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Loans
A loan is financial assistance that enables students and parents to borrow money from the federal government, state government or private lenders. These loans must be repaid. Borrowers are responsible for signing a Master Promissory Note for each loan program. When signed, the Master Promissory Note is a binding, legal document through which the borrower agrees to repay the loan. The promissory note should be read carefully and a copy retained for the borrower’s records. Please note that students who are non-degree seeking or who are seeking teacher certification after graduation are only eligible for alternative loans in most cases.
FEDERAL DIRECT LOANS
Direct Loans are low-interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the U.S. Department of Education (the Department) rather than a bank or other financial institution.
Student loan borrowing cannot exceed the cost of attendance, nor may you borrow over the annual and lifetime aggregates that are set for the Direct Loan. The Department of Education assesses an origination fee on each loan upon disbursement. The type of loan you are offered is based upon the results of the FAFSA.
With Direct Loans, you
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Borrow directly from the federal government and have a single contact-the Direct Loan Servicing Center—for everything related to the repayment of your loans, even if you receive Direct Loans at different schools.
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Have online access to your Direct Loan account information 24 hours a day, 7 days a week at Direct Loans on the Web at: http://www.direct.ed.gov.
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Can choose from several repayment plans that are designed to meet the needs of almost any borrower, and you can switch repayment plans if your needs change.
- Federal Direct Subsidized Loan (Sub)
- Federal Direct Unsubsidized Loan (Unsub)
- Federal Direct PLUS Loan
- Federal Direct Graduate PLUS Loan
Direct Subsidized Loans vs. Direct Unsubsidized Loans
Direct Subsidized Loans - Direct Subsidized Loans are for students with financial need and academic eligibility. Loan amounts are determined by Sam Houston. Interested students must complete the FAFSA for consideration. Borrowers are not charged interest while in school at least half-time, during their grace periods or during deferment periods.
Direct Unsubsidized Loans - Students are not required to demonstrate financial need to receive a Direct Unsubsidized Loan. Like subsidized loans, students must apply for financial aid and be academically eligible for the loan. However, interest begins accruing on these loans from the date of disbursement and borrowers are responsible for payment of all interest. Borrowers can choose to defer payment of the interest while enrolled and during grace, deferment and forbearance periods but deferred interest will be capitalized. When interest capitalized, it is added to the principal amount of the loan and, too, become interest bearing.
Direct Loan Interest Rates
Loan Types |
Interest Rates |
| Undergraduate Subsidized Direct Loan | 4.5% on or after 07/01/10 & before 07/01/11 3.4% on or after 07/01/11 & before 07/01/12 6.8% on or after 07/01/12 |
| Undergraduate Unsubsidized Direct Loan | 6.8% |
| Graduate Unsubsidized Direct Loan | 6.8% |
| PLUS Loan | 7.9% |
Direct Loan Limits
Annual and lifetime (total debt) limits for subsidized and unsubsidized student loans are mandated by the U.S. Department of Education. The amounts include the outstanding principal balance on the loan(s) and not interest or other charges incurred.
Dependent Undergraduate Students
Subsidized Loan |
Additional Unsubsidized |
|
| Freshman | $3,500 |
$2,000 |
| Sophomore | $4,500 |
$2,000 |
| Junior/Senior | $5,500 |
$2,000 |
| Maximum Total Debt | $31,000 ($23,000 may be Subsidized) |
Independent Undergraduate Students
Subsidized Loan |
Additional Unsubsidized |
|
| Freshman | $3,500 |
$6,000 |
| Sophomore | $4,500 |
$6,000 |
| Junior/Senior | $5,500 |
$7,000 |
| Maximum Total Debt | $57,500 ($23,000 may be Subsidized) |
Teacher Certification Students
| Subsidized Loan | $5,500/Academic Year |
| Unsubsidized Loan | $7,000/Academic Year |
| Maximum Total Debt | $57,500 ($23,000 may be Subsidized) |
Graduate/Professional Students
| Unsubsidized Loan | $20,500/Academic Year |
| Maximum Total Debt | $138,000 |
Federal Direct Parent Loan for Undergraduate Students (PLUS)
The Federal Direct Parent Loan (PLUS) is available to the parents of dependent, undergraduate students. The parent may only borrow up to the Cost of Attendance (excluding any other financial aid). An origination fee of 2.5% (initially 4.0% less a 1.5% up front rebate) is charged upon disbursement. All funds are received electronically and are posted to the student's billing account to pay university authorized tuition and fees.
In order for the PLUS loan to be processed, you MUST complete the following:
- The parent must login to https://studentloans.gov and complete the "PLUS Loan Request Process".
- The parent must sign a Master Promissory Note (MPN) on https://studentloans.gov. If you believe you have a valid MPN, please login on https://studentloans.gov, and check under completed MPNs.
Eligibility
- The student must be attending at least half-time (6 hours).
- The parent must have a good credit history.
- The student must be meeting Satisfactory Academic Progress.
