Student Loans

Free Application for Federal Student Aid (FAFSA)

The FAFSA is the first step in applying for financial aid. It is used to apply for federal student aid such as grants, loans and work-study. In addition, most states and schools use information from the FAFSA to award non-federal aid, like school scholarships and grants. Students should never pay someone to help them complete the FAFSA. You can complete the free form online at www.fafsa.gov.

If you would like help completing the FAFSA, please contact the Student Assistance Foundation campus outreach manager in your area, call the College Access Hotline at (877) COLG4ME (265-4463), or check out a College Goal Montana event in your community.

Federal Loans

All student loans are not the same.

Direct, Perkins, PLUS, etc. are federally funded and regulated. You have to repay these loans, but the terms are generally friendlier than other types of loans.

Perkins Loans

• Federal loans issued to borrowers directly by the college.
• Based on need.
• Fixed, 5 percent interest rate.
• No payments required while the student is in school.
• No interest accrues while the student is in school, in an approved deferment or in the grace period.
• Repayment begins nine months after a student leaves school, graduates or drops to less than half-time attendance.
• A portion of a student’s loan may be canceled in certain cases, such as if he or she teaches at a low-income school following graduation.
• For more information, visit the campus financial aid office or Perkins Loan officer or go to http://studentaid.ed.gov.

Direct Loans

Direct loans are the most common form of self-help aid for undergraduate, graduate, vocational and professional students. Direct loans are provided and administered by the U.S. Department of Education. They can be separated into two types:

Direct Subsidized Loans

• Based on need.
• Fixed interest rate.
  • For undergraduate students with loans disbursed between July 1, 2011 and June 30, 2012, the interest rate is fixed at 3.4 percent.
  • For graduate students with loans disbursed between July 1, 2011 and June 30, 2012, the interest rate is fixed at 6.8 percent.
• No payments required while the student is in school. (Interest is paid by the federal government while the student is in college, during an approved deferment period and during the six-month grace period).
• Repayment begins six months after a student leaves college, graduates or drops to less than half-time attendance.

Direct Unsubsidized Loans

• In almost all cases, students enrolled at least half time are eligible.
• Fixed interest rate.
  • For loans disbursed between July 1, 2011 and June 30, 2012, the fixed interest rate is 6.8 percent.
• Interest starts to accrue immediately upon disbursement and continues throughout the grace period and in approved deferment.
• Repayment begins six months after a student leaves college, graduates or drops to less than half-time attendance.
• Interest that is not paid while the student is in school, grace period, deferment, or forbearance will be added to the principal of the loan when he/she enters repayment.

The amount that can be borrowed depends on college costs, expected family contribution, a student’s year in school, their enrollment status, how much other financial aid they receive and whether they are dependent or independent. Dependent students may borrow up to $5,500 in their freshman year with a minimum of $2,000 in Direct Unsubsidized Loans and up to an additional $6,000 a year in unsubsidized loans for independent students.

Dependent Student Direct Loan Levels

Grade Level	Combined Subsidized/Unsubsidized for Dependent Students	Additional Unsubsidized for Dependent Students
Freshman	$3,500	$2,000
Sophomore	$4,500	$2,000
Junior & Senior	$5,500	$2,000
Aggregate Limits	Subsidized Limits	Combined Subsidized/Unsubsidized Total Limits
Undergraduate	$23,000	$31,000

Independent Student Direct Loan Levels

Grade Level	Combined Subsidized/Unsubsidized for Independent Students	Additional Unsubsidized for Independent Students
Freshman	$3,500	$6,000
Sophomore	$4,500	$6,000
Junior & Senior	$5,500	$7,000
Graduate	$8,500	$12,000
Aggregate Limits	Subsidized Limits	Combined Subsidized/Unsubsidized Total Limits
Undergraduate	$23,000	$57,500
Graduate	$65,500	$138,500

For more information regarding the Direct Loan Program, please visit www.StudentLoans.gov.

Direct PLUS Loans (Parent Loans for Undergraduate Students)

• Available to parents of dependent, undergraduate students.
• Fixed interest rate.
  • For loans disbursed between July 1, 2011 and June 30, 2012, the interest rate is fixed at 7.9 percent.
• Parent is responsible for the repayment of the loan.
• Repayment begins 60 days after disbursement of the entire loan amount unless the parent chooses to defer payment.
• Borrower must meet minimal credit requirements.

These loans have no aggregate limit, meaning a parent can borrow as much as needed to pay for the student’s college education.

For more information regarding the Direct PLUS loan program, please visit www.StudentLoans.gov.

Direct Graduate PLUS Loans

• Available to graduate or professional students.
• Fixed interest rate.
  • For loans disbursed between July 1, 2011 and June 30, 2012, the interest rate is fixed at 7.9 percent.
• Student is responsible for repayment of the loan.
• Repayment begins within 60 days after loan is fully disbursed unless the student chooses to defer payment.
• Are unsubsidized loans.
• Borrower must meet credit requirements.

The main purpose of these loans is to supplement federal Stafford loans in amounts up to the cost of attendance less any other financial assistance. Students must have borrowed the full amount of subsidized and unsubsidized federal Stafford loans before becoming eligible for a Grad PLUS loan.

For more information regarding the Direct Grad PLUS loan program, please visit www.StudentLoans.gov.

Private Loans

Some banks offer other loans to help students. Be sure you’ve exhausted all other options before taking out private loans. Also, be sure you know and understand your repayment requirements. The financial aid office can help!