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Direct loans

If you apply for financial aid, you may be offered loans as part of your school’s financial aid offer. A loan is money you borrow and must pay back with interest.

All Student Loan borrowers must be enrolled at least half-time 6 (six) credit hours or 180 clock hours, have an cumulative grade point average (GPA) a 2.0 or above and not in default on previous loan.  Once you have been awarded a loan, Satisfactory Academic Progress must be maintained for eligibility.

Students who have reached their Maximum Time Frame (attempted more than 150% of the credits required for their program of study) are ineligible for financial aid funds.

What types of federal student loans are available?

The William D. Ford Federal Direct Loan (Direct Loan) Program is the largest federal student loan program. Under this program, the U.S. Department of Education is your lender. There are four types of Direct Loans available:

  • Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.
  • Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but in this case, the student does not have to demonstrate financial need to be eligible for the loan.
  • Direct PLUS Loans are loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.
  • Direct Consolidation Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.

What are the current interest rates?

Here are the interest rates for loans first disbursed between July 1, 2016, and June 30, 2017.

The interest rate for Direct PLUS Loans is a fixed rate of 6.31%.

  Undergraduate Students Graduate Students
Direct Subsidized Loans 3.76% N/A
Direct Unsubsidized Loans 3.76% 5.31%

For more information on interest rates and fees please visit Federal Student Aid.

How do I get a federal student loan?

To apply for a federal student loan, you must complete and submit a Free Application for Federal Student Aid (FAFSASM). Based on the results of your FAFSA, your college or career school will award you  financial aid, which may include federal student loans.  If the Office of Financial Aid did not meet your needs with federal grant aid or scholarships and you would like to be considered for William D. Ford Federal Direct student loan.  Please submit the 2016-2017 Direct Loan Request Form to our office and allow up to 10 business days for processing.

Loan Periods Deadline to Apply for 2016-2017
Fall/Spring                            (Aug 2016 – May 2017)    October 14, 2016
Fall/Spring/Summer             (Aug 2016 – Aug 2017)     October 14, 2016
Spring/Summer                    (Jan 2017 – Aug 2017)     March 9, 2017
Summer Only                       (May 2017 – Aug 2017)    June 30, 2017

 

**All students who are enrolled half-time (6-8 credit hours or 180 clock hours) will automatically be set to a loan period of Fall/Spring/Summer.

Before you receive your loan funds, you will be required to:

  1. Completion of Entrance Counseling or confirmation of previously completed counseling at www.studentloans.gov  (Print and attach to loan request form).
  2. My Financial Aid History at www.nslds.ed.gov under “Financial Aid Review”  (print and attach to loan request form).

You will need your FSA ID to complete requirements listed above.

  1. Final Step: Completion of MPN at www.studentloans.gov; available 5 – 7 business days after loan is accepted on your My FGC account. Your Master Promissory Note (MPN) will be received electronically within 48 – 72 hours.  (Parent borrowers must complete a PLUS MPN for each student awarded a PLUS Loan)

 

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Maximum eligibility period to receive Direct Subsidized Loans

There is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans.  In general, you may not receive Direct Subsidized Loans for more than 150% of the published length of your program.  This is called your “maximum eligibility period”.  You can usually find the published length of any program of study in your school’s catalog.

For example, if you are enrolled in a 4-year bachelor’s degree program, the maximum period for which you can receive Direct Subsidized Loans is 6 years (150% of 4 years = 6 years).  If you are enrolled in a 2-year associate degree program, the maximum period for which you can receive Direct Subsidized Loans is 3 years (150% of 2 years = 3 years). 

Your maximum eligibility period is based on the published length of your current program.  This means that your maximum eligibility period can change if you change programs.  Also, if you receive Direct Subsidized Loans for one program and then change to another program, the Direct Subsidized Loans you received for the earlier program will generally count against your new maximum eligibility period.

Periods that count against your maximum eligibility period

The periods of time that count against your maximum eligibility period are periods of enrollment (also known as “loan periods”) for which you received Direct Subsidized Loans.

For example, if you are a full-time student and you receive a Direct Subsidized Loan that covers the fall and spring semesters (a full academic year), this will count as one year against your maximum eligibility period.

