Direct Loan Process
A Federal Direct Loan is a need based loan insured by the federal government and guaranteed by a guarantee agency. There are two types of Direct Stafford Loans, subsidized and unsubsidized. Both loans require a student to be enrolled at least halftime in a degree or certificate program at an eligible institution. There is a fixed interest rate of 5.05% for both Subsidized Loans and Unsubsidized Loans. Saddleback College participates in the Direct Loan Program only and will not certify private or alternative loans.
Subsidized Loans: The federal government will pay the interest on these loans while the student is enrolled in school at least half time and during grace and deferment periods.
Loan Limitations (limit of how many years a student may receive subsidized loans)
- Applies to “new borrowers” (students with zero balance) on or after July 1, 2013
- The maximum amount of subsidized loan a student can borrow is 150% of the student’s program of study.
Limitations of Subsidized Loan Eligibility
2- year Associate’s Degree
3 years of subsidized loan eligibility
1- year of Certificate Program
1 ½ years of subsidized loan eligibility
- In addition, any previously-borrowed subsidized loan will begin to accrue interest at the time that the student reaches the 150% timeframe.
Unsubsidized Loans: Interest begins when the loan is disbursed. Students are responsible for paying the interest while in school. Payment of interest can be deferred by capitalizing the interest; however, this increases the amount of repayment.
- If your loan request is approved, the loan will be submitted to the National Student Loan Data System (NSLDS), and will be accessible by guaranty agencies, lenders, and schools determined to be authorized users of the data system.
- All Loan borrowers will be required to submit the Federal Direct Loan Program Exit Loan Counseling before a final loan disbursement. Complete the Exit Loan Counseling online at http://www.nslds.ed.gov/nslds_SA/. (link is external) The Student Financial Assistance/Scholarship Office will be notified electronically after your exit loan counseling has been submitted to the Department of Education.
- Your loan funds will be disbursed in two separate disbursements per semester. Disbursement dates will be included on your award letter and the funds will be issued on your Higher One Saddleback Card. For more information about the Saddleback Card, go to http://www.saddleback.edu/Refunds
Direct Loan Origination Fee (May be subject to change): A 1.062 loan origination fee is charged and taken off the top of the loan. If you borrow $1,000, the amount disbursed is $990 (For example, $1,000 less the $10 loan origination fee).
If you are interested in applying for a Direct Loan, please note the following:
- You must have completed a financial aid file at Saddleback College before the Student Financial Assistance & Scholarship Office (SFASO) can process your loan request for a Direct Loan. This means you must have completed a FAFSA and turned in all of the required documents requested.
- You must be meeting all Satisfactory Academic Standards.
- Students participating exclusively in distance learning programs will have a delayed disbursement.
- You must not be in default or owe an overpayment to any other financial aid program.
- The earliest date student loan refunds will be issued is approximately four weeks after the start of the semester. All first-time borrowers have a mandatory thirty-day waiting period before they receive their first disbursement. The earliest date student loan refund checks will be issued to first-time borrowers is approximately six weeks after the semester begins. You should not plan to use the loan money to pay registration fees, early fee payments or to buy your textbooks as these funds will arrive after classes begin.
STEPS FOR APPLYING FOR A FEDERAL DIRECT LOAN
1. You must be enrolled for 6 units to be eligible for loans.
2. You must be meeting all Satisfactory Academic Standards.
3. Complete the 2018-19 Free Application for Federal Student Aid
3. Fully complete ALL sections of the Federal Direct Loan Request Form.
4. Complete a new Master Promissory Note (MPN) every year for SC at www.studentloans.gov. (Manage My Direct Loan)
5. Complete the Entrance Counseling every year at: www.studentloans.gov. (Manage My Direct Loan) PRINT Counseling Quiz results and submit with your loan request.
6. Complete the Financial Literacy Counseling at www.mappingyourfuture.org. PRINT Financial Literacy Confirmation Page and submit with your loan request.
7. Visit https://www.nslds.ed.gov. Log in using your FSA ID. If you received loan or grants in the past, your information will be displayed. The amount displayed, plus interest, must be repaid in the future or it could be detrimental to your credit history. Applicants must remember loans have to be repaid and should borrow as little as possible. You must print out this information and attach it to your loan request.
It is extremely important that the Student Financial Assistance & Scholarship Office has your correct address. The Saddleback Cash Card is mailed to the address that you have provided on the 2018-2019 FAFSA. If this address is not correct, you may complete a change of address form in the Student Financial Assistance & Scholarship Office. Please note that you MUST have a photo I.D. for all inquiries made in the Student Financial Assistance & Scholarship Office. SC 106
*All interest rates and origination fees are subject to change based on the date the loan was disbursed/originated and guidance provided by Department of Education.