibility up to the Cost of Attendance minus other financial aid and resources. Students admitted to the Aerospace program and enrolled in flight labs should contact the MT One Stop to submit a form necessary so that their Cost of Attendance can be updated to include the increased flight lab costs.
- If you have submitted all required paperwork and the MTSU Financial Aid Office has
completed the certification request, the lender should be ready to disburse your loan
funds to MTSU depending on your loan period. If you have a fall/spring loan period,
then half of the loan will be disbursed equally between the fall and spring semesters.
If the lender sends the loan funds by Electronic Fund Transfer, then the funds will
automatically be credited to your student account. If the lender sends the loan funds
by check, you will be required to come to the MTSU Business Office to endorse the
check. The MTSU Business Office will email you when your check is ready to be endorsed.
Because it can take up to 4 - 6 weeks for a Private Loan to be processed, we recommend you apply at least 7 weeks before the loan funds are required.
Applying for federal financial aid is a free service. You should never have to pay for assistance with federal educational programs. Learn to distinguish between which companies are legitimate and which companies are not. Please visit the federal https://studentaid.gov/scams website to learn more about being mindful of these situations and protecting your identity.
- MTSU Loan Forms
- Federal Student Aid
- Federal Loan Servicers
- Federal Student Aid Direct Loan
- Federal Direct Loan Master Promissory Note Electronic Signature
- Online Entrance Counseling
- Online Exit Counseling
- Loan Ombudsman
- Federal Student Loan Repayment Plans and Calculators
- Direct Loan Consolidation
- Public Service and Teacher Loan Forgiveness
- Cohort Default Rates
- Loan Discharge