Student Loans

Federal Direct Student Loans

Eligibility: Undergraduate and graduate students eligible
Required: Free Application for Federal Student Aid (FAFSA) required

The Federal Direct Loan is a long-term, low-interest loan available to all students.

How to apply for the Federal Direct Loan

• Complete the Free Application for Federal Student Aid (FAFSA).
• Complete the Master Promissory Note (MPN). If you have borrowed previously at USD you do not need a new MPN.
• Complete the online Entrance Counseling Session. (All first-time borrowers at USD must complete this session before funds will be available.)

Subsidized vs. Unsubsidized Loans

Your Federal Direct Loan award may be subsidized, unsubsidized or the combination of the two.

• Subsidized Federal Direct Loan
  • The Subsidized Federal Direct Loan is awarded for the academic year based on your financial need and academic grade level.
  • Financial need is determined by your cost of attendance minus your Estimated Family Contribution (EFC) from the FAFSA and any other aid you will receive.
  • The federal government subsidizes or pays the interest on the loan while you are enrolled at least half-time.
• Unsubsidized Federal Direct Loan
  • The Unsubsidized Federal Direct Loan is awarded based on your cost of attendance minus any other aid you will receive and your academic grade level.
  • You are responsible for the interest on this loan from the time the loan is disbursed until is it paid in full. The federal government DOES NOT subsidize the interest on this loan.
  • You may choose to defer the interest during enrollment and deferment periods, but it will be capitalized (added to the principal amount).

Is there a time limit on how long I can receive loans?

If you are a first-time borrower on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans. This time limit does not apply to Direct Unsubsidized Loans or Direct PLUS Loans.

If this limit applies to you, you may not receive Direct Subsidized Loans for more than 150 percent of the published length of your program. This is called your "maximum eligibility period." Your maximum eligibility period is based on the published length of your current program. You can usually find the published length of any program of study in the USD catalog.

For example, if you are enrolled in a four-year bachelor's degree program, the maximum period for which you can receive Direct Subsidized Loans is six years (150 percent of 4 years = 6 years). If you are enrolled in a two-year associate degree program, the maximum period for which you can receive Direct Subsidized Loans is three years (150 percent of 2 years = 3 years).

Because your maximum eligibility period is based on the length of your current program of study, your maximum eligibility period can change if you change to a program that has a different length. Also, if you receive Direct Subsidized Loans for one program and then change to another program, the Direct Subsidized Loans you received for the earlier program will generally count toward your new maximum eligibility period.

Certain types of enrollment may cause you to become responsible for the interest that accrues on your Direct Subsidized Loans when the U.S. Department of Education usually would have paid it.

Interest Rates

• The Federal Direct Loan interest rate for undergraduate subsidized/unsubsidized is a fixed 2.75% as of July 1, 2020.
• The Federal Direct Loan interest rate for graduate unsubsidized is a fixed 4.30% as of July 1, 2020.

Loan Fees

Effective October 1, 2020, a loan fee of 1.057% of the principal amount of each loan a student receives will apply. The fees are deducted from your loan prior to disbursement.

Eligibility: Graduate and professional students eligible
Required: Free Application for Federal Student Aid (FAFSA) required; credit approval required

The Federal Direct Graduate PLUS Loan is a low interest rate, unsubsidized loan for graduate and professional students. The program allows a graduate student to borrow up to the cost of attendance, minus any other financial aid received.

Eligibility

You must be a graduate or professional student enrolled at least half-time in a degree granting program.

• File the Free Application for Federal Student Aid (FAFSA).
• Apply for your maximum loan eligibility in unsubsidized loans.
• Borrow as a graduate or professional student. Parents of graduate students will not be eligible to borrow the loan.
• Pass a basic credit check.

How to Apply

• Complete the Free Application for Financial Aid (FAFSA).
• Contact the USD Financial Aid Office to begin the process for the Graduate PLUS Loan.
• Complete the Graduate Plus Loan Master Promissory Note.
• Complete the Entrance Counseling for Graduate Students requirement.

Annual Loan Limit

Borrower may borrow the difference between the total cost of the student's education minus any aid the student will receive.

Repayment

• Repayment begins within 60 days after the final disbursement of each loan.
• The maximum repayment period is 10 years, and the minimum monthly payment is $50.00.
• You may be eligible to defer payments while you are enrolled at least half-time, unemployed, experiencing economic hardship or otherwise unable to make any scheduled payment.

Interest Rate

The Federal Direct Graduate PLUS Loan interest rate is fixed at 5.30% as of July 1, 2020.

Loan Fees

Effective October 1, 2020, a loan fee of 4.228% of the principal amount of each loan a student receives will apply. The fees are deducted from your loan prior to disbursement.

