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Financial Aid - Direct Loan Program
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Apply for a Student Loan
All new and returning students who wish to receive student loans for the 2010/2011 academic year will need to complete Entrance Loan Counseling, a Master Promissory Note and the Loan Application.
All three steps must be complete for your application to be processed.
It is your responsibility to follow up on your application status. Click here to proceed with the loan application process.
Introduction
As a result of the Health Care and Education Reconciliation Act, beginning July 1, 2010, federal student loans will no longer be made by private lenders under the Federal Family Education Loan (FFEL) Program. Instead, all new federal student loans will come directly from the U.S. Department of Education under the William D. Ford Direct Loan Program.
This change does not impact the process of applying for federal grants, loans and work-study or the amount of federal aid that students are eligible to receive. Students interested in receiving federal student aid should continue to complete a Free Application for Federal Student Aid (FAFSA) for each school year that they wish to be considered for aid.
The types of Direct Loans are subsidized, unsubsidized, PLUS (parent) loans and Direct Consolidation loans. At SFCC we work primarily with Direct Subsidized and Direct Unsubsidized loans. Detailed information on all of these loans can be found at the following website: http://www.direct.ed.gov/student.html.
Direct Subsidized Loans:
Subsidized loans are for students with demonstrated financial need as determined federal regulations. No interest is charged while you are in school at least half time (6 credit hours), during the grace period, and during deferment periods. The federal government will pay (subsidize) the interest for you during these periods.
Direct Unsubsidized Loans:
Unsubsidized loans are not based on financial need. Interest is charged during all loan periods.
You have the choice to pay the interest on these loans while you are in school, or you can defer the interest payment until the loan enters the repayment period. Deferred interest is capitalized when the loan enters the repayment period.
Capitalization means that the unpaid interest on the loan is added to the principal balance. Capitalization increases the principal amount of the loan and its total cost. Generally, SFCC encourages the student to pay the interest on your unsubsidized loans to minimize the increased costs of these loans.
| Loan Type | Grade Level | Disbursed between 7/1/2009-6/30/2010 | Disbursed between 7/1/2010-6/30/2011 | Disbursed between 7/1/2011-6/30/2012 |
|---|---|---|---|---|
| Subsidized Loans | Undergraduate | 5.60% | 4.50% | 3.40% |
| Unsubsidized Loans | Undergraduate | 6.80% | 6.80% | 6.80% |
Origination Fees
| Loan Type | Disbursed between 7/1/2009 - 6/30/2010 | Up-Front Interest Rebate | Disbursed after 7/1/2010 | Up-Front Interest Rebate |
|---|---|---|---|---|
| Subsidized Loans | 1.50% | 1.00% | 1.00% | 0.50% |
| Unsubsidized Loans | 1.50% | 1.00% | 1.00% | 0.50% |
The origination fee is based on the principal loan amount. The up-front interest rebate is an incentive from the US Department of Education to encourage on time loan payments.
To retain the up-front interest rebate borrowers who are in repayment will need to make the initial 12 consecutive monthly payments on time. If you do not make these payments on time you will lose the rebate, and the rebate amount will be added to your principal loan balance, which will increase the amount that you repay on the loan.
To qualify for student loans, the student must meet the following requirements:
- Have a current FAFSA with the Financial Aid Office
- A complete financial aid file
- Be enrolled in a minimum of 6 credit hours
- Have a major declared in and AA or AAS degree program
- Be making Satisfactory Academic Progress
- Not be in default for any federal student loan or in overpayment for the Pell Grant
The amount that you can borrow depends upon your dependency status and class standing.
Dependency Status
The Department of Education deems a student independent if any of the following criteria apply:
- A student at least 24 years old
- Married
- A Graduate or Professional student
- A veteran or on active duty for the military
- An orphan
- A ward of the court
- One who has legal dependents other than a spouse
If none of these apply, a student is dependent.
Class Standing
Your subsidized loan eligibility depends upon whether you are in freshman or sophomore standing at SFCC.
