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Direct Loans

Federal Direct Student Loans

A Direct Loan is a type of federal student loan that’s made directly by the U.S. Department of Education. Direct Loans are awarded as part of your total award package, which may contain other types of aid. 

Loan proceeds are credited to the student's account in equal amounts for each term of enrollment in the school year. Interest rates vary depending on when the loan is first disbursed and if it is a subsidized (no interest accrues) or if it is unsubsidized. Also, loan origination fees will be charged to the borrower so the actual amount received will be slightly less than the gross amount borrowed.

Completing a FAFSA each year is a requirement to receive consideration for the loan types shown below. 

Step 1: File the Free Application for Federal Student Aid (FAFSA).

This is the first step to establishing eligibility for all federal and state student aid programs as well as Creighton need-based aid. Complete your FAFSA. Check out the instructional video for a step-by-step guide to filing your FAFSA.

The FAFSA can be filed starting in December for the next school year. For example, a student who will begin classes at Creighton in the fall of 2024 can file the FAFSA for the 2024-2025 school year beginning December of 2023. Creighton's school code number is 002542.

Processed FAFSAs should be on file with Creighton by February 1 for priority scholarship consideration but will continue to be accepted through April 1. FAFSA results received after April 1 will be considered as funding allows. If we ask for copies of your federal tax return transcript and W-2 earning statements, these should be sent to our office as soon as possible.

There are some excellent tools, resources and tips for properly completing the FAFSA and avoiding common mistakes at National Association of Student Financial Aid Administrators (NASFAA).

Federal Direct Student Loans Reminder

New borrowers must complete a Master Promissory Note (MPN) and online loan entrance counseling. Loan funds cannot be disbursed until loan entrance counseling has been completed. Federal Direct loans include subsidized, unsubsidized, PLUS and Grad PLUS. You will need your Department of Education PIN to complete the processes.

(Returning students, if you completed a Direct Loan Master Promissory Note (MPN) last year for a subsidized or unsubsidized loan, you will be considered a serial borrower. You do not need to complete a new MPN.)

Students working at laptops

Direct Student Loan Types

The Direct Loan Program offers the following types of loans:

  • Subsidized Loan: This loan is for undergraduate students with demonstrated financial need, as determined by the FAFSA. The Federal government pays the interest on this loan while the student is enrolled in school on at least a half-time basis. This means that the student is not responsible for paying interest while in an in-school, grace, or deferment period.
  • Unsubsidized Loan: This type of loan is not based on financial need. Interest is charged while the student is in school, grace and deferment periods. Interest accrued during these periods will be capitalized onto the principal amount borrowed when the student drops below half-time enrollment. When students complete the Master Promissory note (MPN), they are given the option of making interest payments during the in-school period. 
  • PLUS: This is an unsubsidized loan for the parents of dependent students. PLUS loans help pay for education expenses up to the cost of attendance minus all other financial assistance. Interest is charged during all periods and repayment normally begins 60 days after the loan is fully disbursed. A FAFSA is required to determine the parents' eligibility along with a credit check of the parents' credit worthiness.
  • Grad PLUS is available for credit worthy graduate and professional students. Students can borrow up to the full cost of attendance, less other financial aid received. Interest is charged during all periods. Students are eligible for an in-school deferment while enrolled in school on at least a half-time basis. The first payment will be due 6 months after no longer enrolled at least 1/2 time.
  • Consolidation: Most federal student loans are eligible to be combined into one Direct Consolidation Loan. A consolidation loan pays off the previous loans and a new loan is created. This can be an effective way to combine multiple loans with varying terms into a single more manageable loan, especially during repayment. However, some deferment and cancellation benefits may be lost in doing so. Federal educational loans cannot be consolidated until the student is no longer attending an institution of higher education on at least a 1/2 time basis.

See the Direct Loan Program Guide for more details on each program.

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