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Federal Direct Loan for Graduates


The largest source of low-interest loans administered by the U.S. Department of Education is the Federal Direct Loan program. Federal Direct Loan funding is available to all graduate students who have completed the FAFSA, enrolled as a matriculated student in an eligible degree program, registered for at least six credit hours per term, are U.S. citizens or resident aliens, and who are not in default on a prior student loan. Creditworthiness is not a requirement for the loan.

Graduate students are eligible to borrow the Unsubsidized Loan. The Unsubsidized Direct Loan is not based on need, and interest is charged during all periods including in school, grace, and deferment.


Students can borrow up to $20,500 per year through the Unsubsidized Direct Loan. In addition to annual borrowing limits, students are also limited in the total amount they can borrow from the Direct Loan program during their undergraduate and graduate academic careers. These limits are referred to as aggregate loan maximums and will vary depending on the student’s dependency status and degree being sought. Graduate students may borrow a lifetime maximum of $138,500 from the Direct Loan program with no more than $65,500 in Subsidized Loan funding. These amounts include all Direct Loan borrowing at the undergraduate level.


Monmouth University’s Financial Aid Office will notify the student when to sign their Electronic Master Promissory Note (E-signature MPN) for the Unsubsidized Loan. Borrowers should be aware that their loan will be submitted to the National Student Loan Data System (NSLDS) and will be accessible by authorized agencies, lenders, and institutions.


Monmouth University is responsible for delivering the funds to the student; funds will be transferred electronically to the student’s account. All first-time Direct Loan borrowers must participate in a loan counseling session before receiving the first disbursement of their loan proceeds. For your convenience, you are able to complete this session online. Please use the link to begin the entrance counseling session.

Interest And Fees

Loans first disbursed on or after July 1, 2019 have a fixed interest rate of 6.08% as well as an origination fee of 1.059%.  The origination fee is charged by the federal government and is applied to the principal amount of the loan.


For students borrowing under the Unsubsidized Direct Loan program, the interest must be paid by the borrower. This can be done in one of two ways. While the student is enrolled, the borrower can pay the interest as it accrues. Alternatively, rather than pay the interest during periods of enrollment, borrowers can have that interest capitalized, which means adding it to the principal amount borrowed. All capitalized interest must be repaid. The important thing to note here is that capitalized interest becomes principal in this process. Thus, students who use this second option end up paying interest on accrued (and then capitalized) interest.

Repayment of principal and interest begins six months after graduation or termination of enrollment on at least a half-time basis. To see what your repayment may be, you can look at the standard repayment table. The federal government also requires that students complete an exit counseling session when they graduate, withdraw, or drop below half-time attendance (e.g., less than six credits). For your convenience, you are able to complete this session online. Please use the link to begin the exit counseling session.