Direct Loans

Direct Loans

The Federal Direct Loan is available through the Department of Education to help both undergraduate and graduate students pay for their education. There are two types of Direct Loans: subsidized and unsubsidized. 

Subsidized Direct Loan

Eligibility for subsidized loans is based on financial need as determined by federal guidelines. A loan is called "subsidized" because the government pays interest for the student during at least half-time enrollment in school. You can see eligibility guidelines here.

Unsubsidized Direct Loan

This type of loan is available to students regardless of income or need. With an unsubsidized loan, you are responsible for all interest that accrues during in-school, grace, and deferment periods. You may choose to pay the interest portion only while in school, which would keep your loan balance at principal. If you choose to defer such payments, the interest will be capitalized, resulting in an increase in both total debt and the amount of monthly payments.

Advantages of the Direct Loan

• It carries low origination fees. Fees can be as low as $0. Many other loans have significantly higher fees.
• Repayment of the loan does not begin until you graduate or drop below half-time status. 
• In cases of economic hardship, payments may be deferred, extended, or reduced.
• The loan is forgiven in case of permanent disability or death.

Direct Loan Rates (2024-2025 School Year)

Loan Origination Fee Rates

Loans are usually issued for a single academic year, and both eligibility and amount are redetermined annually throughout your academic career.

Eligibility for Direct Loans

Your Direct Loan eligibility is determined by the Office of Financial Aid and is based on information you provided in the Free Application for Federal Student Aid (FAFSA) . 

Federal criteria include:

• Enrollment in an eligible school at least half-time in a degree program
• U.S. citizenship, permanent residency, or eligible non-citizen status
• Satisfactory academic progress (as determined by the Office of Financial Aid)
• No unresolved defaults or overpayments owed on Title IV educational loans and grants
• Satisfaction of all Selective Service Act requirements

How Much Can I Borrow?

Borrowing limits are based on your dependency status and year in school. You are considered independent if:

• You turned 23 before January 1st of the current year or you are at least 24 years old)
• You are working on a master's or doctorate program
• You are married
• You have children or other dependents who live with you and who receive more than half of their support from you (documentation required)
• Both of your parents are deceased
• You are a ward/dependent of the court or were until you turned 18
• You are or were an emancipated minor as determined by a court in your state of legal residence
• You are or were in legal guardianship
• You are an unaccompanied youth who was homeless or at risk of being homeless
• You are a veteran of the U.S. Armed Forces
• You are currently serving on active duty in the U.S. Armed Forces for purposes other than training

If any of these statements apply to you, you are considered an independent student. Be prepared to provide documentation as proof.

If none of these statements apply to you, you are considered "dependent" for FAFSA purposes.

You can never borrow more than the cost of education, less other financial aid received (special rules apply for recipients of Montgomery Chapter 30 VA benefits and Americorps benefits). Below are the maximum amounts you may borrow. 

If dependent, your combined subsidized and unsubsidized Direct Loan annual eligibility is as follows:

If graduate/professional, your loans are unsubsidized only and the annual eligibility is $20,500.

The cumulative maximum amount that may be borrowed as dependent undergraduate is $31,000 ($23,000 maximum in subsidized loans) and for an independent is $57,500 ($23,000 maximum in subsidized loans).

The Application Process

1. Create an FSA ID using the instructions below.
2. Complete a Free Application for Federal Student Aid (FAFSA) application online at studentaid.gov using the instructions below. Include MC's school code (002415).
3. Once your FAFSA is processed, you will receive an Institutional Student Information Record (ISIR) documenting your financial resources and Student Aid Index (SAI). An electronic copy will be sent to the schools listed on your application.
4. Check your ISIR for accuracy. If there are errors, follow the correction process indicated on the SAR or as instructed by the Office of Financial Aid.
5. From the information obtained in the ISIR and other supporting documents, we will generate an online Financial Aid Award Notification documenting the financial aid available to you including Federal Direct Loan eligibility.
6. The student may accept all or a part of the aid by accepting and confirming the Financial Aid Award Notification online or returning the Direct Loan Acceptance Form. Instructions can be found below.
7. The student must complete a Master Promissory Note (MPN) and Entrance Counseling at studentaid.gov if they have not had a prior direct loan at Mississippi College. Instructions can be found below.
8. Once these requirements are completed, our office can disburse the loans to your account.

Disbursement of Funds

An Electronic Funds Transfer (EFT) will be sent directly to our school. The amount that is disbursed to your account will be the loan amount minus loan origination fees. Funds will credit first to your student bill. If there are any excess funds, the Business Office will notify you.