Borrow What You Need to Achieve Your Academic Goals

College loans for students are a common way to finance your education. Just remember, you must pay back all loans with interest. So be responsible, and only borrow the funds you need to get through school.

Federal Direct Loans

Peirce College participates with the William D. Ford Federal Direct Loan Program. This student loan will be delivered directly from the federal government instead of various banks and lending institutions. Please follow the steps outlined below to apply for a student loan under the Direct Loan Program.

Steps to apply for Direct Student Loans:

  • Make sure you have filed your FAFSA.
  • Review your current loan history on the National Student Loan Database System (NSLDS) at
  • Enroll for six or more credits to be eligible each semester.

For first-time loan applicants:

  • Complete the Direct Loan Entrance Counseling Session at
  • Complete your Direct Loan Master Promissory Note (MPN) at
  • You will need your FAFSA PIN to complete the counseling session and the Master Promissory Note.

Types of College Loans for Students

Federal Subsidized Stafford Loan: A student qualifies for this loan by demonstrating financial need. For a subsidized loan, the U.S. Department of Education pays the interest while you're in school at least half time, for the first six months after you leave school (grace period), and during a period of deferment - a postponement of loan payments. Interest rates on this loan may change annually every July 1st but will never exceed 8.25%. College loans for students that were disbursed on July 1, 2010 or later will have an interest rate of 4.50%.

Federal Unsubsidized Stafford Loan: If a student does not qualify or qualifies only partially for a subsidized loan, all or a portion of the loan will be unsubsidized. This means that you don't have a demonstrated financial need. For an unsubsidized loan, you're responsible for the interest from the time the loan is disbursed until it's paid in full. You can pay the interest as you go along. Or, you can allow the interest to accrue (accumulate) -- for example, while you're in school -- and have the interest added to the principal amount of your loan later. This means the interest will be "capitalized." Note that if interest accumulates, the total amount you repay will be higher than if you paid the interest all along. Again, interest rates on this loan may change annually every July 1st but will never exceed 8.25%.

Federal Parent Loan for Undergraduate Students (PLUS): Parents of dependent undergraduate students who are enrolled at least half time can qualify for this type of loan. Parents must be citizens or eligible non-citizens, may not be in default or owe a refund to any FSA Student Independent program and have good credit history to qualify for this loan. Generally, within 60 days after the loan is fully disbursed your parents will begin repayment of the loan. Interest begins to accumulate at the time the first disbursement is made. Your parents must begin repaying both the principal amount and interest while you're in school. If your parents are denied this loan, then you become eligible to receive additional funds through the unsubsidized loan program.

Loan Amounts

A student's college loan amount will depend on the student's cost of attendance and remaining financial need after subtracting grant assistance and other sources of aid. Contact our Student Financial Services department for information on the loan limits for dependent and independent undergraduate students.

Learn some key terms regarding your student loan

Master Promissory Note (MPN)

A Master Promissory Note (MPN) is the binding legal document you sign when you apply for a student loan. It lists the conditions under which you are borrowing and the terms under which you agree to pay back the loan. It will include information on how interst is calculated and what the deferment and cancellation provisions are. It is very important to read and save this document because you will need to refer to it later when you begin repaying your loan.

Stafford Entrance & Exit Counseling

A Master Promissory Note (MPN) is the binding legal document you sign when you apply for a student loan. It lists the conditions under which you are borrowing and the terms under which you agree to pay back the loan. It will include information on how interest is calculated and what the deferment and cancellation provisions are. It is very important to read and save this document because you will need to refer to it later when you begin repaying you loan.

Loan Repayment

Your repayment amount will depend on how much you have borrowed and the length of your repayment period. The repayment periods for Stafford Loans vary from 10 to 30 years depending on whether the loan is an FFEL or a Direct Stafford Loan and depending on which repayment plan you choose. When it comes time to repay. You can pick a repayment plan that's right for you:

  • A 10-year Standard Plan with a minimum monthly payment.
  • An Extended Plan that allows you to repay your loan over a longer period of time.
  • A Graduated Plan with a monthly payment that starts out low and then increases gradually during the repayment period
  • Income-based repayment
  • A plan that bases the monthly payment amount on how much money you make. Under FFEL, this plan is called the Income-Sensitive Repayment Plan; under Direct, the plan is called the Income Contingent Repayment Plan.