Interest Rate
Direct PLUS loans have a fixed interest rate of 7.90%.
Repayment
- May be deferred until the student falls below half-time enrollment or graduates.
- Standard repayment term is up to 10 years.
PLUS loans are the financial responsibility of the parents, not the student. If the student agrees to make payments on the PLUS loan but fails to make the payments on time, the parent(s) will be held responsible
NOTE: Only PLUS Loan applications from the Direct Loan program will be processed for students attending Summer 2010.
- Entrance Counseling: Each student receiving a Direct Loan (subsidized or unsubsidized) at Sam Houston State University must complete Loan Entrance Counseling. This is also true for students that have completed Entrance Counseling on a previous FFELP Stafford Loan (prior to Summer 2010).
- Exit Counseling: Upon withdrawing, graduating, dropping below half-time, or simply not returning, you will be sent information on how to complete exit counseling.
Note: Online counseling may require the used of specific browsers and/or browser settings. If you encounter difficulties completing a counseling session, please notify the Financial Aid & Scholarships Office.
Processing Your Federal Direct Loans
If you have been offered a FEDERAL DIRECT LOAN (subsidized, unsubsidized, PLUS or GradPLUS), you must complete the following steps.
STEP 1: Accept or reject your aid
- Go to: My Financial Aid through SamWeb - Banner Self-Serve
- Login using the Preferred Login
Scroll to the bottom of the page and Submit "Offer Letter"
STEP 2: Loan Entrance Counseling (ALL NEW BORROWERS AT SHSU)
STEP 3: Complete Electronic Master Promissory Note (eMPN) for Direct Loans
An eMPN can be completed in approximately 30 minutes. Make sure you allow enough time to complete the entire process in a single session. If you exit the website before submitting your signed MPN in Step 8 and return later, you will have to start over beginning with Step 1.
- PIN Registration
- Disclosure and Consent
- Provide Name and School
- Complete MPN
- Review/Read Draft MPN
- Sign your MPN
- Review signed MPN/enter Confirmation Code
- Confirm Acceptance of MPN Terms and Submit MPN
- Success! Now print your MPN for your records (Do NOT submit to your school)
Once you complete the eMPN process correctly, SHSU will receive notification electronically that you have completed your MPN. This will allow the Financial aid and Scholarships Office to continue processing your loan. Applications completed timely should be disbursed to pay University charges 5 business days before the 1st class day for Fall and Spring semesters.
Federal Direct Loan Frequently Asked Questions (FAQs)
Effective summer 2010, Sam Houston State University will begin participating solely in the Federal Direct Loan program from the U.S. Department of Education for all subsidized and unsubsidized student loans, Parent Loans for Undergraduate Students (PLUS) and Graduate PLUS loans (GradPLUS).
Is this important?
Prior to summer 2010, students and parents at SHSU University with Federally guaranteed loans were participating in the Federal Family Education Loan (FFELP) program. Beginning with the summer 2010 terms, all student and parent borrowers will be required to participate in the Direct Loan program.
What are Direct Loans?
The Federal Direct Loan Program (also known as the Federal Direct Stafford/William D. Ford Loan Program) provides subsidized, unsubsidized, PLUS, GradPLUS and consolidation loans to borrowers for educational purposes. The lender for all of these loans is the U.S. Department of Education. The Direct Loan program will take the place of the FFELP program previously used at SHSU.
What is the difference between the Direct Loan and the FFELP (Stafford and PLUS) programs?
The primary difference between the programs is the source of funding. Direct Loan funds are distributed directly from the U.S. Department of Education (the lender). FFELP loans are administered and disbursed by private banks and other types of lenders.
Why did SHSU change loan programs?
- ACCESS TO FUNDS: The Federal Direct Loan program is funded directly by the Federal Government, eliminating the concern for access of funds from banks and other lending institutions who may be exiting the FFEL Program. SHSU has chosen to participate in a loan program which will have funds available.
- LOWER COST TO PARENT: The Federal Parent Loan for Undergraduate Students (PLUS) Loan is available through the Direct Loan program at a lower cost to parents. Parents of dependent students are able to access Federal PLUS at 7.9% interest with Direct Loans versus 8.5% in Federal Family Educational Loan Program (FFELP).
- REPAYMENT PLAN: There is an additional repayment plan option through the Federal Direct Loan program, specifically, the income contingent plan. The government forgives the balance of the loan if it is not repaid after the 25th year of being in repayment. In addition, the interest never exceeds 10% of the loan principle.
- PUBLIC SERVICE FORGIVENESS: For SHSU graduates working in key public service professions such as teaching, government, social work, law enforcement, and non-profit 501(c)(3) organizations, Federal Direct Loans have a new Public Service Loan Forgiveness program that will forgive remaining debt after 10 years of eligible employment and qualifying loan payments.
- ONE LENDER: Students will be able to track their Federal Direct loans with one lender and in one location.
- CONSOLIDATION OPTION: All federal loans can be consolidated to the Federal Direct Loan program, or to the FFEL program. There is still a choice in repayment options for SHSU students.
