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Types of Financial Aid: Loans

Types of Financial Aid: Loans

Loans are borrowed funds that are charged interest and must be repaid. There are three categories of loans: federal (supported by the federal government), state (funded by the state), and private (issued by a bank or credit union).

To receive assistance from any of these loan programs the student must complete the free application for Federal Student Aid (FAFSA).

Federal Direct Subsidized/Unsubsidized Loan

What's the difference in a subsidized and unsubsidized loan?

A subsidized loan is awarded on the basis of financial need.  Interest will not be charged on this loan while the student is enrolled in school or during authorized periods of deferment. The federal government "subsidizes" the interest during these periods.

An unsubsidized loan is not awarded on the basis of need. Interest is charged from the time the loan is disbursed until it is paid in full.  Interest that accrues (accumulates) while the student is in school or during other periods of nonpayment will be capitalized - that is, the interest will be added to the principal amount of the loan and additional interest will be based on that higher amount.

How do I get a Direct loan?

A regular student enrolled in an eligible program at least half-time may receive a Direct loan. Complete the FAFSA as you would for other federal student aid.

Once a Direct loan has been awarded the student should complete an online Master Promissory Note (MPN) and Entrance Counseling.  The MPN is a binding legal document.  By signing it you are agreeing to repay your loan under the terms specified.  Both the MPN and Entrance Counseling should can be completed at studentloans.gov.

How much can I borrow?

Combined Subsidized & Unsubsidized Annual Loan Limits

Dependent students

  • Freshman (<30 hrs) $5,500
  • Sophomore (30-59 hrs) $6,500    
  • Junior/Senior (60+ hrs) $7,500   

Independent students

  • Freshman (<30 hrs) $9,500
  • Sophomore (30-59 hrs) $10,500
  • Junior/Senior (60+ hrs) $12,500

Why is the amount on my bill not the same as the amount awarded?

Direct loans are subject to origination fees.  Origination fees are charged by the lender.  These fees may range from 1% to 3%.  For example, if you borrow $3,500 ($1,750 per semester), the lender may hold out $105 in origination fees for the year ($52.50 per semester).  $1,697.50 per semester would be applied to the bill instead of the award amount of $1750.  You are required to repay the full award amount.

Federal PLUS Loan

The PLUS Loan is a federal loan that the parents of dependent undergraduate students can use to help pay education expenses. 

Parent Borrowers may complete the application for a PLUS Loan here

Notes:

  • Please sign in using the parent's FSA ID.
  • Please do not complete the PLUS Loan application prior to June 1 of the academic year for which you are applying. 
  • A credit check will be performed during the application process and is only valid for 90 days.

Approved PLUS borrowers

The U.S. Department of Education will notify us of any approved PLUS loans within 24 hours. Parent must complete the Master Promissory Note at studentloans.gov. The Master Promissory Note must be in the parent's name. The PLUS must also be accepted online at Campus Connect. PLUS loans, like Direct Loans, are subject to origination fees.

Denied PLUS borrowers

The U.S. Department of Education will notify us of any denied PLUS loans within 24 hours. If the parent is denied the PLUS loan, the student is then eligible for additional Direct Unsubsidized Loan funds. The parent will receive an email from the ETBU financial aid office requesting for the additional loan to be added to the student's Direct Unsubsidized Loan. The parent must reply to the email.

Endorsed PLUS borrowers

If the parent is denied but chooses to get an approved endorser then parent will need to complete the Master Promissory Note (MPN) and the PLUS Credit Counseling at studentloans.gov.

For more information on the PLUS Loan, please click here.

State College Access Loan

The College Access Loan provides loan funding to students from Texas. Students do not have to demonstrate financial need to receive CAL, but the cost of attendance is considered in determining loan limits.

To be eligible for CAL a student must:

  • Be a Texas resident
  • Be enrolled at least half-time in a course of study leading to an associate's, bachelor's, graduate, or higher degree; or an approved alternative educator certification program
  • Meet the satisfactory academic progress requirements
  • Receive a favorable credit evaluation or provide a cosigner who has good credit standing and meets other requirements

For more information and to apply for a CAL loan click here.

**Additional requirements to receive the CAL loan is that the student must submit their FAFSA, complete all documentation requested by the Financial Aid Office and accept the Direct Loans.

Private Loans

Private loans are obtained through a bank, credit union, or other independent lender. You will need to work directly with the lender of your choice to apply for a private loan.

ETBU has partnered with ELM Select to give you the best options when deciding which student loan best fits your needs. Go to Elm Resources to compare loan availability and apply.

Loan Disbursement

Loan funds are generally disbursed to student accounts in equal amounts twice per loan period.  Most commonly the loan period consists of Fall and Spring semesters, therefore, one disbursement is made in the Fall and one in the Spring.

Once the tuition refund period has passed, loans will be disbursed and the Business Office will issue any refunds due at that time to the student's designated bank account.