2. Apply for Financial Aid

Student Loans

The financial aid offer you receive from a college or university will outline the types of financial aid for which you have qualified, including student loans.

Information from your FAFSA will be used to determine your eligibility for student loans, and you may see loans listed in your financial aid offer. However, you're not obligated to accept loans just because they offer them to you. You'll be required to complete additional paperwork with your college or university to accept federal student loans.

Student Loan Language

Direct Subsidized Student Loans
  • Based on financial need (determined by your FAFSA).
  • The U.S. Department of Education pays the interest while you're enrolled at least half-time, during your grace period, and during approved deferments.
  • Available only to undergraduate students.
  • Details at StudentAid.gov
Direct Unsubsidized Student Loans
  • Not based on financial need, almost anyone can qualify.
  • You are responsible for all interest from the day the loan is disbursed. If you don't pay the interest while in school, it's added to your loan balance (capitalized).
  • Available to undergraduate, graduate, and professional students.
  • Details at StudentAid.gov
Master Promissory Note
  • If you are taking out a subsidized or unsubsidized Federal Direct Loan, you must complete the Master Promissory Note (MPN) before your funds can be disbursed.
  • The MPN is your promise to repay and is a legally binding document.
Entrance Counseling
  • If you are taking out a federal loan, your college will ask you to complete entrance counseling.
  • The entrance interview explains your rights and responsibilities and the terms and conditions of your loan. It is a good time to ask questions regarding your student loans.
Exit Counseling
  • If you borrow a subsidized, unsubsidized or PLUS loan under the Direct Loan Program, you must complete exit counseling before you graduate, drop below half-time attendance or leave school.
  • The exit interview concentrates on your repayment obligations and options, and stresses the consequences of default.
  • Details on repayment at StudentAid.gov
PLUS Loans
  • Designed for graduate/professional students and parents of dependent undergraduates ("Parent PLUS Loans").
  • Credit check required (unlike Subsidized/Unsubsidized).
  • Higher interest rate than Direct Subsidized/Unsubsidized loans.
  • Can cover any remaining costs after other financial aid is applied.
PLUS Promissory Note
  • If your parent chooses to take out a PLUS loan to help you pay for school, they will complete a separate Master Promissory Note (MPN). It is called a Direct PLUS Loan Master Promissory Note.
Private Education Loan
  • Private (or alternative) loans are loans from banks or other lending institutions that are not federally supported or guaranteed. They are also referred to as loans.
  • Private loans may be more difficult to qualify for because they can require a credit check to determine your ability to repay the loan.
  • Since federal loans generally offer better terms and repayment flexibility, it is wise to explore your eligibility for federal loans prior to considering an alternative loan.
  • If you have general questions about private loans, contact your financial aid office.
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