Types of Federal Direct Student Loans
Subsidized Direct Loan is based on "financial need" as determined by the FAFSA. The government pays the interest for you as long as you remain enrolled at least six credit hours in a degree seeking program and meet all other eligibility requirements. The amount you can borrow during each academic year is based on your grade level.
If you are a first-time borrower on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that you may receive these loans. Generally, a first-time borrower is one who did not have an outstanding balance or principle or interest on a Direct Loan on July 1, 2013. If this limit applies to you, you may not receive Subsidized Direct Loans for more that 150 percent of the published length of your program. This is called your "maximum eligibility period." You can find the published length of your program of study in our college academic catalog on-line at www.ladelta.edu. For example, is you are enrolled in a two-year academic program, the maximum eligibility period for which you can receive a Subsidized Direct Loan is three years (150 percent of two years = three years).
Because your maximum eligibility period is based on the length of your current program of study your maximum eligibility period can change, if you change to a program that has a different length. Also, if you receive Subsidized Direct Loans for one program and then change to another program the loans you received for the earlier program will generally count towards your new maximum eligibility period.
Unsubsidized Direct Loan is available to students regardless of demonstrated need (determined by your FAFSA). For independent students, this loan may supplement the funds obtained through subsidized loans. You are responsible for all interest payments, including the time that a student is in deferment. It is advisable, if possible, the student should make the interest payments while in school. The student does, however, have the options of capitalizing the interest. This means that the unpaid interest will be added to the principal amount of the loan at regular intervals, and the student will ultimately owe more money.
Federal Direct Parent Plus Loan is an unsubsidized loan for parents and stepparents of a dependent student. The dependent student must be enrolled at least half-time (six credit hours or more), in a degree seeking program, meeting Satisfactory Academic Progress (SAP) and meet all other eligibility requirements. If a student is considered dependent, then the income and the assets of the parent must be reported on the FAFSA. The borrower will be subject to a credit check. The parents and their dependent student must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant and must meet other general eligibility requirements for the federal aid programs. The borrower is responsible for all interest payments; however, the repayment period is determined by your lender. Parents may request a PLUS loan at www.studentaid.ed.gov/sa/types/loans.
Federal Direct Student Loan Interest Rates and Fees
Interest rates will be determined each June for new loans being made for the upcoming award year, which runs July 1 to the following June 30. Each loan will have a fixed interest rate for the life of the loan. You will also pay an origination fee of the loan to the government. Because of this deduction, you will receive slightly less than the amount you borrowed. Go to www.studentaid.ed.gov/types/loans/interest-rates for current year interest and fee rates.
Federal Direct Loan Counseling
Direct Loan Entrance Counseling - If you have not previously received a loan, you must complete the entrance counseling session before the college can make the first disbursement of your loan. This applies to all borrowers, except Parent Plus borrowers. The session will help you understand your responsibilities regarding your loan.
Direct Loan Exit Counseling - Any student who borrowers a Direct Student Loan at LDCC is required by law to complete an exit counseling session before you grduate or withdraw or drop below six credit hours.
Federal Direct Student Loan Master Promissory Note (MPN) and Credit Check
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). In most cases, once you have submitted the MPN and it's been accepted you will not have to fill out a new MPN for future loans. You can borrow additional loans on a single MPN for up to ten years. It is very important that you completely read and understand all of the information on the MPN before you sign it. It takes approximately 30 minutes to complete.
To complete the entrance and/or exit counseling session and the MPN go to www.studentaid.ed.gov. You will be required to use your Department of Education-issued FSA ID. If you do not have a FSA ID, you may request one from the website at www.studentaid.ed.gov/sa/fafsa/filling-out/fsaid.
The LDCC Office of Financial Aid will receive an approval or denial based on the credit evaluation done by the Department of Education.
If credit is approved:
If credit is denied:
Loan Disbursements (paid out)
Generally, your loan(s) will cover a full academic year. LDCC will disburse your loan by crediting it to your LOLA in two disbursements to pay tuition and fees and other authorized charges. If the loan disbursement amount exceeds your school charges, LDCC will pay you the remaining balance via EFT to your BankMobile preference. Check you LOLA for disbursements.
Note: If you change your mind, a loan can be canceled, even if the MPN agreeing to the loan terms has already been signed. LDCC will notify you whenever it credits your student account with your Direct Loan funds. You may cancel all or a portion of your loan if you inform LDCC Office of Financial Aid within 14 days after the date LDCC sent you this notice, or by the first day of your payment period, whichever is later. If you have received funds from the loan to your student account, you will have to return the funds to the college.
Loan Proration - Per federal regulations the college is required to prorate an undergraduate student's annual Direct Loan limits, when that are enrolled in their final period of study, that is shorter than an academic year. The maximum loan amount would be determined by the number of credit hours enrolled for the final semester. In some cases, the actual loan amount that a student is eligible (based on costs, EFC and other aid) may be less than the prorated loan limit.
Repaying Your Federal Direct Student Loan Debt
Enrollment Status and Other Changes - It is important to keep your loan servicer informed of any changes in your status, so that your loan information is up-to-date. This is your responsibility. You must notify the loan servicers if you; change your address or name, do not enroll at least half-time (six credit hours), stop attending school or drop below half-time, transfer from one school to another, or graduate. Until you graduate or leave LDCC, you must keep the Enrollment Services Office at LDCC informed of any of theses changes.
After you graduate, leave school, or drop below half-time enrollment, you MUST complete the exit counseling session at www.studentaid.ed.gov. You will then receive information about repayment and your loan provider will notify you of the date your loan repayment begins. We cannot emphasize enough the importance of making your full loan payments on time either monthly (which is the usual pay cycle) or according to your repayment schedule. If you do not make your payments, you could end up in default, which has serious consequences. Student loans are real loans--just as real as car loans or mortgages. You must pay back your student loans.
Consequences of Default
Default is serious business! You are legally required to repay your educational loans, even if you drop below half-time status, don't finish college, can't find a job right away, or are dissatisfied with the education your received. Your education loan must be repaid when your grace period expires. If you don't fulfill your end of the agreement, the entire unpaid amount of the loan, including interest may be due immediately. Here are some other problems you may face if you default on a student loan:
Each type of loan has its own requirements regarding grace periods (amount of time until your first payments), repayments options, and repayment periods:
If you have an in-school deferment on a Direct Subsidized or Unsubsidized Loan that entered repayment at an earlier date (before you returned to school) and you graduate, drop below half-time enrollment, or withdraw from school, you will be required to immediately begin making payments on the loan because the six month grace period has already been used up, there is no second grace period.
Reservists Called Active Duty
Deferment and Forbearance
If you are having temporary problems repaying your federal student loans, contact your loan servicer to see if you are eligible for deferment or forbearance. A deferment or forbearance allows you to temporarily stop making payments or reducing loan payments on your federal student loans. Note: Interest will continue to be charged on your Direct and Plus Loans. If you do not pay this interest during the deferment/forbearance, it will be capitalized at the end of the deferment/forbearance.
If you make multiple education loans, you can consolidate then into a single Direct Consolidation Loan. This may simplify repayment if you are making separate loan payments to different loan holders, as you'll only have one monthly payment to make. There may be tradeoffs, however, so you will want to learn about the advantages and possible disadvantages.
To learn more, go to www.studentaid.ed.gov/repay-loans/consolidation.
Loan Cancellation (forgiveness or discharge)
Under certain circumstances, you may have all or part of your loan cancelled or discharges.
To learn more, go to www.studentaid.ed.gov/repay-loans/forgiveness-cancellation.