Types of Financial Aid Loans
Direct Stafford
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Direct Stafford Loans are low-interest loans for eligible students to help cover the cost of higher education at a four-year college.
Parents PLUS Loan
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Parents of dependent students may apply for a Direct PLUS Loan to help pay their child’s education expenses.
Student Freedom Initiative
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Student Freedom Initiative is a nonprofit organization that helps students from Minority Serving Institutions achieve their life goals and professional aspirations.
How Financial Aid Loans Work
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Direct Stafford Loans
Direct Stafford
Direct Stafford Loans, issued from the William D. Ford Federal Direct Loan Program, are low-interest loans for eligible students to help cover the cost of higher education at a four-year college. Eligible students borrow directly from the U.S. Department of Education through Morehouse College. Direct Stafford Loans include the following Direct Subsidized Loans (loans for students with financial need) and Direct Unsubsidized Loans (loans for students without financial need). Both require the completion of the Free Application for Federal Student Aid(FAFSA).
The Direct Subsidized Loans are for students with financial need. Students are not charged interest while enrolled in school at least half-time and during grace and deferment periods.
The Direct Unsubsidized Loans accrues (accumulates) interest from the time it’s first paid out. You can pay the interest while you are in school, during grace periods, and deferment or forbearance periods, or you can allow it to accrue and be capitalized (added to the principal amount of your loan). If you choose not to pay the interest as it accrues, this will increase the total amount you have to repay.
Interest Rates for Direct Loans First Disbursed on or After July 1, 2022, and Before July 1, 2023
LOAN TYPE BORROWER TYPE FIXED INTEREST RATE DIRECT SUBSIDIZED LOANS AND DIRECT UNSUBSIDIZED LOANS Undergraduate 4.99% DIRECT PLUS LOANS Parents and Graduate or Professional Students 7.54% Students receiving a Stafford Loan for the first time must complete a Master Promissory Note (MPN) online and Entrance Counseling. The MPN is a legal document in which the student promises to repay the loan and any accrued interest and fees to the Department. It also explains the terms and conditions of the loan. The Entrance Counseling ensures you understand the terms and conditions of your loan and your rights and responsibilities. You will learn what a loans is, how interest works, your options for repayment, and how to avoid delinquency and default.
There are limits on the maximum amount you are eligible to receive each academic year (annual loan limit) and in total (aggregate loan limits). The actual amount you can borrow each year depends on your year in school, whether you are a dependent or independent student and other factors. Depending on your financial need, you may be eligible to receive a subsidized loan for an amount up to the annual subsidized loan borrowing limit for your grade level of study. If you have education expenses that have not been met by subsidized loans and other aid, you may also receive an unsubsidized loan as long as you don’t exceed the combined subsidized and unsubsidized annual loan limits.
Annual Maximum and Aggregate Limits
The following chart provides the annual maximum and aggregate loan limits for Subsidized and Unsubsidized Federal Direct Stafford Loan:
CLASSIFICATION DEPENDENT UNDERGRADUATE STUDENT INDEPENDENT UNDERGRADUATE STUDENT FRESHMEN 0-15 EARNED CREDITS $5,500—no more than $3,500 of this amount may be in subsizied loans. $4,000–Parent Plus denial $9,500—no more than $3,500 of this amount may be in subsidized loans SOPHOMORE 26-57 EARNED CREDITS $6,500—no more than $4,500 of this amount may be in subsidized loans. $4,000–Parent Plus denial $10,500–no more than $4,500 of this amount may be in subsidized loans JUNIOR/SENIOR 58-89+ EARNED CREDITS $7,500—no more than $5,500 of this amount may be in subisized loans. $5,000—Parent Plus denial $12,500—no more than $5,500 of this amount may be in subsidized loans AGGREGATE LIMIT $31,000—no more than $23,000 of this amount may be in subsidized loans $57,500—no more than $23,000 of this amount may be in subsidized loans -
Parents PLUS Loan
Parents PLUS
Parents of dependent students may apply for a Direct PLUS Loan to help pay their child’s education expenses. The annual limit on a PLUS Loan is equal to the student’s cost of attendance minus any other financial aid the student receives. For example, if the cost of attendance is $6,000 and the student receives $4,000 in other financial aid, the student’s parent can request up to $2,000.
The Department of Education will send the loan funds to the student’s school. In most cases, the loan will be disbursed in at least two installments, and no installment will be more than half the loan amount. The school will use the loan money first to pay the student’s tuition, fees, room and board, and other school charges. If any loan funds remain, the parent will receive the amount as a check or other means, unless he or she authorizes the amount to be released to the student or transferred into the student’s account at the school. Any remaining loan funds must be used for the student’s education expenses.
