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Your New Best Friend for Education Loans – StudentLoans.gov

Did you get your student loan yet this year?  If you did and it was a federally backed student loan, then you probably are very familiar with StudentLoans.gov.  It is the new portal that was introduced this year by the Department of Education to process federal education loans for students (and parents) from beginning to end.

Through StudentLoans.gov, you have access to the following types of education loans:

  • Direct Subsidized Loans: These loans are for students that have demonstrated financial need via the FAFSA. No interest is charged while the student is in school at least half-time, during the grace period, and also at anytime the loan is in deferment. Interest starts accruing at the time of repayment and currently the interest rate is fixed at 4.5%
  • Direct Unsubsidized Loans: These loans are for students and are not based upon financial need (however a FAFSA is still required). Interest accrues while you are in school, in a grace period, and in deferment. The current interest rate on this type of loan is 6.8%.
  • Direct Plus Loans: These loans are eligible for parents of dependent students and the current interest rate is 7.9%. Parent’s can borrow up to the amount left over after all financial aid is applied toward educational expenses (otherwise known as Cost of Attendance).
  • Direct Consolidation Loans: This is for borrowers that want to combine (consolidate) their federal student loans into one loan program. The interest rate is typically a blended rate of all the loans being consolidated.

The Department of Education imposes the following loan limits for the Direct Student Loan Program:

Year Dependent Undergraduate Student (except students whose parents are unable to obtain PLUS Loans) Independent Undergraduate Student (and dependent students whose parents are unable to obtain PLUS Loans) Graduate and Professional Degree Student
First Year $5,500—No more than $3,500 of this amount may be in subsidized loans. $9,500—No more than $3,500 of this amount may be in subsidized loans. $20,500—No more than $8,500 of this amount may be in subsidized loans.
Second Year $6,500—No more than $4,500 of this amount may be in subsidized loans. $10,500—No more than $4,500 of this amount may be in subsidized loans.
Third and Beyond (each year) $7,500—No more than $5,500 of this amount may be in subsidized loans. $12,500—No more than $5,500 of this amount may be in subsidized loans.
Maximum Total Debt from Stafford Loans When You Graduate (aggregate loan limits) $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. $138,500—No more than $65,500 of this amount may be in subsidized loans. The graduate debt limit includes Stafford Loans received for undergraduate study.

How Do You Apply For These Loan Funds?

The steps for a student are fairly simple:

  1. Complete the FAFSA (Free Application for Federal Student Aid)
  2. Sign into your account at StudentLoans.gov using the same PIN number that you utilized on the FAFSA
  3. Complete the MPN (Master Promissory Note)
  4. As long as you are a registered student at your college, they will certify the loan and schedule a date for the funds to be disbursed against your tuition accounts.

The steps for a Direct Parent Loan is a little more involved but still done with ease:

  1. Complete the FAFSA (Free Application for Federal Student Aid)
  2. Sign into your account at StudentLoans.gov using the same PIN number that you utilized on the FAFSA
  3. Complete the Loan Application (Unlike the student loan, this loan is subject to a credit review before being approved)
  4. Complete the MPN (Master Promissory Note)
  5. As long as you have no adverse credit and the student is a registered student at the college you are requesting the funds to be sent, a financial aid administrator will certify the loan for the dollar amount requested (or the dollar amount eligible if you request more than what you are allowed) and schedule the disbursement of the funds to the school.

Some Inherent Problems / Mistakes That You Should Try To Avoid…

I have talked with some financial aid administrators and the following list of problems seem to be topping the charts and causing problems for them (and their families) in getting these loan funds processed.

  • Confirmation Woes: Just because you get a confirmation at the end of the process on Studentloans.gov, it doesn’t necessarily mean that you did everything correct. Apparently, the confirmation page is given to anyone that makes it to the end of the online process regardless of accuracy in filling out the boxes… The only way you will know something is wrong, is if the school calls and notifies you or if your loan seems to be taking an extraordinary amount of time for processing (meaning that it is probably being held up for some technicality)
  • No Dashes and No Slashes: Even though we love to use these things on calendar dates, you should refrain from using them on StudentLoans.gov. If used, it will ensure an immediate delay in your loan being processed.
  • Double Check Social Security Numbers: Hard to believe but it actually appears that StudentLoans.gov does not verify the social security number of the student (especially if it is the parent doing the Direct Parent Loan).
  • Time Delays: If a parent is doing the Parent Direct Loan, they will need to wait a little bit before going through the steps if the student just completed the student direct loan MPN. If the parent starts the process too soon, the system will error out.
  • Pin, PIN, PIN: Student should use their PIN for their loans and parents need to use their PIN for their loans. You can ‘t interchange them…
  • Complete ALL The Steps: Apparently, the parents are able to complete the MPN and get a printout confirmation without ever actually doing the application part of their loan. Even though the system permits this, make sure you complete BOTH the application and MPN.

The education loan process can be quite a daunting task but I am hopeful that the information above helps to guide you through the appropriate steps in a timely manner and without errors. If you know of anyone else that may be able to benefit from this information, please feel free to use the “share tab” below to pass this along.

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One Response to “Your New Best Friend for Education Loans – StudentLoans.gov”

  1. Randy Green says:

    Great information here! We’ve also noticed that if a person’s name contains an apostrophe (O’Hara, etc.), that this can cause problems.

    Another item of confusion is that although the site is called StudentLoans, as you mention it is use for parent loans as well. We are seeing some confusion with this — some of our parents are completing the student loan process instead of the parent process.
    The website does a good job of explaining things, but people need to read it carefully to avoid these kinds of problems.

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