William D. Ford Direct Loan Program

The William D. Ford Direct Loan Program is administered directly with the United States Department of Education.Federal Direct Subsidized and Unsubsidized Stafford Loans are long-term, low-interest loans from the U.S. Department of Education.

Direct Loan Eligibility To apply for a Federal Direct Loan, you must complete the Free Application for Federal Student Aid; submit all requested documentation (1)loan entrance counseling, (2) sign the Master Promissory Note. (MPN) (3) submit the Direct Loan request form by the published deadline date and applicants must meet all federal aid eligibility requirements.  See Direct Loan Program at: www.saddleback.edu/fao. .

The Subsidized Direct Loan is need-based.The federal government pays the interest on the loan during:(1) your enrollment in school on at least a half time basis, (2) a six-month grace period immediately following your separation from school, and (3) a deferment, which is a temporary, authorized time when your payments may be postponed.

The Unsubsidized Direct Loan is non-need-based. "Unsubsidized" means the federal government does not pay the interest on your behalf. You are responsible for paying all interest on the loan. Interest is charged beginning the day the loan is paid to you until the day the loan is repaid in full.You either may choose to pay the accumulated interest while you are in school, or to have the unpaid,interest capitalized, i.e., added to the principal balance of the loan. Note: If your loan interest is capitalized, it will increase the amount you have to repay.

Please Note: Saddleback College Does NOT participate in the Direct PLUS Loan Program.

Borrowing can be costly. We recommend you consider borrowing only if you have exhausted all other options.Explore scholarships, grants, and Federal Work-Study opportunities at Saddleback College before making the decision to borrow.

Only borrow what you need. Make a budget for yourself to keep your debt within manageable limits. Budget your own resources to live more economically. Loans must be paid back even if you don't graduate, transfer or are unhappy with your education or training or are unable to obtain employment.

How Much May I Borrow?
The maximum you may borrow depends upon your grade level and dependency status. The amount Direct Loan amount you request may not be the amount you are eligible to receive. While the loans are not based on your ability to repay, in some cases, the applicant must demonstrate financial need or may only be eligible to borrow the annual maximum.

 

Grade Level

Dependent
Sub and Unsub

Independent

Sub

Unsub

First-year undergraduate
(less than thirty units completed successfully)

$5500

$3500

$6000

Second-year undergraduate
(thirty or more units completed successfully)

$6500

$4500

$6000

Saddleback College reserves the right to refuse to certify a direct loan under conditions established by 34 CFR 684.301. Students must maintain satisfactory academic progress. By signing the loan request, applicants agree to all of the terms and conditions for the Federal Direct Student loan. Eligibility requires the applicant to maintain at least half-time enrollment throughout the period of the loan and notify Saddleback College or the Federal Direct Loan Servicing center of any changes in status such as name, address, enrollment status, and change of schools. Borrowing the low-interest, Federal Direct Loan is a privilege. Even though it is a loan, Saddleback College reserves the right to refuse to certify a loan application for high-risk borrowers. Such conditions are: • A previous default on a federal student loan. • Notification of previously discharged federal student loans due to disability or bankruptcy. • Notification of delinquent federal student loan repayment status. • Instances of inconsistent, fraudulent FAFSA, or admissions application information. • Applicants with loan indebtedness in excess of the maximum for two-year public institutions.

 Loan certification requires all applicants to maintain good standing. This is a 2.0 GPA after each term and maintaining at least half-time status.. Transfer units are also reviewed for these academic requirements. Notification • Notification of loan eligibility is sent by mail. • Complete electronic Master Promissory Note (MPN) at www.StudentLoans.gov. • Saddleback College will electronically transmit loan information to the Direct Loan Servicing Center. • To indicate the loan information is received, the Direct Loan Servicing Center will send a loan disclosure notice to the applicant approximately two weeks after transmission. • Saddleback College will receive the electronic acceptance of your MPN. • Check www.nslds.ed.gov for your student loan history. Issuing Loan Funds Generally, loan funds are issued twice during the loan period but not before the official drop date each semester.  The date the check is issued  may vary and is subject to the availability of funds subsidized).

Annual Loan Amounts               

The amount in Direct Loan funds that you are eligible to borrow each academic year is limited by (1) your grade level (2) whether you are a dependent or an independent student, (3) your financial need, and (4) your cost of attendance. You cannot borrow more than your financial need or the cost of attendance (your budget.)

 

Dependent Student

Base Amount
(Subsidized or Unsubsidized)

Additional Unsubsidized Loan
effective July 1, 2008

Total Annual Combined Maximum Amount of Subsidized & Unsubsidized Loans

Freshman 1st year

$3,500

$2,000

$5,500

Sophomore 2nd year

$4,500

$2,000

$6,500

 

 

 

 

Independent Student

Base Amount
(Subsidized or Unsubsidized)

Additional Unsubsidized Loan
effective July 1, 2008

Total Annual Combined Maximum Amount of Subsidized & Unsubsidized Loans

Freshman 1st year

$3,500

$6,000

$9,500

Sophomore 2nd year

$4,500

$6,000

$10,500

 

Lifetime Aggregate Loan Limits

Undergraduate Dependent Students can borrow a maximum total of $31,000 (of which no more than $23,000 can be subsidized loans).