The interest rate is fixed at 6.31 percent. Interest is charged from the date of the first disbursement until the loan is paid in full. The parent will pay a fee of 4.272 percent of the loan amount, deducted proportionately each time a loan disbursement is made. The repayment period for a Direct PLUS Loan begins when the loan is fully disbursed, and the first payment is due 60 days after the final disbursement. However, for Direct PLUS Loans with a first disbursement date on or after July 1, 2008, the parent may defer repayment while the student on whose behalf the parent borrowed the loan is enrolled on a half-time basis, and for an additional six months after the student, ceases to be enrolled at least half-time.
ELIGIBILITY
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The parent borrower must be the student’s biological or adoptive parent. In some cases, the student’s stepparent may be eligible.
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The student must be a dependent student who is enrolled at least half-time.
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Generally, a student is considered dependent if he or she is under 24 years of age, has no dependents, and is not married; a veteran, a graduate or professional degree student or a ward of the court.
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The parent borrower must not have an adverse credit history (a credit check will be done). If the parent does not pass the credit check, the parent may still receive a loan if someone (such as a relative or friend who is able to pass the credit check) agrees to endorse the loan. The endorser promises to repay the loan if the parent fails to do so.
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The student and parent must be U.S. citizens or eligible non-citizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and must meet other general eligibility requirements for the federal student aid programs.
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The parent must complete a Direct PLUS Loan Application and Master Promissory Note. The MPN is a legal document in which the borrower promises to repay the loan and any accrued interest and fees to the Department. It also explains the terms and conditions of the loan. In most cases, one MPN can be used for loans that a parent receives over multiple academic years although a separate Loan Request must be filed for each school year.
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Student Freedom Initiative
Student Freedom Initiative
Morehouse College students looking for alternatives to traditional loan options and enhanced educational experience may find just that in the Student Freedom Initiative. Student Freedom Initiative is a nonprofit organization that helps students from Minority Serving Institutions achieve their life goals and professional aspirations. The program, launched in the fall of 2021, initially focuses on students from Historically Black Colleges and Universities (HBCU Colleges) majoring in Science, Technology, Engineering and Mathematics (STEM) subjects.
Student Freedom Initiative aims to help HBCU students escape the crushing burden of unmanageable student loan debt, which often plagues many African American students. What’s more, the initiative catalyzes freedom in higher education and life choices, by providing students with tools and resources that enhance their educational experiences and pave the way for better career paths. Some of these key aspects of the program include:
- An income-contingent funding alternative
- Tutoring, mentoring, and other support services
- Internships
- Targeted institutional capacity-building support
Direct Stafford
Direct Stafford Loans, issued from the William D. Ford Federal Direct Loan Program, are low-interest loans for eligible students to help cover the cost of higher education at a four-year college. Eligible students borrow directly from the U.S. Department of Education through Morehouse College. Direct Stafford Loans include the following Direct Subsidized Loans (loans for students with financial need) and Direct Unsubsidized Loans (loans for students without financial need). Both require the completion of the Free Application for Federal Student Aid(FAFSA).
The Direct Subsidized Loans are for students with financial need. Students are not charged interest while enrolled in school at least half-time and during grace and deferment periods.
The Direct Unsubsidized Loans accrues (accumulates) interest from the time it’s first paid out. You can pay the interest while you are in school, during grace periods, and deferment or forbearance periods, or you can allow it to accrue and be capitalized (added to the principal amount of your loan). If you choose not to pay the interest as it accrues, this will increase the total amount you have to repay.
Interest Rates for Direct Loans First Disbursed on or After July 1, 2022, and Before July 1, 2023
| LOAN TYPE | BORROWER TYPE | FIXED INTEREST RATE |
|---|---|---|
| DIRECT SUBSIDIZED LOANS AND DIRECT UNSUBSIDIZED LOANS | Undergraduate | 4.99% |
| DIRECT PLUS LOANS | Parents and Graduate or Professional Students | 7.54% |
Students receiving a Stafford Loan for the first time must complete a Master Promissory Note (MPN) online and Entrance Counseling. The MPN is a legal document in which the student promises to repay the loan and any accrued interest and fees to the Department. It also explains the terms and conditions of the loan. The Entrance Counseling ensures you understand the terms and conditions of your loan and your rights and responsibilities. You will learn what a loans is, how interest works, your options for repayment, and how to avoid delinquency and default.
There are limits on the maximum amount you are eligible to receive each academic year (annual loan limit) and in total (aggregate loan limits). The actual amount you can borrow each year depends on your year in school, whether you are a dependent or independent student and other factors. Depending on your financial need, you may be eligible to receive a subsidized loan for an amount up to the annual subsidized loan borrowing limit for your grade level of study. If you have education expenses that have not been met by subsidized loans and other aid, you may also receive an unsubsidized loan as long as you don’t exceed the combined subsidized and unsubsidized annual loan limits.
