Federal Direct Student Loans Home

Federal Direct Student Loan Program

Louisiana Delta Community College is participating in the William D. Ford Federal Direct Loan Program beginning in the Fall of 2014. Student borrowers obtain loan funds directly from the federal government (U.S. Department of Education). The official website is www.studentloans.gov. This site is your source for information from the U. S. Department of Education on how to apply and manage your student loans.

When you complete the Free Application for Federal Student Aid (FAFSA), you are applying for all federal aid programs for which you may be eligible, including direct student loans.

If a Federal Direct Student Loan (subsidized or unsubsidized) has been offered to you as part of your aid package it will appear on your Student Aid Report (SAR). You can accept or decline these loans just as you would any other aid program assistance offered to you.

Federal Direct Student Loans are available for students meeting certain qualifications. If you are considered a student enrolled in a degree seeking program at least six credit hours, are not in default on a federal loan or owe a repayment on a federal grant, and you meet all other eligibility requirements such as Satisfactory Academic Progress (SAP), you may qualify for a Federal Direct Student Loan.

Loans, unlike grants or work-study, are borrowed money that must be repaid. Some direct loans must be repaid with interest. These are real loans – just like car loans and mortgages. You cannot have these loans canceled just because you didn’t like the education you received or because you’re having financial difficulty. These loans are a serious obligation, so think about the amount you’ll have to repay over the years before you take out a loan.

 

The Direct Loan Program is available to assist students and their parents with the costs associated with attending college by offering low-cost education loans.

 

Information contained on this page includes:

 

·         Types of Federal Direct Student Loans and Direct Parent PLUS Loan

·         Loan Limits and Interest Rates

·         How to Apply for a Federal Direct Student Loan

·         How to Apply for a Direct Parent Plus Loan

·         Entrance and Exit Counseling

·         Federal Direct Loan Master Promissory Note (MPN)

·         Federal Direct Parent Plus Loan Master Promissory Note (MPN) and Credit Check

·         Loan Disbursements

·         Repaying Direct Loan Debt

 

 

Types of Federal Direct Student Loans

Subsidized Direct Loan is based on financial need as determined by the Free Application for Federal Student Aid (FAFSA). The government pays the interest for you as long as you remain enrolled at least half-time (six credit hours) in a degree seeking program and meet all other eligibility requirements. The amount you can borrow during each academic year is based on your grade level.

 

If you are a first-time borrower on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that you receive Subsidized Direct Loans. Generally, a first-time borrower is one who did not have an outstanding balance or principle or interest on a Direct Loan on July 1, 2013. If this limit applies to you, you may not receive Subsidized Direct Loans for more than 150 percent of the published length of your program. This is called your “maximum eligibility period.” Your maximum eligibility period is based on the published date of your current program. You can find the published length of any program of study in our college academic catalog on-line at www.ladelta.edu.

 

For example, if you are enrolled in a two-year associate degree program, the maximum period for which you can receive Subsidized Direct Loans is three years (150 percent of 2 years = 3 years).

 

Because your maximum eligibility period is based on the length of your current program of study, your maximum eligibility period can change if you change to a program that has a different length. Also, if you receive Subsidized Direct Loans for one program and then change to another program the loans you received for the earlier program will generally count toward your new maximum eligibility period.

 

Unsubsidized Direct Loan is available to students regardless of demonstrated need (determined by the FAFSA). For independent students, this loan may supplement the funds obtained through subsidized loans. You are responsible for all interest payments, including the time that a student is in deferment. It is advisable; if possible, the student should make the interest payments while in school. The student does, however, have the option of capitalizing the interest. This means that the unpaid interest will be added to the principal amount of the loan at regular intervals, and the student will ultimately owe more money.

 

Students may apply for a Subsidized and/or Unsubsidized Direct Loan at www.studentloans.gov.