If you receive a Direct Subsidized Loan for a period of enrollment that is shorter than a full academic year, the period that counts against your maximum usage period will generally be reduced accordingly.

For example, if you are a full-time student and you receive a Direct Subsidized Loan that covers the fall semester but not the spring semester, this will count as one-half of a year against your maximum eligibility period.

With one exception, the amount of a Direct Subsidized Loan you receive for a period of enrollment does not affect how much of your maximum eligibility period you have used. That is, even if you receive a Direct Subsidized Loan in an amount that is less than the full annual loan limit, that lesser amount does not reduce the amount of your maximum eligibility period you have used. The one exception applies if you receive the full annual loan limit for a loan period that does not cover the whole academic year.  In that case, the loan will count as one year against your maximum eligibility period regardless of your enrollment status (half-time, three-quarter time, or full-time).

 Effect of borrowing while enrolled part-time

If you receive a Direct Subsidized Loan when you are enrolled less than full-time, the period that is counted against your maximum eligibility period will be reduced.

For example, if you are enrolled half-time and receive a Direct Subsidized Loan for a period of enrollment that covers a full academic year, this will count as only one-half of a year against your maximum eligibility period.

Loss of eligibility for additional Direct Subsidized Loans and becoming responsible for paying interest on Direct Subsidized Loans

After you have received Direct Subsidized Loans for your maximum eligibility period, you are no longer eligible to receive additional Direct Subsidized Loans.  However, you may continue to receive Direct Unsubsidized Loans.

In addition, if you continue to be enrolled in any undergraduate program after you have received Direct Subsidized Loans for your maximum eligibility period, we will no longer (with certain exceptions) pay the interest that accrues on your Direct Subsidized Loans for periods when we would normally would have done so.  The chart below provides examples of these circumstances.

 

Do I become responsible for paying the interest that accrues on my Direct Subsidized Loans because . . . Yes No
 I am no longer eligible for Direct Subsidized Loans and I stay enrolled in my current program?

X

I am no longer eligible for Direct Subsidized Loans, did not graduate from my prior program, and am enrolled in an undergraduate program that is the same length or shorter than my prior program?

X

I transferred into the shorter program and lost eligibility for Direct Subsidized Loans because I have received Direct Subsidized loans for a period that equals or exceeds my new, lower maximum eligibility period, which is based on the length of the new program?

X

I was no longer eligible for Direct Subsidized Loans, did not graduate from my prior program, and am enrolled in an undergraduate program that is longer than my prior program?

X

I lose eligibility for Direct Subsidized Loans and immediately withdraw from my program?

X

I graduated from my prior program prior to or upon meeting the 150% limit, and enroll in an undergraduate program that is the same length or shorter than my prior program?

X

I enroll in a graduate or professional program?

X

I enroll in preparatory coursework that I am required to complete to enroll in a graduate or professional program?

X

I enroll in a teacher certification program (where my school does not award an academic credential)?

X

Remember, your maximum eligibility period can change if you enroll in a different program.  So, if you received Direct Subsidized Loans for your maximum eligibility period for one program and then enroll in a longer program, you will not become responsible for interest that accrues on your Direct Subsidized Loans.

If you meet any of the conditions on the prior page, you will become responsible for the interest that accrues on your Direct Subsidized Loans, from the date of your enrollment after meeting the 150% limit, during periods when we would have normally paid the interest for you.  Below is a chart that summarizes the periods when we normally pay the interest on your Direct Subsidized Loans, and an explanation and what happens after you become responsible for the interest.

During what period am I responsible for paying the interest on my Direct Subsidized Loans . . .

Before meeting the 150% limit?

After meeting the 150% limit?

While enrolled in school at least half-time

No

Yes

During my grace period on loans first disbursed (paid out) July 1, 2013 through June 30, 2014

Yes

Yes

During my grace period on loans first disbursed (paid out) July 1, 2014 or after

No

Yes

During deferment periods

No

Yes

During certain periods of repayment under the Income-Based Repayment or Pay As You Earn Plan

No

Yes

During forbearance periods

Yes

Yes

During all other periods of repayment

Yes

Yes

If you become responsible for the interest that accrues on your Direct Subsidized Loans, any interest that you do not pay will be capitalized (added to your loan principal balance) at the end of the grace, deferment, or other periods.  Capitalized interest increases your loan principal, increases your monthly payment amount under most Direct Loan repayment plans, and causes you to pay more interest over the life of your loan.