Annual Maximum and Aggregate Limits
The following chart provides the annual maximum and aggregate loan limits for Subsidized and Unsubsidized Federal Direct Stafford Loan:
| CLASSIFICATION | DEPENDENT UNDERGRADUATE STUDENT | INDEPENDENT UNDERGRADUATE STUDENT |
|---|---|---|
| FRESHMEN 0-15 EARNED CREDITS | $5,500—no more than $3,500 of this amount may be in subsizied loans. $4,000–Parent Plus denial | $9,500—no more than $3,500 of this amount may be in subsidized loans |
| SOPHOMORE 26-57 EARNED CREDITS | $6,500—no more than $4,500 of this amount may be in subsidized loans. $4,000–Parent Plus denial | $10,500–no more than $4,500 of this amount may be in subsidized loans |
| JUNIOR/SENIOR 58-89+ EARNED CREDITS | $7,500—no more than $5,500 of this amount may be in subisized loans. $5,000—Parent Plus denial | $12,500—no more than $5,500 of this amount may be in subsidized loans |
| AGGREGATE LIMIT | $31,000—no more than $23,000 of this amount may be in subsidized loans | $57,500—no more than $23,000 of this amount may be in subsidized loans |
Parents PLUS
Parents of dependent students may apply for a Direct PLUS Loan to help pay their child’s education expenses. The annual limit on a PLUS Loan is equal to the student’s cost of attendance minus any other financial aid the student receives. For example, if the cost of attendance is $6,000 and the student receives $4,000 in other financial aid, the student’s parent can request up to $2,000.
The Department of Education will send the loan funds to the student’s school. In most cases, the loan will be disbursed in at least two installments, and no installment will be more than half the loan amount. The school will use the loan money first to pay the student’s tuition, fees, room and board, and other school charges. If any loan funds remain, the parent will receive the amount as a check or other means, unless he or she authorizes the amount to be released to the student or transferred into the student’s account at the school. Any remaining loan funds must be used for the student’s education expenses.
The interest rate is fixed at 6.31 percent. Interest is charged from the date of the first disbursement until the loan is paid in full. The parent will pay a fee of 4.272 percent of the loan amount, deducted proportionately each time a loan disbursement is made. The repayment period for a Direct PLUS Loan begins when the loan is fully disbursed, and the first payment is due 60 days after the final disbursement. However, for Direct PLUS Loans with a first disbursement date on or after July 1, 2008, the parent may defer repayment while the student on whose behalf the parent borrowed the loan is enrolled on a half-time basis, and for an additional six months after the student, ceases to be enrolled at least half-time.
ELIGIBILITY
-
The parent borrower must be the student’s biological or adoptive parent. In some cases, the student’s stepparent may be eligible.
-
The student must be a dependent student who is enrolled at least half-time.
-
Generally, a student is considered dependent if he or she is under 24 years of age, has no dependents, and is not married; a veteran, a graduate or professional degree student or a ward of the court.
-
The parent borrower must not have an adverse credit history (a credit check will be done). If the parent does not pass the credit check, the parent may still receive a loan if someone (such as a relative or friend who is able to pass the credit check) agrees to endorse the loan. The endorser promises to repay the loan if the parent fails to do so.
-
The student and parent must be U.S. citizens or eligible non-citizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and must meet other general eligibility requirements for the federal student aid programs.
-
The parent must complete a Direct PLUS Loan Application and Master Promissory Note. The MPN is a legal document in which the borrower promises to repay the loan and any accrued interest and fees to the Department. It also explains the terms and conditions of the loan. In most cases, one MPN can be used for loans that a parent receives over multiple academic years although a separate Loan Request must be filed for each school year.
Student Freedom Initiative
Morehouse College students looking for alternatives to traditional loan options and enhanced educational experience may find just that in the Student Freedom Initiative. Student Freedom Initiative is a nonprofit organization that helps students from Minority Serving Institutions achieve their life goals and professional aspirations. The program, launched in the fall of 2021, initially focuses on students from Historically Black Colleges and Universities (HBCU Colleges) majoring in Science, Technology, Engineering and Mathematics (STEM) subjects.
Student Freedom Initiative aims to help HBCU students escape the crushing burden of unmanageable student loan debt, which often plagues many African American students. What’s more, the initiative catalyzes freedom in higher education and life choices, by providing students with tools and resources that enhance their educational experiences and pave the way for better career paths. Some of these key aspects of the program include:
- An income-contingent funding alternative
- Tutoring, mentoring, and other support services
- Internships
- Targeted institutional capacity-building support