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Direct Lending FAQ

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Moraine Park Technical College utilizes the William D. Ford Federal Direct Loan Program for (also known as Direct Lending) for Federal Student Loans. Students often have questions or concerns about what Direct Lending means for you as a borrower. We have compiled a list of questions and answers that hopefully you will find helpful. More information can be found at studentloans.gov.

What are Direct Loans? How do I know if I qualify for a Direct Loan?

Direct Loans are low-interest loans for students to help pay for the cost of a student’s education after high school. Students must complete the FAFSA and submit any required documentation to Moraine Park, who will then verify student Direct Loan eligibility. Direct Loans are a form of financial aid which must be repaid.

What are the benefits of utilizing Direct Loans?

  • Loan interest rates are low and fixed. Students do not require a credit history for eligibility.
  •  Federal Direct Lending provides a stable source of student loan funding because the funds are provided by the U.S. Treasury.
  •  Direct Lending provides a single point of contact for managing student loans.
  •  Loans are never sold in the Direct Loan Program.
  •  There are a variety of repayment options in the Direct Loan Program. The Direct Loan Program offers loan repayment plans designed to meet the needs of borrowers.

What happens if I have existing Direct Loans or loans that I have borrowed from other lenders?

Any previous loans you borrowed from another lender will be serviced by the lender/servicer you selected when you signed your original MPN. As long as you are enrolled in school on at least a half-time basis, your prior year federal loans will continue to be deferred. Enrollment information is reported to lenders by the school on a regular basis.

After graduation you have a choice to make individual payments to your previous lender(s) and to the Department of Education for your Direct Loans, or you can consolidate your loans into one payment with the Department of Education. Please visit the Department of Education’s website for more information about Loan Consolidation.

Do I have to complete a Master Promissory Note?

If you have not already borrowed a Direct Loan, you must sign a Direct Loan Master Promissory Note (MPN). If you previously had a Direct Loan, your Master Promissory Note is good for 10 years.

How and when do I complete a Direct Loan Master Promissory Note?

If you are a first time borrower or if you have not previously had a Direct Loan, you will be required to complete the Master Promissory Note online at studentloans.gov.  You will receive this information via a missing information letter after your FAFSA has been downloaded at Moraine Park.

What are the interest rates and fees for Direct Loans for 2021-2022?

Direct Loan Program Interest Fees*
Subsidized Federal Direct Loan 3.73% 1.057%
Unsubsidized Federal Direct Loan 3.73% 1.057%

I have previously completed entrance counseling for past student loans, do I have to complete entrance counseling again?

All students are obligated to complete Entrance Loan Counseling prior to the first disbursement of their loans; you only need to do this every 10 years.

What are Direct Loan repayment options?

The Direct Loan Program offers loan repayment plans designed to meet the needs of borrowers. Direct Loans are funded by the U.S. Department of Education through your school and are managed by a loan servicer, under the supervision of the Department.  The Direct Loan Program allows you to choose your repayment plan and to switch your plan if your needs change.

There are eight repayment options available for Direct Loans:

  1. Standard
  2. Graduated
  3. Extended
  4. Revised Pay as you Earn (REPAYE)
  5. Pay as you Earn (PAYE)
  6. Income Based Repayment
  7. Income-Contingent Repayment (ICR)
  8. Income-Sensitive Repayment

To find out more about managing your loans, before receiving a Direct Loan, borrowers may visit the Federal Student Aid Website.

Please contact your loan servicer if you would like to discuss repayment plan options or change your repayment plan.  You can get information about all of the federal student loans you have received and find the loan servicer for your loans by going to “manage my loans” on the Federal Student Aid Website.

Please click here for more information on Federal Subsidized Student Loan Borrowing Limitations.

You will need your FSA ID and password to access your information.