A federal direct loan is offered by the U.S. Department of Education (ED) to help eligible students cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school.
The Department of Education acts as a lender for students. Unlike grants, loans must be repaid and follow a rigorous application process in order to make sure that students understand the implications of receiving a student loan.
These loans are given to eligible students who demonstrate financial need.
The federal government pays the interest on Subsidized Loans while you are enrolled in school at least half-time (six units in the fall or spring semester; three units in the summer semester). If you graduate, drop below half-time, or withdraw from school, then you have a six-month grace period where the federal government will continue to pay the interest on your loan. After the six-month grace period, you are responsible for paying the interest on your loan
These loans are given to eligible students, regardless of their financial need. The combined amount of an Unsubsidized Direct Loan and all other financial aid that you receive cannot exceed the cost of attendance.
Interest accrues from the time the loan is disbursed, and interest payments begin immediately but can be deferred until you are done with school. It is advantageous to pay the interest while you are in school. This way, the debt will be the principal amount only when repayment begins. Regular monthly payments begin six months after you graduate, drop below half-time status, or withdraw from school.
34 CFR 685.301(a)(8) Origination of a loan by a Direct Loan Program school
(8) A school may refuse to originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or may reduce the borrower's determination of need for the loan if the reason for that action is documented and provided to the borrower in writing, and if-
(i) The determination is made on a case-by-case basis;
(ii) The documentation supporting the determination is retained in the student's file; and
(iii) The school does not engage in any pattern or practice that results in a denial of a borrower's access to Direct Loans because of the borrower's race, gender, color, religion, national origin, age, disability status, or income.
To be eligible for a federal student loan, students must:
Dependent Students
| Academic Level | Subsidized Loan Limits | Unsubsidized Limits | Total Direct Loan |
|---|---|---|---|
| Freshman <30 units | $3,500 | $2,000 | $5,500 |
| Sophomore≥30 | $4,500 | $2,000 | $6,500 |
Independent Students
| Academic Level | Subsidized Loan Limits | Unsubsidized Limits | Total Direct Loan |
|---|---|---|---|
| Freshman<30 units | $3,500 | $6,000 | $9,500 |
| Sophomore≥30 units | $4,500 | $6,000 | $10,500 |
Interest is a loan expense charged for the use of borrowed money and is paid by a borrower to a lender. The expense is calculated as a percentage of the unpaid principal amount of the loan.
Interest Rate for Direct Loans first disbursed on or after July 1, 2024 and before July 1, 2025 is 6.53%.
An Origination Fee is a percentage of your loan amount charged by the lender for the processing of your student loan.
The percentage for all Direct Subsidized and Unsubsidized student loans is 1.057%.
Loan Application Availability: Monday, August 26, 2024
1st Disbursement- October 4, 2024*
2nd Disbursement- November 1, 2024*
All applications and missing documents due by Friday, November 15, 2024 at 5:00 p.m. (PST)
Applications will NOT be accepted after deadline
Loan Application Availability: Monday, January 13, 2025
All applications and missing documents due by Friday, April 11, 2025 at 5:00 p.m. (PST)
Applications will NOT be accepted after deadline
* Dates are subject to change.
Per our policy and regulations, loan funds are disbursed as follows:
If a student is enrolled in the first year of an undergraduate program of study and has not previously received a Direct Subsidized Loan, a Direct Unsubsidized Loan, a Subsidized or Unsubsidized Federal Stafford Loan, or a Federal Supplemental Loan for Students, a school may not disburse the proceeds of a Direct Subsidized or Direct Unsubsidized Loan until 30 days after the first day of the student's program of study. [34 CFR 685.303(b)(5)]
New first-time loan borrowers will receive their first disbursements 30 days after the first day of school
As a student borrower, I have the right to
As a student borrower, I am responsible for:
Exit counseling is required by law. Exit counseling provides important information that you will need as you prepare to repay your federal student loan(s). During exit counseling, you will review the terms and conditions that apply to your federal student loans, be introduced to various repayment options, and learn the importance of avoiding default.
Students must complete loan exit counseling when they do any of the following:
Failure to complete loan exit counseling may result in the delay of your financial aid processing. Complete your Student Loan Exit counseling here.
The federal student loan “grace period” begins the day after you graduate, leave school, or drop below half-time enrollment. Federal Direct loans have a six-month grace period; other federal student loans may have longer or shorter grace periods.
