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Loans are financial aid funds that must be paid back, typically with interest. Loans come in two main types: federal loans from the Direct Loan Program and private loans from third-party lenders. In addition to scholarships and grants, loans are one of the most common ways students bridge the gap between offered gift aid, family resources and their total Cost of Attendance.

Direct Loans

DigiPen participates in the Direct Loan Program, the largest federal student loan program offered by the U.S. Department of Education. Direct Loans are low-interest loans for students and parents to help pay for the cost of a student’s education beyond high school. Students can choose from a variety of flexible repayment plans designed to meet the needs of different borrowers. Direct Loans are the most common form of loans for undergraduate students seeking financial aid to fund their higher education.

To receive Direct Loans, students must be enrolled on at least a half-time basis and must complete the Free Application for Federal Student Aid (FAFSA) to determine their eligibility. If eligible, students will be given the option of borrowing through the Direct Loan Program. To receive loans, students must sign a Master Promissory Note and complete Loan Entrance Counseling on

Types of Direct Loans

There are different types of direct loans:

  • Direct Subsidized Loans are awarded to undergraduate students who demonstrate financial need as determined by the FAFSA. The federal government pays the interest on these loans while the loans are in deferment. Loans are deferred as long as students are enrolled on at least a half-time basis and during the six-month grace period after a student graduates, leaves school, or enrolls on less than a half-time basis.

  • Direct Unsubsidized Loans are available to all eligible students and do not require students to demonstrate financial need. Students are responsible for paying all the interest on an unsubsidized loan but can allow it to accumulate while in college and during the grace period. However, any interest that has accrued will be “capitalized” — that is, added to the amount borrowed when a student enters repayment — and future interest will be based on the new, higher loan amount.

  • The Direct Parent Loan for Undergraduate Students (Direct PLUS Loan) enables parents or stepparents to borrow up to the total cost of their dependent child’s education, minus any other aid the student receives. Only undergraduates who are dependent students are eligible for Direct PLUS Loans. The Direct PLUS Loan does require a separate credit application and credit check with the Department of Education in order to borrow.

  • Direct Graduate PLUS Loans enable graduate students who are not eligible for direct subsidized loans to borrow beyond the limits of the direct unsubsidized loan program. Graduate students can borrow up to their cost of attendance, minus any other aid awarded, in Direct PLUS Loans. The Direct PLUS Loan does require a separate credit application and credit check with the Department of Education in order to borrow.

Steps to Borrow

DigiPen participates in the William D. Ford Direct Loan Program. Students who use the Federal Direct Subsidized and/or Unsubsidized Loan must complete the steps below.

All undergraduate and graduate students must sign a Master Promissory Note (MPN) and complete Loan Entrance Counseling in order to receive Federal Direct loans.

Step 1

Students should log in to the student portal at and complete the Loan Entrance Counseling. They must complete the online Entrance Counseling session before federal loans will disburse.

This website is a quick and easy interactive counseling session that provides useful tips and tools to help develop a budget for managing one’s educational expenses and understand one’s loan responsibilities.

Instructions for Completing Entrance Counseling

This online entrance counseling session will take about 20-30 minutes to complete.

  1. Visit
  2. Select “Sign In”
  3. Log in with FAFSA PIN
  4. Select “Complete Counseling”
  5. Proceed with the entrance counseling

Step 2

After completing Entrance Counseling, students must complete the Federal Direct Loan Master Promissory Note (MPN) also available at

Please be prepared to have the required U.S. Department of Education issued FSA ID to complete the electronic MPN. This is the same FSA ID that was used to complete the signature on the FAFSA.

Exit Counseling

Federal regulations also require that students leaving school complete Loan Exit Counseling.

Direct Stafford Loans are borrowed money that must be repaid, with interest, much like a car note or home mortgage. These loans are a legal obligation that a student must repay. Exit counseling is a requirement when students withdraw, graduate, or drop below half-time attendance. During counseling, students learn about their rights and responsibilities as a student loan borrower and gain information to help manage their loans. For more detailed information or to complete exit counseling, please visit

Instructions for Completing Exit Counseling

  1. Visit
  2. Select ”Sign In”
  3. Log in with FAFSA PIN
  4. Select “Complete Counseling”
  5. Proceed with exit counseling

Financial Aid Disbursement of Loans

If a student’s loan period spans fall and spring semesters, they will receive one half of their loan for fall semester and one half of their loan for the spring semester. The loan period is defined as an academic year.

