Overview
Financial aid for graduate students is primarily in the form of federal loans. MSP participates in the federal Direct Loan program. The student begins the process by filing a Free Application for Federal Student Aid (FAFSA).
Requirements for student loan eligibility include US Citizenship or permanent residency, not in default on federal loans, and maintaining Satisfactory Academic Progress.
To log into FAFSA.gov or StudentAid.gov you must create an FSA ID if you have not already done so. There is a link to create an FSA ID located with the Log In button at StudentAid.gov. The Department of Education has nice videos with instruction regarding how to create an FSA ID and for step-by-step completion of the FAFSA online.
The StudentAid.gov website provides a link to the FAFSA application found on the FAFSA Form dropdown menu at the very top of the page and on the In School tab a bit further down the page.
Submission of the FAFSA notifies the school of your interest in receiving an offer and estimate of your eligibility for a Federal Direct Unsubsidized Loan. At the graduate level, there are no Pell grants. Completion of the FAFSA does not secure loans. FAFSA verifies your identification and citizenship information between the Social Security Administration and Department of Education to report your eligibility status to the school.
Detailed information on federal loans, MSP’s Financial Aid policies & procedures, and tuition & fee billing are found in the MSP Financial Aid Handbook.
One Big Beautiful Bill Act (OB3) and Eligibility for Continuing vs. Newly Admitted Students
With the passage of the One Big Beautiful Bill Act (OB3) legislation, signed into law on July 4, 2025, there are significant changes in particular to graduate student loan eligibility and loan limits. The changes resulting from OB3 affect periods of enrollment beginning after July 1, 2026. For the Michigan School of Psychology (MSP) this means that the changes begin in the fall of 2026. A distinction is made for continuing students who are already enrolled and completing a degree program with 3 years or less to complete that program vs. students newly admitted to a degree program for the fall of 2026. Continuing students will have access to the same federal loan programs and loan limits that were available to them during the 2025-26 academic year. These students are considered to be grandfathered for the following 3-year period with access to the federal loan programs at their former limits.
Enrollment Intensity and Changes in Enrollment
Federal Direct Unsubsidized Loan (DL Unsub) and Graduate PLUS Loan (Grad PLUS)
Note: New DL interest rates and origination fees for the coming academic year are typically published in late May or early June by the Department of Education & Federal Student Aid.
Interest on these loans begins to accrue upon disbursement. The interest rate for federal direct loans is set based on when they are first disbursed. For DL Unsub loans disbursed during the 2025-26 academic year the interest rate is 7.94%. Prepayment of student loans is permitted without penalty. Multiple repayment options are available. See StudentAid.gov for various options from standard repayment (equal flat amount every month), to graduated (lower at first and increase every two years), extended, IDR-income driven repayment, etc. Origination fees are processing charges that the federal government deducts up front from a loan before it is disbursed to the student account. The 2025-26 fees are 1.057 for DL Unsub and 4.228 for Grad PLUS.
Continuing Student Loan Limits for DL Unsub
DL Unsub loan limits at the Master’s degree level are $20,500 annually and a lifetime aggregate loan limit of $138,500. The DL Unsub loan limits at the PsyD level are $35,778 annually and a lifetime aggregate loan limit of $224,000.
Newly Admitted Student Loan Limits for DL Unsub
DL Unsub loan limits at the Master’s degree level are $20,500 annually and a lifetime aggregate loan limit of $100,000 at the graduate level and does not include amounts borrowed as an undergraduate student. The DL Unsub loan limits at the PsyD level are $50,000 annually and a lifetime aggregate loan limit of $200,000 in total for graduate (MA) and professional (PsyD) school.
Note: New DL interest rates and origination fees for the coming academic year are typically published in late May or early June by the Department of Education & Federal Student Aid.
Continuing Student Loan Limits for Federal Direct Graduate PLUS Loans (Grad PLUS)
Grad PLUS loans are credit-based and designed to supplement the DL Unsub loan for up to the Cost of Attendance (COA). For the 2025-26 academic year, the annual limit is the COA and there is no aggregate limit for the Grad PLUS loan. The interest rate for Grad PLUS loans for the 2025-26 academic year is 8.94%.
