Most loans are based on need, as determined through the FAFSA form, while there are others available to all students. Loans, however, are a type of financial aid that do have to be repaid, usually within 10 years of graduation or exiting the college. Per Federal regulation, all loans borrowed by the student or parents of a dependent student who borrows a PLUS loan, will be submitted to the National Student Loan Data System (NSLDS) allowing accessibility by guaranty agencies, lenders, and schools determined to be authorized users of the data system. The following gives a brief description of each loan and its corresponding need requirements.
DCC participates in the William D. Ford Federal Direct Loan Programs (Direct Loans and parent PLUS). For more information, see www.studentloans.gov.
Federal Perkins loans are available for early filers (by March 1st) who demonstrate financial need as calculated by the Federal Processor. Perkins loans are the most attractive of the loans, having a smaller interest rate and longer grace period (nine months), in comparison to other loans. The college is the lender, and the government pays the interest on these loans while the student is in school and during the grace period. Because it is a limited fund, it is awarded on a first-come, first-served basis until the fund is exhausted. The current interest rate on the Perkins Loan is 5%.
Federal Direct Subsidized
Federal Direct Subsidized Loans are loans available to students with financial need based on the EFC calculated by the Federal Processor. Subsidized means the government pays the interest on the loan while the student is in school and during the grace period (six months).
Federal Direct Unsubsidized
The Federal Direct Unsubsidized Loan is essentially the same loan as the Federal Direct Subsidized, with one exception: the loan begins accruing interest immediately upon issue. The interest can be capitalized (added to the principle of the loan) or can be paid each year. Paying the interest yearly is recommended, as the student does not accrue interest on the interest already accrued.
Both the Subsidized and Unsubsidized loans are:
• Available to students regardless of FAFSA filing time.
• Students must be enrolled at least half time (6 credits).
• The grace period for these loans is six months from the date of the last class attended, regardless of whether or not the student graduates. This means that even if the student decides to take a semester off, he/she could still be held responsible for a loan payment.
• Subsidized Loans originated on or after July 1, 2016 the interest rate will be 3.76%.
• Unsubsidized Loans originated on or after July 1, 2016 the interest rate is 3.76%.
• Origination and default fees may be charged up to 1.068% of the loan amount and are taken up front.
• The student must sign a Master Promissory Note (MPN) before the funds will be disbursed, which can done electronically.
• All first-time borrowers must complete the entrance loan counseling requirement before they receive their first disbursement.
• First-time borrowers who are in the first year of their academic program will not receive a loan disbursement until 30 days after the start of the semester.
Dependent students may borrow:
A maximum of $5,500 as a freshman (up to $3,500 may be subsidized) and $6,500 as a sophomore (up to $4,500 may be subsidized).
Independent students may borrow:
A maximum of $9,500 as a freshman (up to $3,500 may be subsidized) and $10,500 as a sophomore (up to $4,500 may be subsidized).
Federal Direct Parent Loan for Undergraduate Students (PLUS)
The Federal Direct PLUS is a loan made to parents of dependent students whose financial aid package has not fully met the Cost of Attendance. The Federal Direct PLUS can be issued for as much as the difference between the financial aid package offered to the student and the Cost of Attendance. For loans guaranteed on or after July 1, 2016 the interest rate is 6.31%. There are default and origination fees, up to 4.272% taken up front. Federal Direct PLUS borrowers generally must begin repaying both principal and interest within 60 days after the loan is fully disbursed or delayed at borrower’s option. The applicant’s credit history will be evaluated in determining loan eligibility. This loan is not automatically awarded; therefore, the parent must contact the Financial Aid Office should they be interested.