Education loans are a form of financial aid that must be repaid with interest. Eligibility may be based on tuition costs and financial need for the loan. Student loans can come from the federal government, referred to as federal student loan, and is determined by completing a FAFSA.

Federal Direct Loans

Federal Direct Loans are low-interest loans funded by the Department of Education to undergraduate and graduate students attending school at least half-time. Undergraduate students must be in a minimum six credits, while graduate students must be in a minimum of five credits. Students must complete the Free Application for Federal Student Aid (FAFSA) for the University to determine loan eligibility.

Loan Entrance Counseling

If you intend to take out a Federal Direct Loan, borrowers must complete Loan Entrance Counseling. Please be aware, if not completed this will delay your Direct Loan disbursements.

All students new to the Federal Direct Loan Program will be required to complete Direct Loan Entrance Counseling, regardless of completion of other Loan Counseling sessions in the past.

Master Promissory Note (MPN)

Undergraduate Direct Subsidized and Unsubsidized borrowers under the Direct Loan Program will sign one promissory note, which can serve over multiple academic years (up to 10 years). A separate MPN is required for Direct Loans and Parent PLUS Loans. You will need the address and phone numbers of one emergency contact person, as well as two references who will know how to contact you at all times. We estimate it will take 30 minutes to complete the electronic MPN process. Make sure you allow enough time to complete the entire process in a single session. If you start the MPN and exit before submitting your signed MPN and return later, you will have to start over at the beginning.

Federal Direct Subsidized Loan

The Federal Direct Loan is subsidized by the Federal Government, which means the Federal Government pays the interest while the student is in school. The Federal Direct Loan is awarded based upon the financial need of the student. There is no priority deadline to qualify for this program.

Repayment begins after a six-month grace period, which means students do not begin repaying the loan until six months after the student either withdraws, graduates, or falls below half-time status. This loan may also carry some teacher cancellation provisions. For additional information regarding this program go to Studentaid.gov.

Federal Direct Unsubsidized Loan

The Federal Direct Unsubsidized Loan is not subsidized by the federal government. Therefore, the student is responsible for paying interest on the loan while they are in school. If you choose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan). Students need to complete the FAFSA to qualify for this program. There is no priority funding deadline to qualify for this program. Students need to enroll at least half-time to be eligible for this loan.

Repayment will begin after a six-month grace period, which means students do not begin repaying the loan principal until six months after the student either withdraws, graduates, or falls below half-time status. This loan may also carry some teacher cancellation provisions. For additional information regarding this program go to Studentaid.gov.

The following chart shows the annual and aggregate limits for subsidized and unsubsidized loans:

 

Federal Direct Loan Annual Loan Limits:  Dependent Student Independent Student
First year  $5,500 $9,500
Second year    $6,500 $10,500
Third, fourth, fifth year $7,500  $12,500
Graduate $8,500 $20,500
Aggregate Loan Limits:  
Undergraduate      $31,000 $57,500
Graduate + Undergraduate   $138,500

Federal Cohort Default Rate

Federal student loans must be repaid with interest. Failure to repay student loan(s) can result in default. The default rate is the percentage of all outstanding loans that have been written off after a prolonged period of missed payments. MSUB’s most recent two-year rates are*:         

Fiscal Year 2020:        0.0% 

Fiscal Year 2019:         2% 

These rates come at a time when students loans have been in repayment pause due to the Covid 19 pandemic flexibility. Prior to the pandemic, MSUB’s rate over the previous 5 years averaged 7.94 % and is below the national average.

Federal Parent PLUS Loan

Parents of dependent students may apply for a Federal Direct PLUS Loan to help pay their child's education expenses if certain eligibility requirements are met. To be eligible for a Direct PLUS Loan for Parents:

  • The parent borrower must be the student's biological or adoptive parent. In some cases, the student's stepparentmay be eligible.
  • The student must be a dependent student who is enrolled at least half-time at a school that participates in the Direct Loan Program.  Generally, a student is considered dependent if he or she is under 24 years of age, has no dependents, and is not married.
  • 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 parent may also still receive a loan if he or she can demonstrate extenuating circumstances.

The student and parent must be U.S. citizens or eligible noncitizens, 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. For additional information on eligibility requirements, visit the Federal student aid eligibility page.

To apply for a Federal Direct Parent PLUS Loan for your Montana State University Billings (MSUB) student, the following steps need to be taken:

  1. The student must be admitted as a degree-seeking student at MSUB
  2. The student must complete a Free Application for Federal Student Aid (FAFSA) and be eligible to receive Federal student aid.
  3. Must be enrolled in at least 6 credits per semester to be eligible.
  4. The parent borrower must complete a Parent PLUS Loan Application each year. Applications can be completed online at Federal Student Aid.
  5. A Federal Direct Parent PLUS Loan Master Promissory Note (MPN) must be on file with the Department of Education.  To complete a Direct PLUS MPN, the parent borrower must sign in to Studentaid.gov using his/her FSAID , select "Complete MPN" and "Parent PLUS."

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.

Repayment Plans - The Direct PLUS Loan Program for parents offers three repayment plans (standard, extended, and graduated) that are designed to meet the different needs of individual borrowers. The terms differ between the repayment programs, but generally, borrowers will have 10 to 25 years to repay a loan. To read more about repayment plans, go to Repayment Information. 

