Frequently Asked Loan Questions
Is there a separate application?
No. The FAFSA is the application for Federal Direct Loans.
Are any additional steps required?
Only for first-time borrowers. First-time borrowers must complete Entrance Counseling and sign a Master Promissory Note (MPN). This will require the student’s FSA ID. If these steps cannot be confirmed by the UA Rich Mountain Financial Aid Office, loan funds will not be disbursed to the student account.
What is the interest rate?
The interest rate for any undergraduate Direct Loan is fixed and accrues as simple interest. To learn more about fixed interest and how interest accrues, please visit the StudentAid.Gov page on interest rates.
Are there any fees for borrowing a Federal Direct Loan?
There is an origination fee for any federal loan that is disbursed. For any Direct Loan that is disbursed an origination fee is applied. This fee is not expected from the student; however, will be taken from the loan disbursement. Visit the Federal Student Aid website for more information on origination fee for Direct Loans.
Are there limits for how much can be borrowed?
Yes; however, the limits depend on the student’s grade level and dependency status, as determined by the FAFSA.
For a dependent undergraduate student, the annual limits are:
- Freshman: $5,500 in Direct Loans. May be up to $3,500 in Sub Loan funds and the difference would be Unsub Loan funds.
- Sophomore: $6,500 in Direct Loans. May be up to $4,500 in Sub Loan funds, the difference would be Unsub Loan funds.
NOTE: The combined aggregate limit that a dependent student may have outstanding is $31,000. The student may only have up to $23,000 in Sub Loan funds.
For an independent undergraduate student, the annual limits are:
- Freshman: $9,500 in Direct Loans. May be up to $3,500 in Sub Loan funds and the difference would be Unsub Loan funds.
- Sophomore: $10,500 in Direct Loans. May be up to $4,500 in Sub Loan funds, the difference would be Unsub Loan funds.
The combined aggregate limit that a dependent student may have outstanding is $57,500. The student may only have up to $23,000 in Sub Loan funds.
Note: Students attending UA Rich Mountain can borrow at the Freshman and Sophomore levels only.
Is there a separate application?
Yes. Although, the FAFSA must be completed, PLUS borrowers must also complete a PLUS Loan application. An FSA ID will be required for this process.
Who can borrow a Federal PLUS Loan?
A PLUS Loan borrower must be:
- a U.S. citizen AND
- a legal parent (or step-parent listed on the FAFSA) of a dependent student
NOTE: Legal parents of dependent students may borrow a Parent PLUS Loan.
How do I apply for a Federal PLUS Loan?
- Complete the FAFSA
- Visit Federal Student Loan website.
- Sign in using your FSA ID
- Click Request PLUS Loan
- Click Parent PLUS (if legal parent of dependent student)
Complete PLUS Application
- You will be notified immediate if you have been denied due to adverse credit history
- Complete PLUS Master Promissory Note
NOTE: Credit checks and PLUS Loan approval are only valid for 180 days.
What are the requirements for a Federal PLUS Loan?
A “soft” credit check will be performed by the U.S. Department of Education upon PLUS application submission. It is possible that a borrower be denied if they have an adverse credit history; however, the credit check for a PLUS Loan will be more lenient than a traditional credit check. If the borrower is a legal parent of a dependent student, that student must meet the standard eligibility for federal aid.
What if I am denied a Federal PLUS Loan?
You may choose to seek an endorser. If you choose to pursue this option, your endorser must create an FSA ID to complete the Endorser Addendum electronically. The PLUS Loan may only be awarded up to the endorsed amount. You may also choose to appeal the credit decision. Contact information and instructions for appealing the credit decision will be provided in the denial notification. If a legal parent of a dependent student is denied a Parent PLUS Loan due to adverse credit history (and does not wish to pursue an endorser or appeal the credit decision) or lack of U.S. citizenship, that student may request additional Federal Direct Unsubsidized Loan funds up to the independent student limits. This is typically up to an additional $4,000 for the academic year. See Federal Direct Loans.
What is the interest rate?
The interest rate for any PLUS Loan disbursed is fixed and accrues as simple interest. To learn more about fixed interest rate amount and how interest accrues, please visit the Student Aid page on interest rates.
Are there limits for how much can be borrowed?
Yes, there is an annual limit; however, the limit depends on the student’s Cost of Attendance (COA) and any other aid the student may be receiving. A student may receive PLUS Loan funds up to their COA minus any other aid the student is receiving. For more information, the student may visit their UA Rich Mountain account for their specific COA and to view their current financial aid award package. There are no aggregate limits to how much a PLUS borrower may borrow. The PLUS borrower limits is looked at when reviewing student’s COA.