Will I be allowed to borrow student and PLUS loans from the same lender as last year?
No. At SHSU all subsidized and unsubsidized student loans, PLUS and Graduate PLUS loans for the summer 2010 and beyond will be through the Direct Loans program.
How does this change affect me?
All continuing borrowers (those that have student loans through the FFEL program) will be required to complete a new Master Promissory Note with the Department of Education.
All borrowers will be required to complete entrance counseling for the Federal Direct Loan Program. If you completed entrance counseling for a previous FFELP Stafford Loan, you will be required to complete it for the Direct Loan Program..
New student loan borrowers for summer 2010 and beyond will likely not notice the change in programs. This program change does not affect any student or PLUS loan processed through the spring 2010 semester.
How will I know if I need to do something?
The Free Application for Federal Student Aid (FAFSA) is required for a Direct subsidized, unsubsidized, PLUS and GradPLUS loans. If you have completed the FAFSA, forthcoming email notifications and in Banner Self-Serve Financial Aid tab will provide you with all of the information needed to process your loans.
Will my FFEL Stafford loans automatically be moved from my previous lender to the Department of Education?
No. Please refer to your lender for the administration of previous FFEL Stafford loans.
Are the interest rates the same for both FFEL and Direct Loans?
Direct PLUS loans have a lower interest rate (7.9%) compared to FFEL PLUS loans (8.5%). All other loans have the same interest rate regardless of the program.
Will private (alternative) student loans be through the Direct Loan program?
No. Private student loans (also known as alternative student loans) remain unchanged.
When should I apply for a Parent Loan (PLUS) or Graduate PLUS (GradPLUS) for summer or fall 2010?
Summer 2010 PLUS and GradPLUS applications will be available after May 1st. The same website (www.studentloans.gov) will be used.
Texas B-On-Time Loan
The Texas B-On-Time Loan is a no-interest loan for eligible Texas students with the added benefit that if the borrower meets specified goals, the entire loan amount can be forgiven upon graduation. This loan is funded by the State of Texas, with repayment made to Hinson Hazelwood, The Coordinating Board.
Eligibility Requirements:
- Must be a Texas resident (House Bill 1403-B students are not eligible).
- Graduated from public or accredited private high schools in Texas during or after the 2002-2003 academic year or have received an associates degree from an eligible institution no earlier than May 1, 2005. (Home school students are not eligible.)
- Completed the recommended or advanced high school curriculum
- Not earned a bachelor's degree
- Be enrolled full time in an undergraduate degree or certificate program at an eligible institution
- Have completed the FAFSA and be eligible to receive federal financial aid
- Have been certified by the designated school as eligible for Texas B-On-Time Student Loan
Renewal Eligibility Requirements ( 2nd and Subsequent Years)
- Must complete as least 75% of the semester credit hours attempted in the most recent academic year
- Must have a cumulative GPA of at least 2.5
- Must NOT have received BOT loans for more than 150 hours.
Students will be notified via their SHSU student e-mail account and/or permanent phone number as listed with the Registrar's Office if they are eligible to be considered for the Texas B-On-Time Loan.
For more information on this loan program, please visit the Texas Higher Education Coordinating Board's web-site and read their Texas B-On-Time Loan Fact Sheet.
Federal Perkins Loan Program
- Available to undergraduate and graduate students.
- Amount varies depending upon need, but cannot exceed $3000 for first two years.
- Interest rate currently 5.0%
- Repayment begins nine months after leaving school or dropping below half-time enrollment status.
| Amount Borrowed |
No. Of Payments |
4% Mo. Payment Amount |
Total Interest |
5% Mo. Payment Amount |
Total Interest |
7% Mo. Payment Amount |
Total Interest |
8.25% Mo. Payment Amount |
Total Interest |
| $6000 | 120 | $61 | $ 1290 | $64 | $ 1637 | $70 | $2380 | $74 | $2831 |
| $9000 | 120 | $91 | $ 1934 | $95 | $ 2455 | $105 | $3540 | $110 | $4246 |
| $12000 | 120 | $121 | $ 2579 | $127 | $ 3273 | $139 | $4720 | $147 | $5662 |
Defaulted Loans
SHSU will not automatically award or process any loans for individuals who have defaulted on their student loans.
Students submitting documentation that the defaulted loan has been repaid or satisfactory repayment arrangements have been made may be considered for grants and work study.
The letter (from the respective guaranty agency) must also state that the student is now eligible for further financial aid.
Semester Loans
- Semester Tuition and Fees Loan (ETFL) - Provides for tuition and required course-related fees only for students unable to obtain funds from other sources.
- Short-Term Loans (STL) - Unavailable for Summer sessions.
Loan and loan organization fee (not to exceed 5% per annum) must be repaid within 90 days.
Alternative Loans (Private)
Alternative loans, also known as private loans) are always an option for students. These types of loans are NOT direct loans and remain unchanged. Applications must be made through the lender of your choice.
