Federal Student Loans

When applying for financial aid, in addition to grants and work study, federal student loans may also be part of a student's financial aid award package. At MMA, federal loans are offered through the William D. Ford Federal Direct Subsidized and/or Unsubsidized Loan Programs. By completing the FAFSA a student is automatically applying for federal student loans. Students must meet all eligibility criteria in order to receive a federal loan. Once the loan has been awarded, if the student is a first time loan borrower at MMA, he/she must complete Loan Entrance Counseling as well as sign a Direct Loan Master Promissory Note, promising to repay the loan.

Federal Direct Subsidized Stafford Loan – a loan that must be repaid and is awarded on the basis of financial need. You are not charged interest on this loan while you are in school at least half-time as the government “subsidizes” the interest. The interest rate is variable-fixed and is based on the 10 year Treasury bill.  This means that the interest rate can change every July 1st for the upcoming academic year.  The loan that a student receives for that year is fixed at that year's rate for the life of the loan.  The rate is capped at 8.25%.  For the 2019-2020 year, the rate is 4.53%.  There is also a fee of up to 4% of the loan, deducted proportionately from each loan disbursement. Repayment begins six months after the student graduates, leaves school or drops below half-time enrollment. The government pays the interest for the student while the student is enrolled at least half time and during the 6 month grace period. 

Federal Direct Unsubsidized Stafford Loan – a loan that must be repaid and is not awarded on the basis of need.  The interest rate is variable-fixed and is based on the 10 year Treasury bill.  This means that the interest rate can change every July 1st for the upcoming academic year.  The loan that a student receives for that year is fixed at that year's rate for the life of the loan.  For Undergraduate students, the rate is capped at 8.25%.  For the 2019-2020 year, the rate is 4.53%. If you allow the interest to accrue while you’re in school, it will be capitalized and be added to the principal amount of your loan. The fees and repayment conditions are the same as the above listed subsidized loan.

Federal Direct Unsubsidized Stafford Loans for Graduate Students - A loan that must be repaid and is not awarded on the basis of need.  The interest rate is variable-fixed and is based on the 10 year Treasury bill.  This means that the interest rate can change every July 1st for the upcoming academic year.  The loan that a student receives for that year is fixed at that year's rate for the life of the loan.  The rate is capped at 9.5%.  For the 2019-2020 year, the rate is 6.08%.  If you allow the interest to accrue while you’re in school, it will be capitalized and be added to the principal amount of your loan. The fees and repayment conditions are the same as the above listed subsidized loan.

Stafford Loan limits are as follows:

Year in School    
First Year (0 - 30 credits) $5,500 – no more than $3,500 of this amount may be subsidized $9,500 – no more than $3,500 of this amount may be subsidized
Second Year (31 - 60 credits) $6,500 – no more than $4,500 of this amount may be subsidized $10,500 – no more than $6,500 of this amount may be subsidized
Third and beyond (each year) (61+ credits) $7,500 – no more than $5,500 of this amount may be subsidized $12,500 – no more than $5,500 of this amount may be subsidized
Max. total debt allowed as undergrad when you graduate $31,000 – no more than $23,000 of this amount may be subsidized $57,500 – no more than $23,000 of this amount may be subsidized

Note:  Students enrolled in a 4 year degree program, who take longer than 4 years to achieve their undergraduate degree may receive the Federal Direct Subsidized Stafford Loan for up to the equivalent of 6 years of full time study.  After 6 years, the student may only receive funding through the Federal Direct Unsubsidized Stafford Loan, even if s/he has not borrowed the aggregate limit through the Subsidized Loan ($23,000).  For a student who received Subsidized Stafford Loan and does not finish their undergraduate program in 6 years, not only will they no longer qualify for any additional Subsidized Loan, but they will also lose the subsidy on all prior Subsidized Loan after the 6 year point.

 Students are required to complete Direct Loan Entrance Counseling, as well as sign a Direct Loan Master Promissory Note in order to finalize any loan offer from MMA.  Both of these requirements can be completed on-line.  Loans will be cancelled for students who fail to complete these two requirements.  Detailed terms and conditions for the Federal Direct Stafford Loan can be found on the actual Master Promissory Note that the student must sign.

Many families borrow additional funding through other sources such as the Federal Direct Parent PLUS Loan program, private, state-funded alternative loans or private lender-funded alternative loans.  These loans are all credit-based loans and require a credit-worthy borrower or co-signer.  Details regarding these options can be found on the ‘other funding options’ link from our web page.  Keep in mind that a co-signer is equally responsible as the borrower for repayment of one of these loans.  If the student is the borrower and a parent co-signs the loan, the parent shares the responsibility for ensuring the loan is repaid according to its terms.  The Federal Parent PLUS Loan is a loan in the parent name only and not in the student name.  The parent is the only one who is legally responsible for repaying this type of loan.

Families should understand that these additional loans cannot be consolidated with a student’s Federal Stafford Loans into a Federal Consolidation Loan upon repayment. There are, however, a small number of private lenders that offer private loan consolidation programs.  Families are encouraged to borrow wisely and maintain organized records of all loans borrowed during the student’s enrollment at MMA.  It is highly recommended that you stay with the same lender each year if you are borrowing through one of these additional loan programs. The goal is to keep the number of monthly loan payments to a minimum, in addition to keeping the total amount borrowed as low as possible. 

Students must complete Direct Loan Exit Counseling upon leaving MMA.  At that time, students are given detailed information regarding only their Federal Stafford Loans borrowed.  Students are given the opportunity to select a repayment plan (with the help of interactive calculators, etc.).  This process does not include any private or parent loans borrowed.  Individual private lenders will be in touch separately with the borrower and co-signer (if applicable) regarding any alternative loans borrowed and repayment terms.  Parents will be contacted directly regarding repayment of any Federal Direct Parent PLUS Loans that were borrowed on the student’s behalf.

Student and parent (if applicable) information from the Federal Direct Stafford Loan and the Federal Direct Parent PLUS Loan will be submitted to the National Student Loan Data System (NSLDS) and will be accessible by guaranty agencies, lender and schools determined to be authorized users of the data system.  This system is used nationally to maintain records of all federal loan borrowers.  Unfortunately this web site does not provide information on any private loans borrowed.

 Students can use a calculator to estimate monthly loan payments and determine the best repayment option for them based on their individual circumstances.