An education loan is a type of financial aid that must be repaid with interest. Education loans consist of three basic types: student loans, parent loans and private loans.

Responsibility for financing a college education rests primarily with the student. Therefore, students who choose to take out loans must understand acceptance of a loan includes the responsibility of full, timely repayment. Defaulting on a loan adversely affects both a student’s financial aid eligibility and his/her credit history.

Types of Loans

The Federal Direct Loan Program allows for eligible students to borrow funds to help cover costs of undergraduate study. The interest rate for a direct loan first disbursed on or after July 1, 2016 and before July 1, 2017 is 3.76 percent.

Subsidized loans are only available to undergraduate students who demonstrate federal financial need. The federal government subsidizes or pays the interest on the loan while the student is attending at least half-time. The interest that accrues on these loans while a student is enrolled more than half-time is paid by the federal government.

An unsubsidized loan is awarded to students who do not have financial need or students who don’t qualify for a maximum subsidized direct loan. For more details on Federal Student Direct Student Loans, visit the Federal Student Aid Website. To apply for a Federal Direct Student Loan, click here for instructions.

Loan Limits for Each Year

In addition to the information below, please note that a new provision is in place that affects first-time borrowers:

  • Once the borrower has received Direct Subsidized Loans for a period that is 150 percent of the published length of the borrower’s current education program, the borrower is no longer eligible for Direct Subsidized Loans.
  • A first-time borrower who loses eligibility for additional subsidized loans loses interest subsidy on subsidized loans received on or after July 1, 2013 if the borrower did not complete the program AND continues enrollment in the program OR enrolls in another program of the same or shorter length.

Annual Federal Direct Loan limits for students enrolled in eligible programs are as follows:

Dependent Undergraduate Students
BASE AMOUNT (SUB/UNSUB)ADDITIONAL LOAN (UNSUB)Total
First-year$3,500$2,000$5,500
Sophomore$4,500$2,000$6,500
Independent Undergraduate Students and Dependent Undergraduate Students Whose Parents Cannot Borrow PLUS
BASE AMOUNT (SUB/UNSUB)ADDITIONAL LOAN (UNSUB)Total
First-year$3,500$6,000$9,500
Sophomore$4,500$6,000$10,500

For full details on the Federal Direct Loan program, visit Federal Student Aid.
Federal Direct Parent Loans for Undergraduate Students (PLUS)

The Federal Direct PLUS Loan Program allows parents of undergraduate students to borrow up to the cost of attendance minus other financial aid. A parent applying for a Federal PLUS loan must be a biological or adoptive parent. A stepparent whose information is included on the FAFSA is also eligible to apply for the loan. A parent seeking a loan must not have an adverse credit history. The interest rate for Direct PLUS loans first disbursed on or after July 1, 2016 and before July 1, 2017 is 6.31 percent. Federal Direct PLUS loans have an origination fee of 4.272 percent assessed by the U.S. Department of Education and deducted from each loan disbursement.

For more information about the Federal Direct PLUS loan, visit the Federal Student Aid website.
Additional resources: How to apply for a Parent PLUS loan.

Private and Alternative Loans

Private student loans are made by private lenders to students and most require credit-worthy cosigners. These loans may be more expensive than Federal Direct PLUS loans so students should first maximize any eligibility under the federal loan programs. Private loan fees and interest rates vary among lenders. All lenders will review the borrower’s and cosigner’s credit history. Moraine Valley does not endorse any specific lender or group of lenders.

For more information on private student loans, click here.

Private Education Loans Self-Certification

Congress has mandated private loan lenders require borrowers to complete a Private Education Loan Applicant Self-Certification Form when requesting any private education loans. The self-certification form must be completed by the borrower and submitted to the lender. Forms should not be sent to Moraine Valley.

How to Apply for Student Loans

New Borrowers

To apply for Federal Direct Loan Programs (Stafford Subsidized, Stafford Unsubsidized and/or Federal PLUS), you must:

  • Complete the Free Application for Federal Student Aid (FAFSA)
  • Submit the required documentation requested by the Financial Aid Office
  • Be enrolled in six credit hours applicable to your eligible program
  • Submit a Federal Direct Loan Request Form with all required documentation (located on your student portal)
  • Complete Entrance Counseling online at studentloans.gov
  • Complete your Master Promissory Note (MPN) at studentloans.gov.

Repeat Borrowers

  • Complete the Free Application for Federal Student Aid (FAFSA)
  • Submit the required documentation requested by the Financial Aid Office
  • Be enrolled in six credit hours applicable to your eligible program
  • Submit a Federal Direct Loan Request Form with all required documentation (located on your student portal).