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Federal Direct Unsubsidized Loans Make Graduate School Possible

Graduate students often receive help with graduate school expenses through government and private education loans, which all must be repaid. IU South Bend graduate students may be eligible for a Federal Perkins Loan or a Federal Direct Loan. However, those who do not qualify for a federal loan should consider applying for an alternative loan through a private lending institution.

The first step before applying for either a federal loan or a private alternative loan is to complete a Free Application for Federal Student Aid (FAFSA).



About Federal Loans

Federal loans must be requested through FAFSA. There are two types of loans available to graduate students at IU South Bend – Federal Perkins Loans and those offered through the Direct Loan Program. Filing the FAFSA by March 10 each year ensures consideration for the Perkins Loan.

Unsubsidized loans– The graduate student is expected to pay the interest while enrolled in school or have it capitalized. Unsubsidized loans can replace a family’s expected contribution.

When a graduate student accepts a Federal Direct Loan, he or she is borrowing from the government, not from a bank. Students repay the government, which never sells the loan.

Direct Loan Student Rights and Responsibilities 



How Federal Funds Are Applied to a Graduate Student’s Account

IU South Bend’s Office of Financial Aid administers the federal loans, determines student eligibility, approves the loan and confirms the promissory note, if necessary. The university receives the funds from the Federal government and credits the loan amount directly to the student’s account.

All graduate students recieving a loan from the government must complete a master promissory note and an Entrance Interview before loan funds are credited to their account. The promissory note and forms are available online at www.studentloans.gov


About Private Loans

Private lending institutions, such as banks and credit unions, also provide graduate student loans, which are limited by the cost of attendance. Generally, it’s wise to apply for government aid before pursuing a private loan because repayment terms, including interest rates, are typically more favorable through the government. Private loan sources are a way to supplement federal student aid, if needed.  

Bear in mind that interest on private loans often accrues while the graduate student is still in school and that good credit is usually a prerequisite to obtaining such a loan. In addition, the rate of interest paid is usually dependent upon the borrower’s credit history. If the borrower’s credit history is excellent, the interest rate may be favorable.

Before arranging for a private loan, we require students to meet with an IU South Bend Financial Aid Representative to discuss alternate loan arrangements.



Office of Financial Aid Administration Building 157

1700 Mishawaka Avenue

Post Office Box 7111

South Bend, IN 46634-7111

Phone: (574) 520-4357

Toll free: 1-877-462-4872, Extension 4357

Fax: (574) 520-5561

E-Mail: sbfinaid@iusb.edu