Disbursement dates are important in calculating student living expenses for the student’s first month at school. Direct Loans will be requested the first week of both fall and spring semester. Once the money disburses, the Business Office deducts all tuition and fees due to the school then has up to 14 business days to issue the student (Direct loans) and parents (Direct PLUS loans) any excess funds for living expenses.

In general, students should be prepared to cover living expenses for the months of September (beginning of fall semester) and January (beginning of spring semester) of each year.

Students may choose to have excess Direct Loan funds issued back to the government instead of their bank account. If students decide that they do not want their excess funds to obtain books and supplies, they must indicate this by contacting the Office of Financial Aid to request a Loan Change Form.

Annual Direct Subsidized and Unsubsidized Loan Limits

Year of StudyAnnual Loan LimitTotal Annual Limit for Independent Students and/or Those Eligible for Additional Unsubsidized Loans
First-Year Undergraduate$5,500 (maximum of $3,500 subsidized)$5,500 + $4,000 additional unsubsidized loans
Second-Year Undergraduate$6,500 (maximum of $4,500 subsidized)$6,500 + $4,000 additional unsubsidized loans
Third-, Fourth-, and Fifth-Year Undergraduate$7,500 (maximum of $5,500 subsidized)$7,500 + $5,000 additional unsubsidized loans
Graduate/Professional$20,500$20,500 unsubsidized loans

Annual loan limits include $2,000 direct unsubsidized loans that are available to all loan recipients.

Aggregate Loan Limits

Type of EnrollmentSubsidizedTotal (Subsidized and Unsubsidized)
Dependent Undergraduates (excluding dependent students whose parents cannot get a Parent PLUS Loan)$23,000$57,500 (no more than $23,000 of which may be subsidized)
Independent Undergraduates and Dependent Undergraduates whose parents cannot get a PLUS loan$23,000$57,500 (no more than $23,000 of which may be subsidized)
Graduate/Professional Students$65,500$138,500 (no more than $65,500 of which may be subsidized)

Additional unsubsidized loans are available to independent students (both undergraduate and graduate) as well as dependent students whose parents are unable to borrow through the Federal Direct Parent PLUS loan program due to adverse credit history.

Interest Rates by Loan Type

For Loans Disbursed After July 1, 2021

Type of LoanInterest Rate
Undergraduate Subsidized/Unsubsidized Loans3.73%
Graduate Unsubsidized Loans5.28%
Direct PLUS Loans6.28%

For Loans Disbursed After July 1, 2020

Type of LoanInterest Rate
Undergraduate Subsidized/Unsubsidized Loans2.75%
Graduate Unsubsidized Loans4.30%
Direct PLUS Loans5.30%

For more information on current rates please visit

Loan Origination Fees

Loan origination fees are the cost of borrowing from the federal government. This fee is expressed as a percentage of the loan’s total.

For Loans Disbursed After October 1, 2020

Type of LoanOrigination Fee
Undergraduate Subsidized/Unsubsidized Loans1.057%
Graduate Unsubsidized Loans1.057%
Direct PLUS Loans4.228%

National Student Loan Data System (NSLDS)

All information related to a Title IV loan (any of the following Federal Direct Loan Programs: Subsidized, Unsubsidized, PLUS and Grad PLUS loans) will be reported to the National Student Loan Data System (NSLDS), whether the borrower is a student or parent. Information from NSLDS is accessible by guarantor agencies, lenders, and institutions determined to be authorized users of the data system. Students and parents may check their loan borrowing history and servicer information stored in NSLDS by visiting and logging in with their FSA ID.

Private Loans

Private loans are often referred to as “private educational loans” or “alternative loans.” Private loans are based on your credit history and can help bridge the gap between your other financial aid funds and the actual cost of your education. These loans are offered by private lenders and should be considered only after exhausting all other sources of funding, including federal loans and grants.

The Office of Financial Aid is available to discuss with all students, and their parents, the financial aid options available to them. Students and parents may qualify for Federal loans or other assistance programs under Title IV of the Higher Education Act. Title IV program loans (including Direct Loans) may have more favorable terms and conditions than private educational loans, which do not fall under Title IV.

Preferred Lender Lists: DigiPen does not have any preferred lender arrangements. However, students can use the following Private Education Loan Applicant Self-Certification Form to start the application process with their lender of choice.

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