 

Federal Direct Parent PLUS Loan

 

An unsubsidized loan for the parents and stepparents of a dependent student. Parent PLUS Loans help pay for education expenses up to the cost of attendance minus all other financial assistance. You must be the student’s biological parent or student’s stepparent, if the biological or adoptive parent has remarried at the time of application. The dependent student must be enrolled at least half-time (six credit hours or more) in a degree seeking program, meeting Satisfactory Academic Progress (SAP) and meet all other eligibility requirements. For federal aid purposes, a student is considered “dependent” if he or she is under the age of 24, unmarried, and has no legal dependents at the time the FAFSA is submitted. (Exceptions are made for veterans, wards of the court, and other special circumstances.) If a student is considered dependent, then the income and the assets of the parent have to be reported on the FAFSA.

 

The borrower will be subject to a credit check to determine eligibility. The parents and their dependent student must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant and must meet other general eligibility requirements for the federal aid programs.

 

The borrower is responsible for all interest payments; however, the repayment period for this loan is determined by your lender.  Parents may request a PLUS loan at www.studentloans.gov.

 

Federal Direct Student Loan Limits

 

The actual amount you are awarded will depend on other financial aid you receive, your estimated family contribution (EFC), and other factors.  Your total financial aid award package cannot exceed your financial aid cost of attendance (COA) budget.  This means that you may not be eligible for the maximum amount specified below. The grade level for your yearly loan limits will be based upon the number of earned hours you have at the beginning of the Fall semester for each year. The academic year begins with the Fall semester and ends with the Summer semester.

 

 

Freshman Federal Loan Limits

(0 -29 credit hours earned)

Sophomore Federal Loan Limits

(30 or more credit hours earned)

Federal Undergraduate

Aggregate Loan Limits

 

 

 

Dependent

Dependent

Dependent

$5,500 per year

$6,500 per year

$23,000 subsidized, $31,000 total

(up to 3,500 may be subsidized based on need)

(up to 4,500 may be subsidized based on need)

 

Independent

Independent

Independent

$9,500 per year

$10,500 per year

$23,000 subsidized, $57,500 total

(up to 3,500 may be subsidized based on need)

(up to 4,500 may be subsidized based on need)

 

 

 

 

 

 

 

 

Federal Direct Student Loan Interest Rates and Fees

Interest rates will be determined each June for new loans being made for the upcoming award year, which runs from July 1 to the following June 30. Each loan will have a fixed interest rate for the life of the loan. 

 

 

You will also pay an origination fee on the loan, deducted proportionately from each loan disbursement.  A portion of the fee is for insurance used to pay off loan defaults; the rest reduces the cost of the loan to the government. Because of this deduction, you will receive slightly less than the amount you borrowed. 

 

 

Go to www.studentaid.ed.gov/types/loans/interest-rates for current year interest and fees rates.

 

 

How to Apply for Federal Direct Student Loans

 

·         Submit a 2014/2015 FAFSA at www.fafsa.gov.

·         The FAFSA must be processed by the government and received at the college.

·         Be admitted to the college in a degree seeking program.

·         Be enrolled in at least half-time status (six credit hours).

·         Must be meeting Satisfactory Academic Progress (SAP) requirements.

·         Complete the online Loan Entrance Counseling Session at www.studentloans.gov. You will be required to use your (FAFSA) Department of Education-issued PIN. If you do not have a PIN, you may request one from the official PIN site www.pin.ed.gov.

·         Complete the Master Promissory Note online at www.studentloans.gov.

 

Federal Direct Student Loan Counseling

 

 

Direct Loan Entrance Counseling

Except for Parent Plus Loan borrowers, if you have not previously received a loan, you must complete the entrance counseling session before your school can make the first disbursement of your loan. The session will help you understand your responsibilities regarding your loan.  To complete the entrance counseling session go to www.studentloans.gov/mydirectloan and sign in.

 

 

Direct Loan Exit Counseling

Any student who borrowed a Direct Loan at LDCC is required by law to complete an exit counseling session before you graduate or withdraw or drop below half-time status (six credit hours). To complete the exit counseling session go to www.studentloans.gov/mydirectloan and sign in.

 

 

Federal Direct Student Loan Master Promissory Note (MPN)

 

The MPN is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s). To complete an MPN online go to www.studentloans.gov/mydirectloan and sign in. You will be required to use your Department of Education-issued Personal Identification Number (PIN). If you do not have a PIN, you may request one from the official PIN website at www.pin.ed.gov.