You are a freshman if you have completed less than 33 credit hours, including transfer credits, audited classes, and developmental coursework.
You are a sophomore if you have completed 33 credit hours or more. This excludes audited, pass/fail, and developmental courses.
Please refer to the table below for the maximum amounts you may borrow each academic year.
| Student Status | Direct Subsidized | Direct Unsubsidized | Total for the academic year |
|---|---|---|---|
| Freshman/Dependent | $3,500 | $2,000 | $5,500 |
| Freshman/Independent | $3,500 | $6,000 | $9,500 |
| Sophomore/Dependent | $4,500 | $2,000 | $6,500 |
| Sophomore/Independent | $4,500 | $6,000 | $10,500 |
Please note; these are the maximum amounts available each academic year. The amount you actually receive may be less.
- The first step to apply for student loans is to fill out the Free Application for Federal Student Aid (FAFSA).
- Complete Entrance Loan Counseling and sign a Master Promissory Note (MPN) for Direct Loans. You can complete both steps at the following website https://studentloans.gov/myDirectLoan/index.action. NOTE: Even if you have borrowed student loans through SFCC in the past, starting July 1, 2010 all new and continuing students will need to complete an MPN and Entrance Counseling session for the William D. Ford Direct Loan Program. Once you have completed these steps, you will not have to do them again for 10 years. The entrance loan counseling and MPN will transfer from school to school.
- Finally, you will need to complete the Santa Fe Community College loan application. This will help us determine how much you want to borrow as well as your eligibility. Please remember to request only the amount of money that you wish to borrow. You will have to pay this money back with interest! The SFCC Loan Application link is: http:/www.sfcc.edu/financial_aid
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- SFCC will disburse your loan in two equal installments, generally, one in the fall term and one in the spring.
- Your loan money must first be used to pay for any balance owed to SFCC, such as tuition, fees and textbooks. If loan funds remain, you will receive them by check on our regularly scheduled disbursement days along with any other aid you may be receiving.
- Loans that cover one term must be disbursed in two equal amounts. In this case, you will receive your second check shortly after midterm.
- You cannot receive your student loan disbursement until 6 credit hours have begun. If you are enrolled in late starting classes, your disbursement may be delayed.
Repayment on your student loans begins when you:
- Graduate
- Leave school
- Drop below half-time enrollment
You have a six month grace period before repayment begins. During the grace period on subsidized loans, you do not accrue interest and you do not have to make payments.
During the grace period on unsubsidized loans, you do accrue interest. If you have chosen to pay the interest as you go on your unsubsidized loans, you will continue to make the interest payment during your grace period. After your grace period, you will make principal and interest payments.
If you choose to defer the interest payments on your unsubsidized loans, interest will continue to accrue during the grace period and will be capitalized at the end of the grace period. You will not be required to make payments during the grace period.
More detailed information regarding direct student loan repayment can be found at https://studentaid.ed.gov/PORTALSWebApp/students/english/repaying.jsp.
Once your loans are established the Department of Education may sell your loan to a loan servicer. If or when your loan is sold, the loan servicer should contact you. If you are not contacted you may determine who your loan servicer is through the National Student Loan Database, http://www.nslds.ed.gov/nslds_SA/.
You should be able to get contact information for your Direct Loan Servicer from NSLDS. You may also gain information regarding your student loans from the Direct Loan Servicing website: https://www.dl.ed.gov/borrower/BorrowerWelcomePage.jsp
If you default, it 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
For more information and to learn what actions to take if you default on your loans see the Department of Education's Default Resolution Group website: http://www2.ed.gov/offices/OSFAP/DCS/index.html.
DIRECT PLUS LOANS - Parent loans for students
Direct Plus loans are unsubsidized loans for the parents of dependent students and for graduate/professional students. PLUS loans help pay for education expenses up to the cost of attendance minus all other financial assistance. Detailed information regarding Direct PLUS loans can be found at the following website: http://www2.ed.gov/offices/OSFAP/DirectLoan/parent.html.
