Direct & PLUS Loans
Awarding and Applying for Loans
Loans may be awarded to students as part of the financial aid package if the student indicates on the FAFSA that s/he will accept a loan. The Shopping Sheet from the Office of Financial Aid will indicate loan eligibility. For more detailed information, see the CMC Financial Aid Guide (pdf) and the Financial Aid Facts PDF.
Federal Direct Loans
Direct Loans are low-interest loans made to you by the US Department of Education to help you pay for your education after high school. The interest rate is fixed at 3.4% for subsidized loans first disbursed between July 1, 2011 and June 30, 2013. As of April, 2013 the interest rate is fixed at 6.8% for all direct loans first disbursed on or after July 1, 2013 (subject to change due to new legislation congress has not yet voted upon); interest rates for unsubsidized loans are at 6.8%. The Dept. of Education will provide specific information about fees, interest rates, loan repayment, grace periods, deferring payment, penalties for defaulting on loans, etc.
There are two kinds of Direct Loans. The Subsidized loan is based on need, and the government pays the interest while you are in school. The Unsubsidized loan is not need-based, so it is available to students regardless of financial need. While you are still in school, the interest is automatically “capitalized” (i.e., added to the principal). However, you may request to make interest payments while you are still in school. Most students will begin repayment six months after leaving college or when dropping below half-time status. Under some conditions, repayment may be deferred. Go to http://www.direct.ed.gov/student.html for more information.
Parent PLUS Loans
The PLUS loan is a federal program that allows credit eligible parents to borrow to pay the educational expenses of their dependent college students. Parents may borrow up to the cost of attendance minus any other financial aid. Repayment begins within 60 days of the final disbursement, with a maximum repayment period of 10 years. Go to http://www.direct.ed.gov/parent.html for more information.
Alternative (Private) Loans
Dependent and independent students who are credit worthy (co-signers may be required) can borrow to help with the cost of their education. Loan limits are usually the cost of attendance minus any other financial aid. Interest rates vary, depending on the student/co-signer's credit (can range from 5%-17%). Most lenders will allow you to defer regular repayment while in school, although interest will start accruing right after disbursement. It is always advisable to pay the interest while you are in school. Lenders may or may not charge fees.
For more detailed information, see the CMC Financial Aid Guide.
Caution: Some information may change as the US Department of Education continues to issue new regulations in 2013-2014. Stay in contact with the Office of Financial Aid.