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Federal Direct Loans
 
If you don't receive enough free money to pay for college and you aren't able to cover your costs with savings or other resources, there are Federal Direct student loans. 
 
These type of loans through the U.S. Department of Education will likely have lower interest rates. 
 
There are also Federal Direct loans for parents enabling your parents or stepparents to borrow money to aid you in paying for the cost of your schooling.

Master Promissory Note

Students borrowing under the Federal Direct Student Loan Program are required to complete a Master Promissory Note before receiving loan proceeds.  This should be the very first step in applying for a loan through NMCC.  To complete an MPN, click the link above.
 
Students borrowing under the Federal Direct Student Loan Program are required to complete loan entrance counseling before receiving loan proceeds. 
 
Students are also required to complete the loan exit counseling when graduated, withdrawn or dropped below half-time enrollment.

Subsidized Federal Direct Stafford loans are based solely on financial need. The federal government pays the interest while you’re in college and during the six-month grace period after you graduate, leave school or enroll less than half time—you’ll make no loan payments until your grace period ends. To qualify, you must meet all the requirements for federal aid.

Unsubsidized Federal Direct Stafford loans are for all eligible students, regardless of income or assets. You must meet the same requirements as those for the subsidized Federal Direct loan, except for demonstrating financial need. You’re responsible for paying all the interest on your loan, but you can defer interest payments while you’re in school at least half time. If you do, the interest will be added to the amount you borrowed when repayment begins and future interest costs will be based on the higher loan amount. If you’re an independent student, you may be eligible to receive additional unsubsidized Federal Direct loans to help cover unmet financial need or replace some of your expected family contribution.
Federal Direct Parent PLUS loans enable your parents or stepparents (but not your legal guardians) to borrow up to the total cost of your undergraduate study, minus any other aid you may receive. These loans aren’t based on your family’s income or assets and require a credit check. You must be enrolled at least half time. In addition, some colleges may require you to submit the FAFSA first.
 
Origination Fees

There is a 4.0% origination fee that will be automatically deducted from the loan amount. 

Borrowers are better off when they borrow conservatively, budget wisely, and plan ahead to repay their student loans. Knowing the monthly payments for the amount you borrow is a great start. As you plan your financial future, use this chart to determine your loan repayment obligations.

FEDERAL STAFFORD LOANS (SUBSIDIZED AND UNSUBSIDIZED)
FEDERAL SUPPLEMENTAL LOANS AND FEDERAL PLUS LOANS

 

 

6.80%

8.25%

9.00%

AMOUNT
BORROWED

# OF PAYMENTS

PAYMENT

TOTAL
INTEREST

PAYMENT

TOTAL
INTEREST

PAYMENT

TOTAL
INTEREST

$2,000

46

$50

$271

$51

$340

$52

$372

$2,625

63

$50

$495

$51

$618

$52

$678

$3,000

76

$50

$672

$50

$874

$52

$947

$4,000

108

$50

$1,332

$50

$1,817

$52

$1,964

$5,000

120

$57

$1,905

$61

$2,359

$63

$2,601

$6,000

120

$69

$2,286

$74

$2,736

$76

$3,121

$7,000

120

$81

$2,667

$86

$3,303

$89

$3,641

$8,000

120

$92

$3,048

$98

$3,774

$101

$4,161

$9,000

120

$104

$3,429

$110

$4,247

$114

$4,681

$10,000

120

$115

$3,810

$123

$4,718

$127

$5,201

$12,000

120

$138

$4,572

$147

$5,662

$152

$6,241

$14,000

120

$161

$5,334

$172

$6,605

$177

$7,282

$16,000

120

$184

$6,095

$196

$7,549

$207

$8,322

$18,000

120

$207

$6,857

$220

$8,492

$228

$9,362

$20,000

120

$230

$7,619

$245

$9,437

$253

$10,402

$25,000

120

$288

$9,524

$307

$11,796

$317

$13,003

$30,000

120

$345

$11,429

$368

$14,155

$380

$15,604

$35,000

120

$403

$13,334

$429

$16,514

$443

$18,204

$40,000

120

$460

$15,239

$491

$18,873

$507

$20,804


These numbers are accurate to the nearest dollar and based on a standard repayment plan. For more detailed information about your loan, talk to your lender or current holder of your loan.
Up to June 30, 2006 the interest rate on new Stafford loans is variable, with a cap of 8.25%. As of July 1, 2008 the interest rate on new Stafford subsidized loans is a fixed rate of 6%. Unsubsidized loans are at a 6.8% fixed rate.
In general, your student loan debt should not be more than 8 percent of your annual salary. The following chart ties income to estimated repayment amounts, demonstrating the amount of debt you may be able to afford based on your income. Use this chart to see if you fit within the recommended 8 percent. If you don’t meet these guidelines, you may want to contact your lender to discuss repayment options.

*Payments are based on a 10-year repayment term and 6.8 percent interest

Loan Debt/Annual Salary

Annual Salary   8% of Salary* Cumulative Debt
 $20,000  $133  $11,584
 $25,000  $167  $14,480
 $30,000  $200  $17,376
 $35,000  $233  $20,272
 $40,000  $267  $23,168
 $45,000  $300  $26,064
 $50,000  $333  $28,960
 $55,000  $367  $31,856
 $60,000  $400  $34,752
 $65,000  $433  $37,648
 $70,000  $467  $45,544
 $75,000  $500  $43,440
 $80,000  $533  $46,337
 $85,000  $567  $49,233
 $90,000  $600  $52,129
 $95,000  $633  $55,025
 $100,000  $667  $57,921
 $120,000  $800  $69,505
Loan Repayment Calculator   

A great tool to not only calculate your future monthly loan payments, but it also generates the minimum annual salary that could handle these payments.