Federal Graduate PLUS Loan

Federal Graduate PLUS Loans are unsubsidized loans made to graduate students.  The maximum PLUS Loan amount that a graduate student can borrow is the student’s cost of attendance minus other financial aid received. Interest rates for these loans vary each aid year, please contact the Office of Financial Aid and Scholarships to get the current year’s rate. Repayment of a PLUS loan for graduate students begins on the date of the last disbursement.  

 To apply for a Federal Direct Graduate PLUS Loan the following steps need to be taken:

  1. The student must be admitted as a degree-seeking student at MSUB
  2. The student must complete a Free Application for Federal Student Aid (FAFSA) and be eligible to receive Federal student aid.
  3. Must be enrolled in at least 5 graduate level credits per semester to be eligible.
  4. The student must accept the Graduate PLUS Loan via the MSUB Office of Financial Aid & Scholarships, either through their myInfo secure login or in writing.
  5. First time Direct Graduate PLUS Loan borrowers must complete:
  6. Loan Entrance Counseling.
    1. A Federal Direct Graduate PLUS Loan Master Promissory Note (MPN) must be on file with the Department of Education.
    2. To complete a Direct PLUS MPN, sign in to Studentaid.gov using your Federal FSAID, select "Complete MPN" and "Graduate PLUS." NOTE: If the student is using an endorser on their loan a new MPN is required each year.
  7. Complete Graduate PLUS Loan Application each year. This can be completed online by logging into Studentaid.gov using your FSAID and selecting the “Request PLUS Loan” link. 

More information about the Federal Direct Graduate PLUS Loan online.

Exit Counseling 

The federal government requires students to complete student loan Exit Counseling before they graduate or stop attending at least half-time (less than 6 credits). Exit Counseling can be completed online at https://studentaid.gov/.  You will need your FSA ID to login.    

Federal Direct Subsidized and Unsubsidized Loans:  

  • Select the Loan Repayment menu at the top of the page   
  • Select Loan Exit Counseling, then Log in To Start with your information
    • Select your student type: Undergraduate or Graduate
  • Select Montana State University Billings as your school, and click Submit
  • When you are done you will receive confirmation that your Exit Counseling is complete 

Repaying your Loans

Know what you owe, navigating and understanding your student loans

After a student graduates, leaves school, or drops below 6 credits, the student may have a grace period before they begin repayment of student loans. Go to studentaid.gov for information on Loan Repayment. A record of all of the federal aid a student has received can be found in their dashboard on the same website.

If you are looking for information about loan repayment plans check out Federals Student Aid's video Your Guide to Student Loan Repayent Plans and review FSA's Loan Repayment Checklist.

Loan FAQ

You must be registered and attending a minimum of six financial aid eligible credits by the census date each term to be eligible to receive a Federal loan.

A student loan is awarded as a subsidized, unsubsidized, or combination of both based on the following: cost of attendance (enrollment and residency status), Student Aid Index, other financial aid resources received, dependency status, grade level, and remainingaggregate loan eligibility.

A subsidized loan is a federal student loan for students with financial need as determined by federal regulations. No interest is charged while the student is in school at least half-time. Interest will accrue during the grace period for all students who received their first subsidized loan on or after July 1, 2013. 

An unsubsidized loan is not based on financial need. With an unsubsidized loan, the student is responsible for the loan's interest when the loan is disbursed until the loan is paid in full. Interest payments may be made while in school or can be deferred and capitalized when repayment begins. This means that the interest that accrues is added to the principal loan balance. Interest then begins accruing on the new principal loan balance.

Interest is the expense of borrowing money, which is calculated as a percentage of the amount borrowed. For the current interest rate, click here.

An origination fee is a fee paid by the borrower to the Department of Education to cover the loan's administrative fees. The loan amount credited to the student account will be the principal amount borrowed minus an origination fee. For the current origination fee, click here.

Repayment begins on the day immediately following a six-month grace period. The six-month grace period starts when you graduate, withdraw from school, or drop below the required six credits. To see more about repayment and repayment plans, please click here.  

To ensure that payments are made on time, borrowers should consider making payments through the Department's Electronic Debit Account (EDA) repayment option. Under EDA, the borrower's bank automatically deducts the monthly Direct Loan payment from the borrower's checking or savings account. The payments will be forwarded to the Direct Loan Servicing Center and will always be on time. The borrower will also receive a 0.25 percent reduction in their interest rate for paying through the EDA option. 

When you begin student loan repayment it is important to make your payments on time. Your student loans become delinquent if you miss a required payment. Delinquency is reported to the credit bureaus and will hurt your credit rating.   

If your loans are delinquent for 270 or more days, you will enter student loan default. Defaulting on your loans is very serious and can result in: 

  • Losing eligibility for future financial aid 
  • Damage to your credit history 
  • Garnishment of working wages and/or seizure of benefits or tax refunds 
  • Loss of eligibility for certain types of employment 

A Federal Direct Student Loan is in the student's name. If a parent wishes to borrow a loan on behalf of their dependent student, they must borrow a Federal Direct PLUS (Parent) Loan. Unlike Federal Direct Student Loans, PLUS loans are based on credit eligibility. If the parent's credit is denied and the parent borrower cannot secure an endorser, the student may be eligible for an additional unsubsidized student loan. For more information on PLUS loans, click here. 

If you borrowed a loan from another school in the fall or spring you will need to let your prior school know to cancel your remaining loan. You will need to add MSUB’s school code (002530) to your FAFSA.

If you transfer to another school during the academic year, the loan is not transferred to the new school. You will need to cancel your remaining loans at MSUB and request a loan at your new school. You may need to contact your loan servicer and request an "in-school deferment" so your loan(s) do not go into repayment.