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Federal Direct Loans

 are the most common source of funding. The federal government makes these loans. Federal Direct Loans have a  and offer several . 

To receive federal Direct Loans, students must:

• Have a completed and valid  for the current aid year on file with ´ºÃÎÖ±²¥
• Be a matriculated student (enrolled in a degree-seeking program)
• Enrolled at least half-time (six credits or more)

Students at ´ºÃÎÖ±²¥ are offered student loans as part of their financial aid package. 

It's important to remember that a loan is a legal obligation; the student is responsible for repaying the money borrowed with interest.

We recommend that students and their families borrow only what they need.

Before accepting any loans, we strongly advise students to review their current account activity, including all charges, expected refunds, and their overall financial situation. Students are not required to accept a student loan and may accept a lower amount than was offered in their financial aid package

Types of Federal Direct Loans

Direct Subsidized Loans 

 are available to undergraduate students who demonstrate .

The U.S. Department of Education pays the interest on Direct Subsidized Loans while a student is enrolled at least half-time, during a six-month  after a student leaves school, and during a  (a postponement of loan payments).  

Direct Unsubsidized Loans 

 are available to undergraduate and graduate students. These loans are not need-based.

Students are responsible for the interest during all periods. Students may arrange with their loan servicer to pay interest while enrolled in school. If a student chooses not to pay interest while in school and during grace, deferment, or forbearance periods, the interest will accrue and be capitalized. 

•  means that interest is added to the loan's principal at the beginning of the repayment period. For more information on capitalization, please visit 

Loan Limit Amounts

Limits are placed on the amount a student may be eligible to receive in subsidized and unsubsidized loan funds each academic year (annual loan limits) and the total amount a student may borrow for their undergraduate and graduate studies (aggregate loan limits).

Annual and Aggregate Loan Limits for Subsidized and Unsubsidized Loans

Dependent students whose parents are denied a and do not wish to obtain an endorser or appeal the credit decision may qualify to receive additional Direct Unsubsidized Loan funds: 

• First and second-year students can receive up to an additional $4,000.
• Third-year students and above can receive up to $5,000 in Direct Unsubsidized Loan funds.
• The student will automatically be awarded these funds after Salem State receives the PLUS loan denial.

Loan Requirements

If a student receives a Federal Direct loan for the first time, they are required to:

• Complete , a tool to ensure borrowers understand their obligation to repay the loan, and
• Sign a loan contract called a , agreeing to the loan terms.

All students must complete when they are enrolled less than half-time, are no longer attending ´ºÃÎÖ±²¥, or have graduated.

Loan Servicer and Loan Repayments

The Department of Education assigns students a  after their loan is first disbursed (paid out). A loan servicer is a company that handles billing and other services for federal student loans at no cost to students. The loan servicer provides regular updates on the status of their Direct Loan and any additional Direct Loans they receive.

After a student graduates, leaves school, or drops below half-time enrollment, they will have a before they must begin 

During the grace period, the loan servicer will send repayment information, including a repayment schedule that specifies the first payment due date, the number and frequency of payments, and the amount of each payment. The monthly payment amount depends on the .

Payments are made directly to the loan servicer. Borrowers must keep their contact information current with the servicer so the servicer can help them stay on track with repayment.

For more information on loan servicers and current repayment plans available, please visit:

Loan Consolidation 

A Direct Consolidation Loan allows borrowers to consolidate one or more federal education loans into a new Direct Consolidation Loan to lower their monthly payment or gain access to federal forgiveness programs.

For more information on consolidating your federal loans, please visit  or contact your loan servicer. 

Deferment and Forbearance

Borrowers facing a short-term financial bind may qualify for a deferment or forbearance. With either option, borrowers can temporarily suspend their payments. However, keep in mind that both options have pros and cons.

Borrowers who qualify for a deferment or forbearance can temporarily suspend their payments. When it comes to deferment and forbearance, there are two important considerations:

• In most cases, interest will accrue during the deferment or forbearance period. This means the loan balance will increase, and the borrower will pay more over the life of the loan.
• For a borrower pursuing loan forgiveness, any period of deferment or forbearance may not count toward the forgiveness requirements. This means borrowers will stop making progress toward forgiveness until they resume repayment.