Your federal loan servicer will notify you if you become responsible for paying the interest on your Direct Subsidized Loans.

Regaining eligibility for Direct Subsidized Loans

If you become ineligible for Direct Subsidized Loans because you have received Direct Subsidized Loans for your maximum eligibility period, you may again become eligible to receive Direct Subsidized Loans if you enroll in a new program that is longer than your previous program.

If you regain eligibility to receive additional Direct Subsidized Loans because you enrolled a program that is longer than your prior program and you previously became responsible for paying all of the interest that accrues on your Direct Subsidized Loans, we will pay the interest that accrues on your new loans during the periods described in the chart above.

 

Repay Your Loans

studentloan

Get all the information you need to manage repayment of your federal student loans.

Remember, federal student loans are real loans and must be repaid.

Understanding the repayment process for your federal student loans can go a long way toward building a solid financial foundation.

Remember, federal student loans are real loans, just like car loans or mortgages. You must repay a student loan even if your financial circumstances become difficult. Your student loans cannot be canceled because you didn’t get the education or job you expected, or because you didn’t complete your education (unless you couldn’t complete your education because your school closed).

For more information please visit the Federal Student Aid website for repaying loans at  http://studentaid.ed.gov/repay-loans#making-payments

There are steps you can take to repay your federal student loan and successfully and avoid going into default.

Understanding your loan agreement, staying on top of your loan information, and making sure to contact your loan servicer if you are having trouble making payments can help you avoid default.

If you don’t make a payment on time or if you miss making a payment, your loan is delinquent and late fees may be assessed. Even if you are delinquent on your loan, you may still be able to avoid default, so it’s important that you contact your loan servicer immediately.

Delinquencies on your Direct loan payments are reported to national credit bureaus after being 60 days late. After 240 days of being delinquent, the entire loan, including interest, becomes due immediately and in full. Loan default occurs after one is 270 days late. Having defaulted on your loan means that you have abandoned your responsibility to repay the loan.

Consequences of Defaulting on a Direct Loan

  • you will become ineligible for additional federal aid including grants and student loans, and state based assistance;
  • you will become ineligible for other student loan benefits such as a deferment or forbearance;
  • Florida Gateway College will not provide you or others with official or unofficial copies of your college transcript;
  • it will severely damage your credit rating, making it more difficult to obtain affordable credit in the future, including credit cards, a car loan, or a mortgage;
  • defaults are reported to national credit bureaus and can remain on your credit report for seven years;
  • more employers and rental agencies are requiring credit checks before hiring or leasing, so your ability to obtain certain types of employment or living situations may be affected;
  • your federal tax refunds may be withheld and applied to your outstanding loan balance;
  • your savings and checking accounts may be seized to pay your outstanding debt;
  • your loan may be assigned to the U.S. Department of Education Collection service;
  • you will have to pay additional fees and court costs for the collecting of your loan;
  • your employer could be ordered to withhold or garnish a portion of your wages, up to 10%;
  • if you need a license to practice in your profession, it may be revoked, canceled, or not renewed;
  • there is no statute of limitations, which means your obligation to repay federal loans will never go away.

There is no reason ever to default on your federal student loans. If you find that you are having difficulty making payments you should call your loan servicer immediately. You would be able to request a deferment, a forbearance, or change your repayment plan.

For more information please the Federal Student Aid website for avoiding default at http://studentaid.ed.gov/repay-loans/default/avoid

 

FSA Ombudsman Group

The Ombudsman Group is dedicated to helping resolve disputes related to Direct Loans, Federal Family Education Loan (FFEL) Program loans, Guaranteed Student Loans, and Perkins Loans.  Contact the Ombudsman Group as a last resort.  If you’ve completed the preparation steps above, and you have done everything you can to resolve your dispute, contact the Ombudsman Group through one of these methods:

U.S. Department of Education
FSA Ombudsman Group
830 First Street, N.E.
Fourth Floor
Washington, DC 20202-5144
1-877-557-2575