Loans
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.
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 (0 - 29 credit hours) |
$5,500 (no more than $3,500 subsidized) |
$9,500 (no more than $3,500 subsidized) |
| Second Year (30 - 59 credit hours) |
$6,500 (no more than $4,500 subsidized) |
$10,500 (no more than $4,500 subsidized) |
| Third, Fourth, Fifth Year (60+ credit hours) |
$7,500 (no more than $5,500 subsidized) |
$12,500 (no more than $5,500 subsidized) |
| Graduate | N/A | $20,500 (Graduate students are not eligible to receive subsidized loans) |
| Aggregate Loan Limits: | ||
| Undergraduate |
$31,000 |
$57,500 |
| Graduate + Undergraduate (Legacy) | $138,500 | |
| Graduate | $100,000 (not including undergraduate loans) |
|
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.
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.
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.
- 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
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. The current interest rates for federal student loans can be viewed on the FSA's website.
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. The current origination fees for federal student loans can be viewed on the FSA's website.
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. Vist the FSA's website to learn more about federal studnet loan repayment and repayment plans.
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. Vist the FSA's website to see learn more about learn more about federal direct PLUS loans.
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.