 The difference between deferment and forbearance concerns . During a deferment, interest doesn’t accrue on some types of loans. During a forbearance, interest accrues on all loan types.

If you are experiencing financial hardship, contact your loan servicer to apply for forbearance or deferment. They can explain the process.

For more information on deferment and forbearance, please visit

Delinquency and Default

On the first day a federal student loan payment is missed, the loan becomes delinquent (past due). The loans remain delinquent until a payment is made or other payment arrangements are made with the loan servicer. 

Borrowers who are delinquent on their student loan payments for 90 days or more will have their delinquency reported to the national credit bureaus, which can negatively impact their credit rating. 

Borrowers who do not make their scheduled payment on their federal student loans for at least 270 days will have their loans go into default. 

Defaulting on a student loan can lead to serious legal and financial consequences, which include the following:

• The entire unpaid balance of the loan, plus any accrued interest, becomes immediately due; this is called "acceleration".
• Tax refunds and federal benefit payments may be withheld and applied toward repayment of the defaulted loan; this is called “".
• , meaning an employer may be required to withhold a portion of an employee's pay and remit it to the lender to repay the defaulted loan.
• No longer receive deferment or forbearance, and lose eligibility for other benefits, including the ability to choose a repayment plan.
• Lose eligibility for additional federal student aid, including Federal Pell Grants and student loans.
• The default is reported to credit bureaus, damaging a credit rating and affecting the ability to buy a car, a house, or obtain a credit card. It may take years to reestablish a good credit record.
• May be unable to purchase or sell assets such as real estate.
• The loan holder can take the borrower to court.
• Borrowers may be charged court costs, collection fees, attorneys' fees, and other costs associated with the collection process.

For more information, please visit the 

Preventive Measures to Keep Your Loan Out of Default

To keep any loan from going into delinquency or default status, follow the tips listed below: 

• Only borrow what you need.
• Keep an information folder with any information about borrowed loans, including Master Promissory Notes, Entrance Interviews, Exit Interviews, Loan Counseling, cancelled checks, repayment information, and other important information regarding your loan(s).
• Complete required Exit Loan Counseling for all federal loans.
• Make payments on time.
• Consider options.

Need Help Managing Your Federal Direct Loans?

Salem State has partnered with  to provide additional support and ensure you have everything you need to manage your federal student loans. This service is completely free! Their Borrower Advocates can answer any questions and help you find the best, most affordable repayment option.

While you are in repayment, Student Connections may contact you through emails, text messages, and phone calls to:

Visit  or talk to a Borrower Advocate for free at (866).311.9450.

Other Federal Loans

Federal Nursing Student Loan

The  funds the Nursing Student Loan program. The interest rate is fixed at 5% for the life of the loan. No interest is charged while the student is in school. Students have a nine-month grace period after they leave school and up to ten years to repay their loans. These are need-based loans available to undergraduate students pursuing a degree in nursing through the School of Nursing at ´ºÃÎÖ±²¥.

Funds are limited and offered on a first-come, first-served basis, subject to the university's available funding.

Nursing Student Loan Eligibility Requirements:

• Have a completed and valid  for the current aid year on file with ´ºÃÎÖ±²¥.
• Demonstrate  on the FAFSA.
• Be enrolled at least half-time (six credit hours)
• Complete a separate Master Promissory Note and all other Nursing Student Loan documents.

Borrower Responsibilities

Federal regulations require students to complete a Master Promissory Note, Other Nursing Student Loan Related Documents, and Exit Counseling.

Students who are enrolled less than half-time, no longer enrolled in the nursing program, no longer attending Salem State, or have graduated will be contacted by their loan servicer, , to complete their Exit Counseling.

Loan Servicer Information

 is the loan servicer and is contracted with ´ºÃÎÖ±²¥ to perform all the billing and accounting for this loan program.  provides students with repayment information and Exit Counseling. For any questions, please contact  at 1-800-875-8910.

Repayment and Deferment Information

Borrowers have a 6-month grace period before they are required to begin repaying their loans. 

