Montana State University Federal Stafford Student Loans

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Federal Stafford Student Loans:
Federal Stafford Loans are either subsidized or unsubsidized. With a subsidized loan, the federal government pays interest on the loan ("subsidizes" the loan) until you begin repayment and during authorized periods of deferment.

With an unsubsidized loan, you will be charged interest from the time the loan is disbursed until it is paid in full. If you allow the interest to accumulate, it will be capitalized - that is, the interest will be added to the principal amount of your loan and will increase the total amount you have to repay. If you choose to pay the interest as it accumulates, you will repay less in the long run. You may be eligible to receive both a Subsidized Stafford Loan and an Unsubsidized Stafford Loan for the same enrollment period.

Currently, the interest rate on Stafford Subsidized and Unsubsidized Loans is fixed at 6.8%. Beginning on July 1, 2008 the interest rate on Subsidized Stafford loans for undergraduate students will be decreased to 6.0% fixed. All Unsubsidized Stafford Loans and Subsidized Stafford Loans for graduate students will remain at a fixed interest rate of 6.8%.

Repayment of your Stafford Loan begins six months after you leave school or cease to be enrolled on at least a half-time basis. This is called a "grace period." The federal government pays the interest on the subsidized Stafford loan while in the grace period. If you have an Unsubsidized Stafford Loan, you will be responsible for the interest during in-school and deferment periods; however, you may delay the payment of interest until six months after you leave school. The Stafford Loan Program offers four repayment plans which are discussed in more detail in materials you will receive.

Loan Information from the Student Guide:
The U.S. Department of Education Student Guide provides information on two types of Subsidized/Unsubsidized Loans: FFEL Stafford Loans and the Direct Stafford Loans. Montana State University participates in the FFEL Stafford Loan Program. The guide answers the following questions:

What kinds of Stafford loans are available?
Who can get a Stafford Loan?
How much can I borrow?
What's the interest rate charged on these loans?
Is there a charge for these loans?
When do I pay back these loans?
Is it ever possible to postpone repayment of my loan?
Can my Stafford Loan be discharged (canceled)?
Federal Plus Loan:
Federal PLUS Loans enable parents with good credit histories to borrow money to pay the educational expenses of a dependent undergraduate student enrolled at least half-time.

The yearly borrowing limit on the PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. For example, if your cost of attendance is $10,000 and your receive $4,000 in other financial aid, your parents could borrow up to - but no more than $6,000. Beginning with the 2006-2007 award year, the interest rate is fixed at 8.5% Interest is charged on the loan from the date the first disbursement is made until the loan is paid in full.

Your parents will be charged a required loan fee prior to the loan being disbursed. Generally, repayment begins within 60 days after the final loan disbursement. There is no grace period for these loans. This means that interest begins to accumulate at the time the first disbursement is made. Your parents must begin repaying both the principal and interest while you are in school. Promissory notes will be mailed to the parent borrower from the Montana Guaranteed Student Loan Program.

PLUS Loans are credited to your University student account. If any loan money exceeds your university charges, the credit balance will be mailed to the parent borrower, unless they authorize it to be released to you.

If your parents are denied a PLUS loan, you may contact our office to determine if you are eligible for loan assistance through the Unsubsidized Stafford Loan Program.

The U.S. Department of Education Student Guide provides information on two types of PLUS Loans: the FFEL PLUS Loans and the Direct PLUS Loans. Montana State University participates in the FFEL PLUS Loan Program. The guide answers the following questions:
Are there any borrowing requirements my parents have to meet?
How much can my parents borrow?
What's the interest rate on PLUS Loans?
Is there a charge for a PLUS Loan?
When do my parents begin repaying a PLUS Loan?
Is it ever possible to postpone repayment of a PLUS Loan?
Can a PLUS Loan be discharged (canceled)?
Federal Graduate PLUS loans:

Federal Graduate PLUS loans are awarded to graduate students who are enrolled in at least six credits in a degree-seeking program, with the student being subject to a credit check by the guaranty agency to evaluate credit worthiness. Before the Graduate PLUS loan can be awarded, students must first apply for their maximum loan eligibility in Subsidized and Unsubsidized Stafford loans. The yearly borrowing limit on the Graduate PLUS loan is equal to a student’s cost of attendance minus any other financial aid received. For example, if your cost of attendance is $12,000 and you are receiving $4,000 in other financial aid, you could borrow up to, but no more than $8,000. Repayment of the Graduate PLUS loan begins 60 days after the final disbursement; however, you may be eligible for a deferment as long as you are enrolled at least half time.

The interest rate is fixed at 8.5 percent. A borrower will be charged a required loan fee not to exceed 3 percent. This fee will be deducted from each loan disbursement before it is credited to the student’s University account.

For more information on Graduate PLUS loans including eligibility requirements and repayment information, please see the U.S. Department of Education Student Guide.

Federal Perkins Loan & Nursing Student Loan:
A Federal Perkins Loan or a Nursing Student Loan is a low-interest (5 percent) loan for students with exceptional financial need. MSU-Bozeman awards Federal Perkins Loans and Nursing Student Loans primarily from funds generated from former students repaying these loans. As a Perkins Loan and/or Nursing Student Loan borrower, you are not charged any loan fees.

Repayment begins nine months after you graduate, leave school, or drop below half-time status. This is called the "grace period." Interest begins to accrue and you must begin repaying your loan. You have up to 10 years to repay.

Consolidation Loans:
A Consolidation Loan allows you to combine one or more of your federal education loans into a new loan that offers several advantages. Some of these advantages include no minimum or maximum loan amounts or fees (consolidation is FREE), one lender and one monthly payment, flexible repayment options, lower interest rate, and a second chance for borrowers in default. Consolidation loans have been available for student borrowers, parent borrowers, and married couples; however, beginning July 1, 2006, in-school consolidations and consolidations for married couples are eliminated. Certain provisions exist.

The U.S. Department of Education Student Guide answers the following questions on consolidation loans:
What kinds of loans can be consolidated under a Consolidation Loan?
What is the interest rate on a Consolidation Loan?
What are the benefits of a Consolidation Loan?
How can I get a Consolidation Loan?
You may also receive information on consolidation loans from the Student Assistance Foundation of Montana and the Direct Loan Servicer.

Alternative Loans:

Alternative loans are used as a last resort to fill unmet need between financial aid and cost of attendance. (You should complete the FAFSA before considering alternative loans). Keep in mind to only borrow what you need. Terms and conditions on alternative loans vary widely, so before taking out an alternative loan, it is recommended you research interest rate, origination and repayment fees, repayment options, and grace periods. By taking the time to research alternative loan possibilities now, it will greatly benefit you, the borrower, in the years ahead.

If you are considering an alternative loan, please contact the Financial Aid Loan Department (406) 994-2845 to determine if you have exhausted all of your federal loan eligibility.

Choosing an Alternative Loan Lender:

Please keep in mind that you are free to choose any alternative loan lender. Montana State University does not have an official lender list for alternative loan lenders; however, there are five lenders that send student loan funds directly to MSU through EFT (electronic funds transfer), resulting in an accelerated receipt of loan monies.

Information regarding these lenders and the terms and conditions of their loan products can be researched by visiting our FASTChoice website.