 

In most cases, once you have submitted the MPN and it’s been accepted, you won’t have to fill out a new MPN for future loans you receive. You can borrow additional Direct Loans on a single MPN for up to ten years. It is very important that you completely read and understand all of the information on the MPN before you sign it.

 

·         You are not required to accept the full amount that LDCC awards you.

·         You may notify LDCC Office of Financial Aid if you want to borrow a lower amount than the college has awarded you.

·         You can decline the entire loan amount.

 

Students who need to complete a MPN will need:

·         Approximately 30 minutes to complete

o    MPN must be completed in a single session, be sure to allow enough time to complete.

o    If it takes longer than 30 minutes, the MPN will not go through, regardless of error message.

o    You must have Supported browsers: Microsoft Internet Explorer (version 8 and up), the latest stable release for Google Chrome, Apple Safari (version 5.1.5 and up), Mozilla Firefox (version 14.0 and up).

§  If not, the sign in box will not be visible or

§  Writing will overlap the text boxes.

o    You cannot hit the back button at all.

o    There is no save option.

o    The Department of Education cannot view an incomplete application.

·         Your Federal Student Aid PIN (the same one that you used to complete your FAFSA)

o    If you do not have a Federal Student Aid PIN, request one at www.pin.ed.gov.

·         Personal Information

o    Permanent Address

o    Mailing Address (if different from permanent address)

o    Telephone Number

o    Email Address

·         Employer Information

o    Employer Name

o    Employer Address

·         School Name

 

·         Reference Information from two people you have known you for at least three years. The first reference should be a parent or legal guardian.

o    Reference Names

o    Reference Addresses

o    Reference Telephone Numbers

o    Reference Relationship to Student

·         If you have previously completed either a Direct Loan MPN or a Direct PLUS Loan application, some of this information may be populated for you. You should review any populated information carefully for accuracy.

 

 

Federal Direct Parent PLUS Loan Master Promissory Note (MPN)

and Credit Check

 

To take out a Direct Parent PLUS Loan the parent must complete a PLUS application and MPN. It is very important that you completely read and understand all of the information on the MPN before you sign it.

·         You are not required to accept the full amount that LDCC awards you.

·         You may notify LDCC Office of Financial Aid if you want to borrow a lower amount than the college has awarded you.

·         You can decline the entire loan amount.

 

 

 

Parents can complete the PLUS MPN online at the Direct Loans website at www.studentloans.gov. 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, the parent will be required to use your Department of Education-issued PIN (not your child’s). If the parent does not have a PIN, they may request one from the official PIN website at www.pin.ed.gov.

 

 

Direct Parent PLUS Loan Process and Credit Check:

·         Go to www.studentloans.gov.

·         Under Manage My Direct Loan, sign in using your parent FAFSA Pin.

·         Look down the menu on the left side of the page and choose Request PLUS Loan.

·         When the page comes up, click on Parent PLUS for type of loan that you would like to receive.

·         Complete all of the information in steps 1, 2 and 3.

·         If each step is completed fully, you should see a check mark on the top tab.

·         In step 4, you will submit the credit check.

·         You should receive a confirmation showing if the PLUS loan has been approved or denied.

·         The college should receive notice of the application decision within 48 hours.

·         Print a copy of the confirmation message for your records.

 

 

The LDCC Office of Financial Aid will receive an approval or denial based on the credit evaluation done by the Department of Education.

 

 

If credit is approved:

·         In most cases, once you have 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. You can borrow additional Direct PLUS Loans on a single MPN for up to 10 years.

·         You will receive a disclosure statement from the U. S. Department of Education that gives you specific information about any loan that the college plans to disburse under your MPN, including the loan amount and loan fees, and the expected loan disbursement dates and amounts.

 

If credit is denied:

·         The PLUS Loan applicant who has an adverse credit history still may be able to receive a loan by obtaining an endorser who does not have an adverse credit history. If the applicant does not wish to obtain an endorser, the PLUS loan will be deleted and the student may request an additional Unsubsidized Direct Loan from the LDCC Office of Financial Aid. However, the amount may be less than the PLUS loan due to federal limits.

