Loans are funds that must be repaid. As you and your family discuss how to pay for college, the amount that will be financed (i.e. paid over an extended period of time) is a very important subject.
Federal Direct Student Loans
Financial aid packages at Reed include Federal Direct Student Loans, which are low-interest loans provided to students by the federal government. The Direct Loan offered in your financial aid package may be Subsidized or Unsubsidized or a combination of both.
Effective July 1, 2024 through June 30, 2025, the annual interest rate for the subsidized and unsubsidized loan is 6.53% for undergraduate and 8.08% for graduate borrowers. Direct undergraduate loans disbursed on or after 10/1/20 are also subject to a 1.057% origination fee which is deducted from the loan at the time of disbursement. For example, if you borrow $1,000, approximately $990.00 will be disbursed to your account.
Monthly repayment is usually made over a period of 10 years and begins after a six-month "grace period" after graduation or when the student ceases to be enrolled at least half time.
Direct Subsidized Loan
The Direct Subsidized loan is need-based form of federal aid. The U.S. Department of Education pays the interest on a Subsidized loan while the borrower is enrolled in school at least half-time, for the first six months after leaving school, and during periods of repayment postponement called "deferment." Interest begins to accrue for the borrower upon entering loan repayment.
Direct Subisidized loan eligibility depends on a student's class year and federal financial need. The following amounts are the annual limits for Subsidized loans:
- First Year: $3,500
- Second Year: $4,500
- Third Year (and beyond): $5,500
Direct Unsubsidized Loan
The Unsubsidized loan is a form of non-need-based federal aid. The student borrower is responsible for the interest that accrues, beginning while they are enrolled. The student can choose to pay the interest as it accrues or can choose to have the interest capitalized (added to the principal balance).
How to Apply for Federal Direct Student Loans
To receive Direct loans, you must meet eligibility criteria for federal student aid. Learn more about federal aid eligibility at StudentAid.gov.
Step 1. Submit your FAFSA to Reed
Complete your Free Application for Federal Student Aid (FAFSA) at StudentAid.gov. Submit the application using Reed’s Federal School Code (003217). If it is your first time completing a FAFSA, you will need to create an FSA ID.
Step 2. Accept your Financial Aid Award
Students must log into their Banner Self-Service account to view and accept offered loan funds. Students have the option to borrow the full amount, or specify a lesser amount of their maximum loan eligibility.
Step 3. Complete Requirements for First-Time Borrowers
If it is your first time borrowing a Direct Subsidized or Unsubsidized loan from Reed, you will need to complete the following online requirements before loan funds can disburse (be sent) to Reed:
Student Loan Entrance Counseling
All first time federal loan borrowers are required to complete Student Loan Entrance Counseling. Entrance counseling ensures you understand the terms and conditions of your loan and your rights and responsibilities. You'll learn what a loan is, how interest works, your options for repayment, and how to avoid delinquency and default. When you're finished, a record of your completion will be sent to Reed.
Master Promissory Note
The Master Promissory Note (MPN) is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s).
Direct Unsubsidized and PLUS Loans for Graduate Students
To apply for a federal graduate student loan, Master of Arts in Liberal Studies (MALS) students must first submit their FAFSA to Reed.
The maximum unsubsidized Direct Stafford Loan available to a graduate student is $20,500 per academic year. The exact amount of unsubsidized loan eligibility is based on the number of units enrolled at Reed each semester. New federal loan borrowers at Reed must also complete Loan Entrance Counseling and a Master Promissory Note.
Generally, a student may borrow sufficient amounts under the Direct Student Loan program to cover educational expenses; therefore, it is unlikely that a MALS student will qualify for the additional funding through the Graduate PLUS loan. Loan terms for the Direct Loan are more favorable than the Graduate PLUS loan, and students should always utilize their Direct Unsubsidized Loan eligibility before considering the Graduate PLUS loan.
Graduate students may, in some circumstances, borrow under the Graduate PLUS loan program to cover educational expenses. To apply for a Graduate PLUS loan, submit the FAFSA and complete the Direct PLUS Loan Application through StudentAid.gov. PLUS borrowers must not have an adverse credit history, and the U.S. Department of Education will run a credit check to determine eligibility.
Graduate students must also complete a Direct PLUS Loan Master Promissory Note (MPN) before receiving Direct PLUS Loan funds. The Direct PLUS Loan MPN explains all of the terms and conditions and is your legally binding agreement to repay all Direct PLUS loans, accrued interest, and fees to the U.S. Department of Education.
Reed Loan for International Students
The Reed Loan Program is offered only to international students as part of their financial aid package. The loan program is a revolving fund, funded by the college.
Like annual federal loan limits for domestic students, the maximum Reed Loan offered increases with a student’s class year. Offered amounts are as follows: $4,000 for first-year students, $4,500 for second-year students, $5,000 for third-year students, and $5,500 for fourth-year students.
After receiving an aid award, students must accept their aid through Banner Self-Service. Students who are offered and accept Reed Loan funds will be required to complete a Promissory Note through the Reed College Business Office before funds can disburse into their student account.
More information about the Reed Loan, including interest, deferment, and repayment details, can be found on the Business Office’s Student Accounts website.
Visit our Additional Financing Options webpage for alternative loan and payment plan information.