Your lender will send you information about repayment, and you'll be notified of the date repayment begins. However, you are responsible for beginning repayment on time, even if you don't receive this information. It is important to remember that failing to make payments on your loan can lead to default.


A deferment is a period of time during which no payments are required and interest does not accrue (accumulate), unless you have an unsubsidized Stafford Loan. In that case, you must pay the interest.

Under certain circumstances, you can receive periods of deferment that allow you to postpone loan repayment. The most typical loan deferment circumstances are enrollment in school at least half time, the inability to find full-time employment (for up to three years), and economic hardship (for up to three years). Other deferment circumstances are loan specific. These periods of deferment don't count toward the length of time you have to repay your loan. You are also unable to get a deferment on a loan that is in default.

Receiving a deferment is not automatic. You or your parents must apply for it. To apply for a deferment of your student loan, you will need to contact the lender or agency holding the loan. You MUST continue making payment on your loan until you're notified that your deferment has been granted! If you don't, and your request isn't approved, you'll become delinquent and could end up with a loan in default.


If you temporarily can't meet your repayment schedule but you don't meet the requirements for a deferment, your lender might grant you forbearance. During forbearance, your loan payments are postponed or reduced. Interest continues to accrue (accumulate). You are responsible for paying it, no matter what kind of loan you have.

Under certain circumstances, you can receive periods of forbearance that allow you to postpone loan repayment. Generally, you can receive forbearance for periods of up to 12 months at a time for a maximum of three years. You will have to provide documentation to the lender or holder of your loan to show why you should be granted the forbearance.

Default on a Student Loan

Your loan will enter into default when you fail to repay the loan according to the terms agreed when you signed the Master Promissory Note (MPN). The consequences of default are severe! The lender or agency that holds your loan, the state, and the federal government may all take action to recover the money, including notifying national credit bureaus of your default. This notice affects your credit rating for a long time. For example, you might find it very difficult to borrow money from a bank to buy a car or a house. In addition the IRS can withhold your U.S. income tax refund and apply it to the amount you owe, or the agency holding your loan might ask your employer to deduct payments from your paycheck. If you return to school, you are not entitled to receive additional federal student aid. In many cases, default can be avoided by submitting a request for a deferment, forbearance or discharge and by providing the required documentation.

Loan Discharge

A loan discharge (cancellation) releases you from all obligation of having to repay a student loan. However, it is only under specific circumstances that this is possible. Two examples are your death or your total and permanent disability. Also, your loan might be discharged because of the type of work you do: teaching in a designated low-income school, for example. In order to qualify for a loan discharge, you must contact the lending institution or serving agent that holds the loan.

It is important to remember that your loan can not be canceled because you didn't complete the program of study at your school (unless you couldn't complete the program for a valid reason - because the school closed, for example). Also, cancellation is not possible because you didn't like the school or program of study, or you didn't obtain employment afterwards.

Loan Consolidation

Loan consolidation is a way for you to consolidate (combine) multiple federal student loans with various repayment schedules into one loan: either a Federal Family Education Loan (FFEL) Consolidation Loan or a Direct Consolidation Loan. Then, you can make just one monthly payment. You can consolidate during your grace period, once you have entered repayment or during periods of deferment or forbearance.

With a consolidation loan, your payments might be significantly lower, and you can take a longer time to repay (up to 30 years). Also, you might pay a lower interest rate than you would on one or more of your existing loans. However, it is important to remember that consolidation significantly increases the total cost of repaying your loans. Because you can have a longer period of time to repay, you'll pay more interest. In fact, consolidation can double total interest expense. So, compare the cost of repaying your unconsolidated loans with the cost of repaying a consolidation loan.

To qualify for a consolidation loan or to receive more information about interest rates, you can contact the consolidation department of a participating lender or the holder of the loan(s).

It is important to keep in touch with your lending institution or Direct Loan servicing office. You must notify your lender or servicing office when you:

  • Graduate
  • Withdraw from school
  • Drop below half time status (6 credits=half time)
  • Change your name, address or Social Security number
  • Transfer to another school

Failure to keep updated information with your direct loan servicing office could cause your loan to go into default or to be sent to a collection agency. More information explaining Federal Financial Aid can be found at

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