 

 

 

Parents who need to complete a MPN will need:

·         Approximately 30 minutes to complete

o    MPN must be completed in a single session, be sure to allow enough time to complete.

o    If it takes longer than 30 minutes, the MPN will not go through, regardless of error message.

o    You must have supported browsers: Microsoft Internet Explorer (version 8 and up), the latest stable release for Google Chrome, Apple Safari (version 5.1.5 and up), Mozilla Firefox (version 14.0 and up).

§  If not, the sign in box will not be visible or

§  Writing will overlap the text boxes.

o    You cannot hit the back button at all.

o    There is no save option.

o    The Department of Education cannot view an incomplete application.

·         Parent Federal Aid PIN (your PIN—not your child’s, the same one that you used to sign your child’s FAFSA.) If you do not have a parent Federal Student Aid PIN go to www.pin.ed.gov to request a PIN.

·         Personal Information

o    Permanent Address

o    Mailing Address (if different from permanent address)

o    Telephone Number

o    Email Address

o    Alien Registration Number (if you are an eligible non-citizen)

·         Employer Information

o    Employer Name

o    Employer Address

·         School Name

·         Student Information

o    Student first name, middle initial and last name

o    Student social security number

o    Student date of birth

o    Student address

o    Student telephone number

·         If you have previously completed either a Direct Loan MPN or a Direct PLUS Loan application, some of this information may be populated for you. You should review any populated information carefully for accuracy.

 

 

Loan Disbursements (paid out)

Generally, your loan(s) will cover a full academic year. LDCC will disburse your loan money by crediting it to your school account in two disbursements to pay tuition and fees and other authorized charges. If the loan disbursement amount exceeds your school charges, LDCC will pay you the remaining balance via EFT to your Higher One Debit Card. Check your LOLA account for disbursements.

 

Your loan(s) will show as estimated financial aid on your LOLA account after all of the following steps have been completed.

 

1.       Loans have been accepted in LOLA – Student.

2.       Entrance counseling session has been completed – Student.

3.       Loans have been sent to the Department of Education – LDCC Office of Financial Aid.

4.       Notification sent to student to complete Master Promissory Note (MPN) – Department of Education

5.       Master Promissory Note (MPN) has been completed – Student.

 

Note:  If you change your mind, a loan can be canceled, even if the MPN agreeing to the loan terms has already been signed. LDCC will notify you whenever it credits your student account with you Direct Loan funds. You may cancel all or a portion of your loan if you inform LDCC Office of Financial Aid within 14 days after the date LDCC sends you this notice, or by the first day of your payment period, whichever is later. If you have received funds from the loan to your student account, you will have to return the funds to the school.

 

 

Loan Proration for Graduating Undergraduate Borrowers

Per federal regulation LDCC is required to prorate a dependent or independent undergraduate student’s annual Direct Loan limits, when they are enrolled in their final period of study that is shorter than an academic year. This will affect students that will graduate from their program of study at the end of the fall semester. The maximum loan amount would be determined by the number of credit hours enrolled for the final semester. In some cases, the actual loan amount that a student is eligible to receive (based on costs, EFC and other aid) may be less than the prorated loan limit.

 

The Financial Aid office will receive an official graduation list from the Registrar’s Office. If you fail to notify the Registrar’s Office of your upcoming graduation prior to the disbursement of your loans for that semester, your loans may be adjusted which could result in a bill with the college.

 

Repaying Your Federal Direct Student Loan Debt

 

Enrollment Status and Other Changes

It is important to keep your loan servicer informed of any changes in you status, so that your loan information is up-to-date. This is your responsibility. You must notify the loan servicer if you:

·         Change your local address, permanent address or telephone number(s);

·         Change your name (for example, maiden name to married name);

·         Do not enroll at least half-time (six credit hours) for the loan period certified by the school;

·         Do not enroll at the school;

·         Stop attending school or drop below half-time enrollment;

·         Transfer from one school to another school; or

·         Graduate.