Interest Rate
The interest rate for Direct PLUS loans is fixed at 7.90%
Fees
An origination fee of 4.00% is charged on the principal balance of all Direct PLUS loans. There is a 1.50% up-front interest rebate. Please see the origination fee section above for a description of how the up-front interest rebate works.
Applying for Direct PLUS loans
To take out a Direct Loan for the first time, you must complete a PLUS Application and master promissory note (MPN). The MPN is a legal document in which you promise to repay your loans and any accrued interest and fees to the Department of Education. It also explains the terms and conditions of your loans.
You may complete the MPN electronically online at the Direct Loans e-MPN website: https://studentloans.gov/myDirectLoan/index.action. If you are borrowing Direct PLUS Loans for more than one student, you'll need to complete a separate MPN for each one. To complete an MPN online, you will be required to use your Department of Education-issued PIN (not your child's). If you do not have a PIN, you may request one from the official PIN site: http://www.pin.ed.gov/PINWebApp/pinindex.jsp.
In most cases, once you've submitted the MPN and it's been accepted, you won't have to fill out a new MPN for future loans you receive to pay for the educational expenses of the same student. Unless your child's school does not allow more than one loan to be made under the same MPN, you can borrow additional Direct Loans on a single MPN for up to 10 years.
You'll receive a disclosure statement that gives you specific information about any loan that the school plans to disburse under your MPN, including the loan amount and loan fees, and the expected loan disbursement dates and amounts.
Credit Check and Endorser Alternative
When you apply for a Direct PLUS Loan, the Department of Education will check your credit history. To be eligible for a PLUS Loan, you must not have an adverse credit history. If you are found to have an adverse credit history, you may still borrow a PLUS Loan if you get an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS Loan if you do not repay the loan. The endorser may not be the student on whose behalf a parent obtains a Direct PLUS Loan.
In some cases, you may also be able to obtain a Direct PLUS Loan if you document to our satisfaction that there are extenuating circumstances related to your adverse credit history.
Dependent students whose parents have applied for but were unable to get a PLUS Loan are eligible to receive additional Direct Unsubsidized Loan funds.
Loan Limits
There are no set limits for Direct PLUS Loans, but you may not borrow more than the cost of your child's education minus any other financial aid received, such as a Direct Subsidized or Unsubsidized Loan. SFCC will determine the actual amount you may borrow.
LOANS FOR SERVICE FROM THE HIGHER EDUCATION DEPARTMENT
The New Mexico Higher Education Department offers several loan forgiveness programs for professions that are in high demand, especially in New Mexico rural communities. A complete list of the loans for service programs from the HED can be found at http://www.hed.state.nm.us/LFS.aspx . Of particular interest to Santa Fe Community College students are the Nursing Loans for Service and the Teacher Loans for Service programs.
Nursing Loans for Service
The purpose of the Nursing Loan-for-Service is to increase the number of nurses in areas of the state which have experienced shortages by making educational loans to students entering nursing programs. As a condition of each loan, the student shall declare his/her intent to practice as a health professional in a designated shortage area.
For every year of service, a portion of the loan will be forgiven. If the entire service agreement is fulfilled, 100% of the loan is eligible for forgiveness. Penalties may be assessed if the service agreement is not satisfied. For complete details, visit the New Mexico Higher Education Department's Nursing Loan for Service web page.
Teacher Loans for Service
The purpose of the Teacher Loan-for-Service is to proactively address New Mexico's teacher shortage by providing students with the financial resources to complete or enhance their post-secondary teacher preparation education. As a condition of each loan, the student shall declare his/her intent to practice as a teacher in the New Mexico public school system.
For every year of service, a portion of the loan will be forgiven. If the entire service agreement is fulfilled, 100% of the loan is eligible for forgiveness. Penalties may be assessed if the service agreement is not satisfied. For complete details, visit the New Mexico Higher Education Department's Teacher Loan for Service web page.
For more information, please contact The Financial Aid Office, (505) 428-1268, financialaid@sfcc.edu.