I need some advice on wooden doors for basement entryways. My home currently has a wooden door for the basement entrance. It has not held up very well. The door is partially below the grade level (roughly 50-50). My understanding is that this contributes to the door aging, as it is more often than not damp below grade. The question is it okay to use a wooden door for an entrance below grade, or should you use a more waterproof material like steel or fiberglass? Any and all experiences or advice is appreciated.

Surely a steel door will work much better - and a prehung will be the way to go.

Steel exterior doors are generally cheaper than wood ones, and you'll find that installing a prehung is a fairly simple job for a diy'er.

Take measurements of the opening then take that measurement with you to lowes/homedepot to confirm they've got a fit.

... I think these are your best next steps.

Like rickj said steel would be a better way to go. If your door opening is a standard opening (28", 30", 32", 36") and the door jambs are not rotted you can by a door "slab" of the size you need. A "slab" is the door only. No jambs, hinges, knobs.
Measure your existing door itself to see if it is close to the sizes mentioned above and also take a measurement of the door height. A standard door height ids 6'-8". Most exterior basement doors are shorter. To have a steel door cut down from HD or Lowe's is expensive. I usually just cut the bottoms off myself and install an adjustable threshold on the door bottom.
If the wood door is an odd size but the rough opening is big enough, like rickj said, install a pre-hung door.
To special order from HD or Lowe's is about twice the cost if you can buy a stock door.
Just another note, the stell doors come in primer gray. This is not a finish coat so make sure to paint the door w/ a rustoleum paint to prevent rusting of the door.