Financial Aid Office

Federal Direct Loans & the Application Process

FEDERAL SUBSIDIZED AND UNSUBSIDIZED DIRECT LOANS

Direct Loans are for undergraduate, graduate and professional degree students.  There are two types of Direct Loans:  Subsidized and Unsubsidized.  

  • Subsidized Direct Loans are available to students who demonstrate financial need as determined by using information provided on the FAFSA.  Interest on Subsidized Direct Loans is paid by the federal government while you are enrolled at least half-time or qualify for a deferment.  Subsidized Direct Loans are available only to undergraduate students for loan periods beginning on or after July 1, 2012.

    Repayment of principal and interest begins six months after the student graduates, leaves school or stops attending at least half time. We also recommend visiting the Loan Payment Calculator web site to help you determine your future payments based on your Direct Loan balance.

 

  • Unsubsidized Direct Loans do not require the student to demonstrate financial need, however, the student is required to file a FAFSA.  The interest on an Unsubsidized Direct Loan is either paid by the student or added to the loan principal (capitalized).  

    Repayment of principal begins six months after the student graduates, leaves school or stops attending at least half time. We also recommend visiting the Loan Payment Calculator web site to help you determine your future payments based on your Direct Loan balance

 

FEDERAL DIRECT LOAN APPLICATION PROCESS

Step 1: Complete the FAFSA and submit any other information (tax returns and other documents) that may be requested by the Financial Aid Office.

Step 2: When you receive the notification of your financial aid eligibility (this is the only notification you will receive), we strongly recommend that you visit MaineStreet self-service at https://mainestreet.maine.edu on a regular basis.  Please be advised that you may visit the ACCEPT/DECLINE YOUR AWARD option once and once only.  Follow the instructions carefully to apply for the Federal Direct Loan(s).  Any changes after that will need to be made directly with the Student Financial Aid Office. 

Step 3: First-time borrowers must complete an Entrance Counseling Session to review their rights and responsibilities.  The Entrance counseling session must be completed online and must be completed prior to your federal loan being disbursed. 

Step 4: For all Federal Direct Loan borrowers, if you are borrowing for the first time, you must complete a Master Promissory Note (MPN).  You must complete this electronically at http://www.studentloans.gov  The MPN must be completed before your loan funds will be released to the school.  Repeat borrowers will receive funds under their previously completed Direct Loan MPN. 

Step 5: Your loan will be divided between the number of semesters you are enrolled at least half-time (6 credits) for the   academic year.  Loan funds (less fees) will be sent to USM.  And, assuming you continue to meet all eligibility criteria, will be credited to your bill.   Visit the Student Accounts web site or call 780-5200 for details about an outstanding balance and credit refunds.