Federal Direct Loan

Minnesota State University, Mankato is committed to offering reasonable and affordable options for students pursuing higher education. The Federal Direct Loan program is a helpful resource to students who need help meeting their educational expenses.

Federal Direct Loans are administered by the federal government.  There are two different types of Federal Direct Loans; Subsidized and Unsubsidized. It is very important to understand the differences between these two.

When you accept loans you commit to paying the amount you borrow plus interest in the future. Before taking on the responsibility of loan indebtedness, determine how much loan funding you will need for the academic year. Your financial aid award sets the limit on your federal loan eligibility; borrow only the amount you need within that limit to meet your actual expenses. Remember student loans have an impact on your financial future, too, as you will need to incorporate monthly student loan payments into your budget.

First-Time Borrower Requirements

Federal regulations require all first-time borrowers of a Federal Direct Loan complete Federal Direct Loan Entrance Counseling and a Master Promissory Note (MPN). These must be completed before a student’s loan can be certified for disbursement.

Proceed to On-Line Entrance Loan Counseling & MPN

Origination Fee

This is a loan fee deducted proportionately from each loan disbursement you receive. This means the money you receive will be less than the amount you actually borrow. You're responsible for repaying the entire amount you borrowed and not just the amount you received.

A 1.059% origination fee applies to Federal Direct Loans first disbursed on or after October 1, 2019 and before October 1, 2020.

Interest Rates

Fall 2019 - Summer 2020

As of 7/1/2019, interest rate for the 2019-2020 school year is 4.53% for Federal Direct Subsidized and Unsubsidized Loans for undergraduate students, and 6.08% for Federal Direct Unsubsidized Loans for graduate and professional students; graduate and professional students are not eligible to receive Direct Subsidized Loans.

Fall 2020 - Summer 2021

As of 7/1/2020, interest rate for the 2020-2021 school year is 2.75% for Federal Direct Subsidized and Unsubsidized Loans for undergraduate students, and 4.30% for Federal Direct Unsubsidized Loans for graduate and professional students; graduate and professional students are not eligible to receive Direct Subsidized Loans.

Maximum Annual and Aggregate Limits

There are maximum annual and aggregate limits on Federal Direct Loans. The annual maximums are based on grade classification and dependent/independent status. Note that loan eligibility is subject to change if other funding sources change and/or if there are changes in enrollment.

Dependent Students
Grade Classification Annual Limit Aggregate Limit
Freshman $ 5,500
(subsidized may not exceed $3,500)
$ 31,000
(subsidized may not exceed $23,000)
Sophomore $ 6,500
(subsidized may not exceed $4,500)
$ 31,000
(subsidized may not exceed $23,000)
Junior & Senior $ 7,500
(subsidized may not exceed $5,500)
$ 31,000
(subsidized may not exceed $23,000)
Independent Students
Grade Classification Annual Limit Aggregate Limit
Freshman $ 9,500
(subsidized may not exceed $3,500)
$ 57,500
(subsidized may not exceed $23,000)
Sophomore $ 10,500
(subsidized may not exceed $4,500)
$ 57,500
(subsidized may not exceed $23,000)
Junior & Senior $ 12,500
(subsidized may not exceed $5,500)
$ 57,500
(subsidized may not exceed $23,000)
Graduate $ 20,500
(unsubsidized only as of July 1, 2012)
$ 138,500
(subsidized may not exceed $65,500)

 

 

 

Loan Amounts Prorated for Students Graduating, Attending Only One Semester

Federal Direct student loans are prorated for undergraduate students enrolled in only one semester of the school year who will be graduating at the completion of that semester; eligibility is based on the number of enrolled credits. For example, the maximum amount of student loan funds is $1,875 for a dependent undergraduate student enrolled in six credits, which is 6/24ths of the annual limit of $7,500. If that student is enrolled in 14 credits, the maximum amount of student loan funds is $4,350, which is 14/24ths of the annual limit of $7,500. Students are notified when the loan amount is prorated based on enrolled credits.

Paying Back Your Loan

You are responsible for paying all of your Federal Direct student loans back in full, plus interest, even if you do not complete your education, if you are unable to gain suitable employment, or if you are unsatisfied with your education. 

You may make interest and principal payments on your loans before repayment is required, and you are especially encouraged to pay the interest on your Unsubsidized Federal Direct Loans while you are in school if you can. This will keep your future monthly payments lower because the interest that accrues while you are in school will be combined with the loan principal as interest charges are calculated throughout the repayment period. There is no penalty for repaying your Federal Direct Loans before they are due.

Repayment on a Federal Direct Loan begins six months after you graduate, drop below 1/2 time, or leave school. This six-month grace period applies to both Subsidized and Unsubsidized Federal Direct Loans. Your minimum monthly repayment is normally $50, but it could be more depending on how much you borrowed and if you chose to repay any amounts while you were in school.

Contact your Department of Education loan servicer if you move, change your name, change your telephone number, change schools, drop below 1/2-time, or if you are unable to make your loan payment due to financial hardship.

More Information

The Federal Direct Loan program complies to both Satisfactory Academic Progress Standards (SAPS) criteria as well as the Family Education Rights and Privacy Act (FERPA).

Learn more about Managing Your Student Loans.