Payments are not required during the grace period; however, you may wish to pay the interest that accrues during this period. Any interest that is unpaid when repayment begins will be capitalized and added to your principal balance, increasing the total loan amount you must repay. Note: interest is charged on unsubsidized loans during the grace period, but not on subsidized loans.
After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you are required to begin repayment. During this period, you'll receive repayment information from your loan servicer, and you'll be notified about your first payment due date.
A Loan Servicer is the company that is assigned to collect payments on a student loan, respond to student questions and inquiries, and perform other administrative task needed to maintain loans.
Student Loan Servicers send out monthly billing statements. It is extremely important to be in contact with your Servicer/s.
If you are not sure who your Servicer is you can always log in to the Federal Student Aid website. Student are able to log in using their FSA ID. There you will find your loan servicers name, address, and number of your Servicer.
Students may call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.
The following are loan servicers for loans that the U.S Department of Education (ED) owns. To learn more visit the Federal Student Aid/Loan Services site.
Before your loan money is disbursed, you may cancel all or part of your loan at any time by notifying your school. Generally, you may cancel all or part of your loan within 120 days after receiving it and no interest or fees will be charged.
You can return loan funds to your servicer more than 120 days after disbursement, but the return will be processed as a pre-payment on the loan, and you’ll be charged interest and a loan fee on the amount you
return. Your promissory note and additional information you receive from your school will explain the procedures and time frames for canceling your loan.
A loan goes into default when you fail to repay the loan as outlined in your promissory note. Most federal student loan default occurs when a payment isn't made in more than 270 days. It can result in legal consequences and a loss of eligibility for additional federal student aid.
A loan is delinquent when loan payments are not received by the due dates. A loan remains delinquent until you make up the missed payment(s) or receive a deferment or forbearance that covers the period when you were delinquent. If you are having trouble making your monthly loan payments, you should contact your loan servicer to discuss options to keep the loan in good standing.
Defaulting on student loans is a serious matter and should be addressed as soon as possible. DO NOT be afraid to contact your lender or collection company; they are there to assist you in finding the best way to pay off your student loan, regain your financial aid eligibility and straighten out your credit record.
Deferment is a temporary postponement of payment on a loan that is allowed under certain conditions and during which interest doesn’t accrue on subsidized loans.
Forbearance allows you to temporarily stop making your monthly student loan payments or temporarily make smaller payments. Eligibility for specific types of forbearance
If you are unable to make your scheduled loan payments, contact your loan servicer immediately. Your loan servicer can help you understand your options for keeping your loan in good standing. For example, you may wish to change your repayment plan to lower your monthly payment or request a deferment or forbearance that allows you to temporarily stop or lower the payments on your loan. Learn more about deferment or forbearance options.
Under certain conditions, you may be eligible to have all or part of your loan discharged or forgiven (canceled). Find out about loan cancellation, discharge, or forgiveness.
You can pick from repayment plans that base your monthly payment on your income or plans that give you a fixed monthly payment. Repayment plans based on your income are a smart choice to lower your payment. If you don’t pick a repayment plan, your loan servicer will place you on the Standard Repayment Plan (a 10-year fixed payment repayment plan). This plan might result in a higher monthly payment for you.
To find out more about Repayment Plans please visit the US Department of Education's Repayment Plan website.
Loan Simulator helps you estimate monthly student loan payments and choose a loan repayment option that best meets your needs and goals. You can also use it to decide whether to consolidate your student loans.
To find out your estimated monthly student loan payment, please visit the US Department of Education Loan Simulator.
Federal Direct Loans are funds which must be repaid to the United States Department of Education. Unlike private loans, student loans cannot be forgiven and places the borrowers in debt until the balance of the loan is fully repaid.
Federal student loans are made by the government, with terms and conditions that are set by law, and include many benefits (such as fixed interest rates and income-driven repayment plans) not typically offered with private loans.
In contrast, private loans are made by private organizations such banks, credit unions, and state-based or state-affiliated organizations, and have terms and conditions that are set by the lender. Private student loans are generally more expensive than federal student loans.
MJC does not certify or process private loans.
To find out more information on the differences between federal or private student loans please visit the Federal Student Aid website.
Financial literacy is the ability to successfully understand how to budget and plan for your money. It is the foundation to your relationship with money and navigating college costs. It is never too late to start building or continue improving on your financial literacy. The more you learn, the better you can manage your finances to pay for college and living expenses.