Undergraduate Independent Students can borrow a maximum total of $57,500 (of which no more than $23,000 can be subsidized loans).

 

Interest Rates

Over a four-year period beginning July 1, 2008, the interest rate on Subsidized Loans made to undergraduate students will be reduced. These rates do not affect any prior loans made to borrowers; the terms and interest rates of those loans remain the same. The applicable interest rates for loans made during this period are as follows:

 

 

UNDERGRADUATE STUDENTS - First disbursement of aloan:

Interest Rate on the Unpaid Balance of the Subsidized Loan

Interest Rate on the Unsubsidized Loan Balance

Made on or after

And made before

July 1, 2008

July 1, 2009

6.0 percent

6.8 percent

July 1, 2009

July 1, 2010

5.6 percent

6.8 percent

July 1, 2010

July 1, 2011

4.5 percent

6.8 percent

July 1, 2011

July 1, 2012

3.4 percent

6.8 percent

Loan Fees

There is a 0.5%loan fee deducted from the Federal Direct Subsidized and Unsubsidized Loan proceeds by the U.S. Department of Education. This loan fee includesa 1.0% up-front rebate that assumes 12 on-time monthly payments once your loan enters repayment. This rebate will be charged back to you if your payments are not made on time. For loans originated after July 1, 2010, the loan up-front rebate will be reduced from 1.0% to 0.5%.

Loan Entrance Counseling

Entrance loan counseling is REQUIRED for all student borrowers applying for a Federal Direct Loan at Saddleback College. Counseling can be completed online and will help you understand your rights and obligations as a student loan borrower. Loan counseling must be completed before we will process your Federal Direct Loan. Other required steps are needed before we can process a Direct Federal Loan (please see Direct Loan Processing).

www.studentloans.gov (Link for Entrance Counseling as well as completing Master Promissory Note).

You will NEED a PIN number to complete the loan process on line. This PIN number is the same PIN number used to complete a FAFSA application. If you do not have your PIN, see www.pin.ed.gov to apply for a PIN number.

Please note that the Student Financial Assistance/Scholarship Office will receive correspondence that a Loan Entrance Counseling Test was completed as well as the Master Promissory Note. You should print a copy for your personal records.

Exit Counseling

Federal regulations require that all student loan borrowers must have an exit interview/exit counseling during their final semester at the College. During the exit counseling, students are reminded of their rights and responsibilities as a student loan borrower. Topics include: when repayment starts, various repayment plans, deferments, loan consolidation, and consequences of default. You'll receive information about repayment, and your loan provider will notify you of the date loan repayment begin. We can't emphasize enough the importance of making your full loan payment on time either monthly (which is usually when you'll pay) or according to your repayment schedule. If you don't, you could end up in default, which has serious consequences. Student loans are real loans—just as real as car loans or mortgages. You have to pay back your student loans. Exit Counseling can be completed on line at http://www.nslds.ed.gov/nslds_SA/ .

 

Student Loan Repayment

After you graduate, leave school, or drop below half-time enrollment, you have a period of time before you have to begin repayment. This “grace period” will be six months. For more information on loan repayment please see

Get Your Loan Information

The U.S. Department of Education's National Student Loan Data System (NSLDSSM) allows you to access information on loan and/or federal grant amounts, your loan status (including outstanding balances), and disbursements made. Go to www.nslds.ed.gov.

Paying Back Your Loan(s)

You have a choice of repayment plans. How much you pay and how long you take to repay your loans will vary depending on the repayment plan you choose. There are several repayment plans available: Standard, Extended, Graduated, Income Based Repayment (IBR), and Income Contingent Repayment (ICR). For more information see www.studentloans.gov.

Default

Avoid default at all costs. Default means you failed to make payments on your student loan according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. In other words, you failed to make your loan payments as scheduled. Your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe. Here are some consequences of default:

· National credit bureaus can be notified of your default, which will harm your credit rating, making it hard to buy a car or a house.

· You would be ineligible for additional federal student aid if you decided to return to school.

· Loan payments can be deducted from your paycheck.

· State and federal income tax refunds can be withheld and applied toward the amount you owe.

· You will have to pay late fees and collection costs on top of what you already owe.

· You can be sued.

 If you run into financial problems with your repayment schedule, contact the Direct Loan Servicing Center at (800) 848- 0979. There may be solutions that can keep you on track and protect your credit rating. Visit the Direct Loan Servicing Center at www.studentloans.gov