Until you graduate or leave LDCC, you must always keep the Enrollment Services Office at LDCC informed of any of these changes.

 

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. If you do not make your regular payments, you could end up in default, which has serious consequences. Student loans are real loans—just as real as car loans or mortgages. You must pay back your student loans.

 

Consequences of Default

Default is serious business! You are legally required to repay your educational loans. Even if you drop below half-time status, don't finish college, can't find a job right away, or are dissatisfied with the education you received, your education loan must be repaid when your grace period expires. If you don't fulfill your end of the agreement, there are severe consequences. For instance, the entire unpaid amount of the loan, including interest, may be immediately due. Here are some other problems you may face if you default on a student loan:

·         Loss of federal and state income tax refunds

·         Legal action and assessment of collection charges including attorney fees

·         Loss of eligibility for other student aid and assistance under most federal benefit programs

·         Loss of eligibility for deferments

·         Loss of your professional license

·         Negative credit reports

·         Garnishment of wages

 

Grace Periods

Each type of loan has its own requirements regarding grace periods (amount of time until your first payment), repayment options, and repayment periods:

 

Federal Direct Loans

·         You have a grace period of six months until your first payment must be received.

·         Repayment information from the Department of Education at www.direct.ed.gov/inrepayment.html   explains available repayment options for direct loans, includes examples of monthly payments for different loan amounts, and covers other topics you need to consider when managing your loans.

 

 

Federal PLUS Loans

·         The repayment period for PLUS loans begins on the date the loan is fully disbursed, and the first payment is due within 60 days of the final disbursement.

·         Parent PLUS Loan borrowers may choose to have repayment deferred while the student for whom the parent borrowed is enrolled at least half-time and for an additional six months after the student is no longer enrolled at least half-time.

 

 

If you have an in-school deferment on a Direct Subsidized or Unsubsidized Loan that entered repayment at an earlier date (before you returned to school) and you graduate, drop below half-time enrollment, or withdraw from school, you be required to immediately begin making payments on the loan because the six month grace period has already been used up; there is no second grace period.

 

Reservists Called Active Duty

If you are called or ordered to active duty for more than 30 days from a reserve component of the U.S. Armed Forces, the period of your active duty service and the time necessary for you to re-enroll in school after your active duty ends are not counted as part of your grace period. However, the total period that is excluded from your grace period may not exceed three years. If the call or order to active duty occurs while you are in school and requires you to drop below half-time enrollment, the start of your grace period will be delayed until after the end of the excluded period. If the call or order to active duty occurs during your grace period, you will receive a full 6-month grace period at the end of the excluded period. If you are a reservist called to active duty with the U.S. Armed Forces for more than 30 days, contact your loan servicer to let them know your status.

 

 

Deferment and Forbearance                                                                                                                                     If you are having temporary problems repaying your federal student loans, contact your loan servicer to see if you are eligible for deferment. A deferment allows you to temporarily stop making payments on your federal student loans. If you have Direct Subsidized Loans, you are not charged interest on those loans during deferment. You are never charged a fee for applying for a deferment on your federal student loans.

If you are having temporary problems repaying your federal student loans and are not eligible for a deferment, contact your loan servicer to see if you are eligible for forbearance.  Forbearance is another method of temporarily postponing or reducing loan payments. You are never charged a fee for applying for forbearance on your federal student loans.

Note: Interest will continue to be charged during deferment /forbearance on your Direct and PLUS Loans. If you do not pay this interest during the deferment/forbearance, it will be capitalized at the end of the deferment/forbearance.

 

 

Consolidation

If you have multiple federal education loans, you can consolidate them into a single Direct Consolidation Loan.  This may simplify repayment if you are making separate loan payments to different loan holders, as you’ll only have one monthly payment to make. There may be tradeoffs, however, so you will want to learn about the advantages and possible disadvantages of consolidation.

To learn more, go to www.studentaid.ed.gov/repay-loans/consolidation.

 

 

 

Loan Cancellation (forgiveness or discharge)

Under certain circumstances, you can have all or part of your loan cancelled or discharged.

To learn more, go to www.studentaid.ed.gov/repay-loans/forgiveness-cancellation.


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