General Information

Any student & other education loans you take out must be repaid with interest. Types of loans available include Federal Direct loans, the Federal Direct PLUS (Parent) loans, and alternative, private loans through various lenders. Repayment on the Subsidized Direct loan begins six months after you leave school or drop below six credits per semester.

Applying for Education Loans

Federal Direct and Parent/PLUS loans each have application processes consisting of three steps, and all must be completed to be considered for these types of loans.

Federal Direct Loans

Federal Direct Loans are low-interest loans for students attending school at least half-time (i.e., six credits or more per semester). You may be eligible for a Federal Subsidized Direct Loan, a Federal Unsubsidized Direct Loan, or both. Subsidized loans are need-based, and the government pays the loan’s interest while you’re in school or on deferment. Unsubsidized loans are not need-based, and you are responsible for the loan’s interest while in school and during deferment and grace periods.

You must complete the Free Application for Federal Student Aid (FAFSA) for Federal Direct Loan consideration. Your eligibility for other Federal aid needs to be determined before a loan can be processed. You’ll be notified of your eligibility and, if so, how much you’re eligible to borrow through your Financial Aid Award Notice. We recommend you only borrow as much money as you need. More information about award notices is available under our Financial Aid Basics page.

Your borrowing limit is determined by UMFK within federal limits. Direct Loan limits vary depending on your dependent or independent status and your class/grade level. More information about Direct Loan borrowing limits is available through the Federal Student Aid website. Note: you cannot borrow more than the cost of education, and lifetime aggregates also apply.

Direct loan interest rates are variable and set each June by the U.S. Department of Education. For interest rates on loans you may have taken out previously, you may:

Besides interest, you’ll also pay a fee of up to 4 percent of the loan, deducted proportionately from each loan disbursement. Because of this fee deduction, you may receive slightly less than the amount borrowed.

How Much in Loans Do I Need?

To determine the loan amounts you’ll need, you’ll review your Award Notice and estimate your cost of education through our tuition and fees page. We also have a worksheet available to help calculate your expenses.

Direct Parent/PLUS Loans

Direct PLUS loans are in your parent(s) name(s) and allow your parents (if you’re their dependent) to borrow and help pay your undergraduate education expenses. Your parents must pass a credit check as part of the eligibility requirements.

Before your parents apply for a Parent/PLUS loan, we encourage you to file your FAFSA. While the FAFSA isn’t required for PLUS loans, completing it helps determine your eligibility for other forms of funding, including free money such as scholarships and grants. You should first exhaust other aid types available to you, including any Federal Direct loans you may be eligible for. The aid offered to you by the school is usually the better deal.

To qualify for a Parent/PLUS loan, you must be enrolled in school at least half-time (six credits or more per semester), and your parent(s) must meet the credit criteria. You and your parents must also meet the general eligibility requirements for federal student aid.

If your parents are eligible and complete the Parent/PLUS loan application process, their application will either be approved or denied. You should contact the financial aid office for more information and instructions if the loan is denied. Other lending options may be available. We will be informed if the loan is approved, and if we have your PLUS application, we will certify the loan. Note: we cannot certify a loan that exceeds your cost of attendance minus other financial aid. Additional eligibility requirements also apply.

PLUS loan interest rates are variable, meaning the interest rate could change each year of repayment. The rate will never exceed 9 percent.

In addition to interest, your parents will pay a fee of up to 4 percent of the loan. This fee will be deducted from the funds you’ll receive.

PLUS Loan Repayment

Your parents must start repayment of the loan within 60 days after the final loan disbursement. There is no grace period, and interest accumulates from the time the first disbursement is made until the loan is paid in full. Parents must begin repaying while you’re still in school.

If your parents borrow a PLUS Loan, they may, under certain circumstances, request a deferment of the loan from the lender while you are enrolled at least half-time and for an additional six months after you graduate or drop below half-time enrollment.

Interest on the loan will continue to accrue during the deferment. They may choose to pay the interest during the deferment period or wait until it ends. They will be contacted by the loan servicer when the first payment is due.

Alternative Loans

Alternative loans are private loans designed to help you bridge the financial gap between college costs and traditional sources of aid such as federal loans, grants, and scholarships. Borrowing this type of loan is done through a bank or credit union. You’ll generally need to pass a credit check as part of the eligibility requirements. The alternative loan is in your name and often requires a credit-worthy co-signer. Note: qualifications, benefits, fees, and interest rates vary from lender to lender.

Important Things to Note

  • You’re not required to complete a FAFSA for consideration for this type of loan.
  • We strongly advise you to pursue federal grants, scholarships, and federal student loans first. They are usually the better deal and offer the most benefits.
  • We recommend you consider other services, such as enrolling in a payment plan.
  • If you do not apply for your entire Federal Direct Loan eligibility, certification of your alternative loan could be delayed. You must complete a UMFK Bypass Direct Loans form and return it to us before we can process your Alternative loan request.
  • Alternative loans are NOT Federal loans.
  • Before borrowing this type of loan, you should compare the loan features and benefits from multiple lenders.

More information about alternative loans, including UMFK’s preferred lender list, is available in the UMFK portal.

The SFA Ombudsman

The SFA Ombudsman helps resolve complaints regarding federal student aid programs, including:

  • Direct Loans
  • Federal Family Education Loan (FFEL) program loans
  • Perkins Loans
  • Grant programs

Ombudsman Contact Info

Phone: 1-877-557-2575
Fax: (202) 275-2549

Ombudsman Website

U.S. Department of Education
FSA Ombudsman
830 First Street, NE
Fourth Floor
Washington, DC 20202-5144