Eligibility: Parents of undergraduate students eligible
Required: Credit approval required

Parents of undergraduate students may borrow a Federal Direct Parent Loan for Undergraduate Students (PLUS) to help cover educational expenses their student may incur while attending college. The 2020-21 interest rate for PLUS loans is fixed at 5.3 percent.  An origination fee is deducted from the disbursed amount at 4.236 percent when disbursed prior to October 1, 2020 and at 4.228 percent when disbursed on or after October 1, 2020. Parents can borrow up to the Cost of Attendance less any other financial aid (the total of all grants, scholarships and other loans) awarded to the student. Parents may continue to borrow each year but must reapply and complete a new credit check annually. Please see the Direct PLUS Loan Basics for Parents publication from The Department of Education.

Who is Eligible to Borrow a Parent PLUS Loan?

In order to borrow a PLUS loan, a parent must be:

A US citizen, permanent resident or other eligible non-citizen.
Be the biological or adoptive parent of the students. Step-parents can be eligible to borrow a plus loan only if their income is reported on the FAFSA.
Not in default on a federal student loan or have adverse credit history.

How to Apply

Parents interested in borrowing a Federal Direct PLUS Loan will complete the online application process and Master Promissory Note (MPN) through the Department of Education at studentaid.gov. An instant credit check is a part of this application process. A Federal Student Aid (FSA) ID is necessary to complete the process. Go to fsaid.ed.gov to create your FSA ID.

Apply for a Parent PLUS Loan for the Current School Year

• Go to studentaid.gov. Click on the “Log In” button.
• Sign in using your FSA ID.
• Select “APPLY FOR AID” then select “Apply for a Parent PLUS Loan”.
• Please note if more than one parent wishes to borrow PLUS loan funds, each parent must apply for their own FSA ID, complete their own PLUS application and MPN.

Determining a Loan Amount

You will be given three options to indicate how much you would like to borrow when completing the PLUS application:

1. I want to borrow the maximum PLUS loan amount for which I am eligible. Choosing this option, USD will process your PLUS loan for the maximum amount possible (cost of attendance less other financial aid) for the academic year.
2. I would like to specify an amount. By selecting this option, you will enter in the dollar amount you would like to borrow. USD will process your PLUS loan for this amount.
3. I do not know the amount. By selecting this option, USD will hold your PLUS application until you contact us, in writing, to tell us the amount you wish to borrow.

You can send all requests to financial.aid@usd.edu.

Credit Balances

PLUS loan funds automatically pay any charges on your student's account. If there are any funds remaining, the credit balance will be issued as a refund. USD will automatically send this refund to the student unless notified in writing. The parent borrower must also indicate who will receive the refund during the application process.

• Student: This option allows the student to receive the refund.
• Me: This option allows the parent borrower to receive the refund.

Denied Applications

• If your credit check is denied, there are several options which can be pursued:
• Parents can choose "I want to appeal the decision." This allows a parent to appeal the credit decision with the Department of Education. 
• Parents can choose "I want to obtain an Endorser (cosigner)." The Department of Education will provide you with information for reapplying with an Endorser (cosigner). 
• Parents can choose "I do not wish to pursue a PLUS loan at this time." If selecting this option, the Office of Financial Aid will automatically award an additional
• Unsubsidized Direct Loan in the student's name based on their grade level:
  • Freshmen (0-29 credit hours) and Sophomores (30-59 credit hours) will receive an additional $4,000.
  • Juniors (60-89 credit hours) and Seniors (90+ credit hours) will receive an additional $5,000. 

Approved Applications

If the credit check is approved, the parent completing the application must complete a Parent PLUS Master Promissory Note (MPN).

Complete Federal Direct PLUS Master Promissory Note

• Go to www.studentaid.gov. Click on the “Log In” button. Sign in using your information and FSA ID.
• Select “COMPLETE AID PROCESS”
• Select "MPN for Parents"
• The SAME parent must be listed on both the initial application (credit check) and Master Promissory Note.
• The process is not complete until you see a "Congratulations" message.
• Please print confirmations for your personal records. The University of South Dakota will be notified electronically within 24-48 hours once you have completed the process.

Repayment

Parent PLUS loans go into repayment 60 days after the loan fully disburses; however, parents may also opt to defer payments for up to four years while their student is enrolled at least half-time. Please note that interest will accrue and capitalize if you choose to defer payments. Parents can choose to defer payments as part of the application process. If you choose to defer repayment after the application process, please contact the loan servicer for more information.
For more information about the Parent PLUS Loan, please visit the Federal Student Aid website.