Direct Student Loans

The William D. Ford Federal Direct Loan Program is a government loan commonly referred to as a "guaranteed student loan." There are two types of Direct Student Loans:

Subsidized Direct Loan

Subsidized loans are available to students who demonstrate financial need as defined by the FAFSA. The government pays the interest on a subsidized loan while the student is enrolled in school but not during the grace period. The loan goes into repayment six months after the student graduates or is no longer enrolled half time. Effective July 1st, 2013, new borrowers can not get it after 150% of their academic program.

Unsubsidized Direct Loan

Unsubsidized loans are available to students who do not qualify for the Federal Direct Subsidized Loan. Interest accrues on unsubsidized loans while the student is in school. Students are responsible for paying all the interest on the loan (from the day the loan is first disbursed to when it is paid in full). Interest payments can be deferred while they are in school. If students choose to let this interest accrue, it will be capitalized at repayment.

Students must attend college at least half time to receive Federal Direct Loan funds. Generally, repayment begins six months after students graduate, withdraw from school or enroll less than half time. Students with an accumulated a total subsidized and unsubsidized student loan debt of $20,000 in may not be approved for additional student loans at the community college level.

 

Eligibility


In order to be eligible for Federal Direct Loans, an undergraduate student must:

  • File a Free Application for Federal Student Aid (FAFSA)

  • Be enrolled at least half time (at least 6 credits per semester)

  • Be a U.S. citizen or eligible non-citizen

  • Be achieving Satisfactory Academic Progress as established by Cuesta College

  • Cannot be in default on a student loan or owe a repayment on any grant funds

  • Submit all documents required by the Financial Aid Office pertaining to verification

 

Direct Loan Changes for 2013-14

 

For new subsidized loans first disbursed on or after July 1, 2013 through June 30, 2014, the federal government will no longer subsidize (pay) the student loan interest during the six month grace period. The grace period is the time between when the student graduates or drops below half-time status and the time when the student must start repaying the loan. Students are encouraged to check with their Loan Servicer for any available options to assist with their loan repayment. Direct Loans disbursed on or after July 1, 2013 through June 30, 2014 will have a fixed interest rate of 3.86%.

 

Interest Rates and Fees for Federal Direct Loans

 

Program of Study

Fixed Interest Rate

Loan Fees

Federal Direct Subsidized Loan

3.86%

1.051%

Federal Direct Unsubsidized Loan

3.86%

1.051%

These loans have a 1.051% origination Fee which will be deducted from the gross amount of the loan. 

 

Annual Loan Limits

 

Dependent Students (Undergraduate only)

Annual Loan Limits

Undergraduate First Year

$5,500 ($3,500 subsidized/$2,000 unsubsidized)

Undergraduate Second Year

$6,500 ($4,500 subsidized/$2,000 unsubsidized)

 

 

Additional Unsubsidized Loans are available to dependent students whose parents have been denied a Parent PLUS loan. Please see Special Circumstances for more information.

Independent Students

Annual Loan Limits

Undergraduate First Year

$9,500 ($3,500 subsidized/$6,000 unsubsidized)

Undergraduate Second Year

$10,500 ($4,500 subsidized/$6,000 unsubsidized)

   

 

Aggregate Loan Limits


Students who borrow Federal Stafford Loans have aggregate lifetime loan limits. This means that there is a maximum a student may take out in Federal Stafford Loans for his or her educational career. Based on their program of study, students may borrow up to the amounts listed in the table below for their entire academic careers:

Program of Study

Lifetime Loan Limits at Cuesta College

Undergraduate Dependent

$20,000

Undergraduate Independent

$20,000

 

Cuesta College reviews aggregate loan limits prior to awarding loans for the academic year. Students are encouraged to check the aggregate amount of loans they have taken out during their academic careers through the National Student Loan Data System (NSLDS) .

Deferment and Forbearance

If you want additional information on loan default, visit the Department's Debt Resolution website.

Deferment

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

You may qualify for a deferment if you are:

  • enrolled at least half time at an eligible postsecondary school;
  • in a full-time course of study in a graduate fellowship program;
  • in an approved full-time rehabilitation program for individuals with disabilities;
  • unemployed or unable to find full-time employment (for a maximum of three years);
  • experiencing an economic hardship (including Peace Corps service) as defined by federal regulations (for a maximum of three years);
  • serving on active duty during a war or other military operation or national emergency and, if you were serving on or after Oct. 1, 2007, for an additional 180-day period follow¬ing the demobilization date for your qualifying service;
  • performing qualifying National Guard duty during a war or other military operation or national emergency and, if you were serving on or after Oct. 1, 2007, for an additional 180-day period following the demobilization date for your qualifying service;
  • a member of the National Guard or other reserve component of the U.S. armed forces (current or retired) and you are called or ordered to active duty while you are enrolled (or within six months of having been enrolled) at least half time at an eligible school.

 

Forbearance

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. A forbearance is another method of temporarily postponing or reducing loan payments. You are never changed a fee for applying for a forbearance on your federal student loans.

You may be granted a forbearance if you meet one of the following requirements:

  • You are unable to make your scheduled loan payments for reasons including, but not limited to, financial hardship and illness.
  • you are serving in a medical or dental internship or residency program and you meet specific requirements
  • the total amount you owe each month for all of the Title IV student loans you received is 20% or more of your total monthly gross income (for a maximum of three years)
  • you are serving in an approved AmeriCorps position.
  • You are performing a teaching service that would qualify for loan forgiveness under the requirements of the Teacher Loan Forgiveness Program
  • you qualify for partial repayment of your loans under the Student Loan Repayment Program, as administered by the Department of Defense
  • you are called to active duty in the U.S. armed forces.

Note: Interest will continue to be charged during a forbearance on all types of loans. If you do not pay this interest, it will be capitalized at the end of the forbearance.