The repayment period for the loan is 10 years (120 months), excluding any eligible deferment periods. 

The required monthly repayment will be at least $40. 

Borrowers will receive a repayment schedule from their loan servicer, , listing the amounts of their monthly payments. 

The Federal Nursing Student Loan is eligible for consolidation into a Direct Consolidation Loan. 

Borrowers who are falling behind on their payments must contact their loan servicer, , and the Salem State Loan Repayment Office to see if they are eligible for deferment.

Per the Nursing Student Loan Master Promissory Note, the eligibility conditions for deferment are:

• Active Duty member of a uniformed service of the United States (maximum of 3 years)
• Volunteer under the Peace Corps Act (maximum 3 years)
• Enrolled Full-Time or Half-Time in a collegiate nursing school (maximum 10 years)
• Pursuing advanced professional training in nursing, including training in nurse anesthetist (maximum 10 years)

Borrowers must complete the and follow all instructions on it. The Loan Repayment Office will do its best to process the paperwork as soon as possible.

Federal Perkins Loan

The provided money for college or career school for students with financial need. 

The authority for schools to make new Federal Perkins Loans ended on Sept. 30, 2017. 

For more information on Perkins Loan Repayment, please visit the Loan Repayments page.

State Loans

Massachusetts No Interest Loan (NIL)

The  is a state-funded program that provides zero-interest loans to Massachusetts residents to help cover educational costs. Students have ten years to repay their NIL loans. The minimum initial amount a student can receive is $1,000, and the maximum award is $4,000 per academic year. Loan amounts are determined by financial need. The lifetime borrowing limit is $20,000.

Funds are limited and offered on a first-come, first-served basis, subject to the university's available funding.

Massachusetts No Interest Loan Eligibility Requirements

• Be a permanent legal resident of Massachusetts for one year before the start of the academic year for which the loan is awarded.
• Be a U.S. Citizen or a non-citizen eligible under Title IV regulations.
• Have applied for financial aid using the standard 
• Not be in default of any federal or state Student Loans for attendance at any institution or owe a refund for any previous financial aid received.
• Be enrolled full-time (at least twelve credits or more) in a bachelor’s degree program.
• Have not received a prior bachelor’s degree or its equivalent.
• Maintain satisfactory academic progress following institutional and federal standards.
• Demonstrate financial aid need as determined by their FAFSA.

Borrower Responsibilities

Students must complete a Master Promissory Note and Entrance Counseling before receiving loan funds. 

Under Massachusetts state law, students must complete upon graduation or when leaving school.

Loan Servicer and Repayment Information

All questions regarding payment instructions, balances, deferments, and address changes should be directed to the loan servicer,

Borrowers are granted a 6-month grace period that begins at graduation, withdrawal, or when they drop below half-time attendance. 

Borrowers will receive a repayment schedule requiring a minimum monthly payment of $50.00. The loan repayment period may not exceed 10 years, excluding the 6-month grace period or the extension of deferments. 

Deferment and Default Information

Borrowers may have State No Interest Loan payments deferred for a specific time period, provided that proper documentation is received, processed, and accepted by the Commonwealth of Massachusetts or its designee.

Deferments may be granted for:

• Enrollment of at least half-time in an eligible degree or certificate-granting program.
• Hardship deferment (for up to 3 years) due to unemployment, long-term illness, disability, or other extenuating circumstances, approved by the Commonwealth of Massachusetts or its designee(s).
• Military deferment while serving as a member of the U.S. Armed Forces, service in the commissioned corps of the U.S. Public Health Service, or active duty member of the National Oceanic and Atmospheric Corps.
• Volunteer service in Peace Corps, ACTION Programs, or comparable full-time volunteer work for approved, specified tax-exempt organizations.

Late charges may be imposed if a borrower fails to make scheduled payments on time. If a borrower fails to make scheduled payments in accordance with the terms of the promissory note without a deferment, the loan may be declared in default, and immediate payment of the entire loan balance, including principal and late charges, may be demanded. 

If no payment is made within 120 days, the loan will be in default. All future state financial aid will be denied. The loan will be transferred to a collections agency.