Start your financial literacy journey today - with iGrad!
Students now have access to all the great financial well-being resources on iGrad. Once you sign up you will gain access to explore videos, calculators, articles, tools and courses all from your dashboard. Create your iGrad account today!
To get the most out of iGrad, we recommend you sign up and take the Financial Wellness Checkup to personalize your experience, it only takes 5 minutes!
On the iGrad platform, you can explore articles, videos, calculators, games, modules, and more!
Just a few of the topics covered are:
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If you need any assistance, the team at iGrad can help. As you explore the site, you can click on the chat icon in the lower right corner for support.
A. A subsidized loan is a federal student loan for students with financial need as determined by federal regulations. No interest is charged while the student is in school at least half-time. Interest will accrue during the grace period for all students who received their first subsidized loan on or after July 1, 2024.
An unsubsidized loan is not based on financial need. With an unsubsidized loan, the student is responsible for the loan's interest when the loan is disbursed until the loan is paid in full. Interest payments may be made while in school or can be deferred and capitalized when repayment begins. This means that the interest that accrues is added to the principal loan balance. Interest then begins accruing on the new principal loan balance.
A. Before you take out a loan, it’s important to understand that a loan is a legal obligation that you will be responsible for repaying with interest. You may not have to begin repaying your federal student loans right away, but you don’t have to wait to understand your responsibilities as a borrower.
A. Interest Rates for Direct Loans First Disbursed on or After July 1, 2024, and Before July 1, 2025 is 6.53%. Interest is additional money that you’ll have to pay on top of your principal balance (the amount of your original loan). Direct Loans are “daily interest” loans, which means a daily interest formula determines how much interest adds up every day.
A. An origination fee is a fee paid by the borrower to the Department of Education to cover the loan's administrative fees. The loan amount credited to the student account will be the principal amount borrowed minus an origination fee. The current loan origination fee is 1.057% for Direct Subsidized and Unsubsidized Loans.
A. Keep track of how much you’re borrowing. Research starting salaries in your field. Understand the terms of your loan and keep copies of your loan documents. Make payments on time. Keep in touch with your loan servicer.
A. After you graduate, leave school, or drop below half-time enrollment, you must complete the Exit Counseling Session at www.studentloans.gov. You will then receive information about repayment and your loan provider will notify you of the date your loan repayment begins. We cannot emphasize enough the importance of making your full loan payment on time either monthly (which is the usual pay cycle) or according to your repayment schedule
A. Repayment begins on the day immediately following a six-month grace period. The six-month grade period starts when you graduate, withdraw from school, or drop below the required six units.
A. Students who are not meeting Satisfactory Academic Progress are not able to apply for a Student Loan. However, if students have submitted a Financial Aid appeal and if their Appeal was approved, Yes the student can request a Loan.
A. Yes, there are deadlines. Please refer to the Dates/Deadline for specific semester deadlines.
A. No. MJC does not offer Student Loans during the Summer.
A. Default happens when a borrower fails to make a payment for 270 days under their normal repayment plan, and has not requested deferment of payments.
A. A deferment is a temporary pause to your student loan payments for specific situations. You will need to contact your loan servicer for details.
A. A loan becomes delinquent when a student does not make their loan payment by their agreed specified due date.
A. The calculation to determine student loan eligibility is based on your enrollment status when you submitted your loan application. Student Financial Services must adjust your loan if you receive additional awards or make any adjustments to your enrollment (including dropping, adding, withdrawing, and non-attendance). You must be actively enrolled in six or more units to receive loan funds. If it is determined that you are below six credits at the time of disbursement, your loan funds will be returned to the Department of Education for cancellation.
A. If you transfer to another school during the academic year, the loan is not transferred to the new school. You will need to cancel your remaining loans at MJC and request a loan at your new school. You will also need to contact your loan servicer and request an "in-school deferment" so your loan(s) do not go into repayment.
A. In general, loan disbursements are made 30 days after the semester start date or two weeks after certification of the loan, whichever is later. These estimated disbursement dates may change if additional information is received from the Department of Education or if you are enrolled in a late starting class.
A. The U.S. Department of Education Student Loan Support number is 1-800-433-3243 or visit their website
A. A student may log onto the website studentaid.gov, visit your account dashboard and scroll to “My Loan Servicers” section. Or you may call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.
A. Please contact the Loan Program Specialist Lavonna Routt 209-575-7706 or Routtl@yosemite.edu