Newly Admitted Student Loan Limits for Federal Direct Graduate PLUS Loans (Grad PLUS)
The Grad PLUS loan program is phased out – not available. Newly admitted students will likely be turning to the Private Education Loan Market to fill the needs that were formerly covered under the Grad PLUS loan program.
Credit
Credit approval is based on federally-mandated criteria. In order to obtain credit-based loans (i.e. PLUS or Private), credit approval is required. Credit submission is performed during the process of applying for the PLUS loan. Items which negatively affect credit decisions are: delinquencies, foreclosures, bankruptcy, tax liens.
Credit denial information from a credit submission is not made available to MSP. The Student Loan Support Services may be reached at [email protected]. If denied, students are directed to obtain their credit report and correct deficiencies that are preventing approval. A free annual credit report is available one time per year at annualcreditreport.com.
Direct Lending offers an endorser option so that a credit worthy borrower may co-sign a loan. Contact the Financial Aid Office or Federal Loan Servicing for a loan identification code to obtain an endorser for a previously credit-denied Grad PLUS loan.
Private Education Loans
Private education loans (aka, alternative loans) may not be consolidated (re-financed) with Federal Direct Loans. Interest rates vary greatly from one private loan product to the next. Some interest rates are based on the Libor rate, where others are tied to the Prime rate. Most loans will have an interest rate which includes one of those base fees plus anywhere from 4% to 18% additional interest points/fees, dependent on credit score.
Applying for Federal Direct Loans
Federal Direct Unsubsidized Loan (Unsub)
The first tier of federal direct loan programs is the Federal Direct Unsubsidized Loan (Unsub). Of the two federal direct loan programs, it has the lower interest rate and processing fees. The Unsub loan should therefore be fully maximized before borrowing additional funds from the Graduate PLUS Loan (continuing students), or a Private Education Loan. The Unsub is triggered by completion of the Free Application for Federal Student Aid (FAFSA). Subsidized federal student loans are only available at the undergraduate level. Graduate students borrow unsubsidized loans.
Create an FSA ID if you don’t have one (video link). Then go to StudentAid.gov to complete these requirements:
- FAFSA
The Free Application for Federal Student Aid (FAFSA) is completed once per year that you will enroll and desire federal loans. Students usually complete the FAFSA between January & May for the academic year beginning in the fall. The MSP school code is G21989. - Entrance Counseling
Loan entrance counseling is required for all borrowers attending MSP for the first time. The counseling is nothing more than consumer awareness. The federal government wants you to be an informed borrower and understand how federal loans work from the point of application through repayment. - Master Promissory Note (MPN) For Direct Unsubsidized Loans
Students complete a loan agreement (MPN) which is your promise to repay the loan. - Loan Acceptance
You must confirm your acceptance of a Federal Direct Unsubsidized Loan (Unsub). Loans are accepted or declined online via the Empower web portal. Loan funds are applied to pay your MSP bill first. After paying institutional charges for tuition and fees, excess funds are sent via direct deposit to the bank or credit union designated by the student, or a refund check is issued and mailed to the student. The MSP disbursement and refund calendar may be found here.
Federal Direct Graduate PLUS Loan (Grad Plus)
- Grad PLUS Application
Follow the link at the above website titled Apply for PLUS Loan for Graduate School. A credit check will be performed as a part of the application process. - Entrance Counseling
As in Step 2 for the FAFSA/Unsub loan process, loan entrance counseling must be completed. To be eligible to have your Grad PLUS loan eligibility determined you must do loan entrance counseling answering questions including PLUS loans. It is recommended that when you complete the loan entrance counseling for the Unsub loan process that you simply answer questions for both loan programs – Unsub and PLUS, and then you are covered for both. - Master Promissory Note (MPN) For Direct Unsubsidized Loans
Students who wish to borrow a Grad PLUS loan must complete a loan agreement (MPN) particular to the Grad PLUS Loan program. The MPN is your promise to repay the loan.
