Federal Direct Loan Program

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William D. Ford Federal Direct Loan Program
Cuyamaca College participates in the William D. Ford Federal Direct Loan Program by offering subsidized and unsubsidized Direct Student Loans (Direct Loans).

Federal Direct Student Loans – subsidized or unsubsidized, are low-interest rate loans made to students by the federal government.

Direct Subsidized Loan: These loans are available to students who demonstrate financial need. The federal government pays the interest on this loan while you are in college and during deferment periods.

Direct Unsubsidized Loan: These loans are available to all eligible students and are not based on financial need. You are responsible for all interest payments (or capitalization of interest) from the date the loan is disbursed.

 

The interest rate: As of July 1, 2012 the interest rate for subsidized loan is fixed at 3.4% for subsidized loans disbursed from July 1, 2012 to June 30, 2013. The interest rate for unsubsidized loans is fixed at 6.8%.

 

The loan amounts: Grade level one students (freshman) may borrow a base amount of $3,500 (subsidized and/or unsubsidized); Grade level two students (sophomores) may borrow a base amount of $4,500 (subsidized and/or unsubsidized) per academic year. Loan amounts for one semester only are one-half (1/2) the maximum yearly loan amount not to exceed need or cost of attendance.

 

To apply for a subsidized or unsubsidized loan, you must first apply for federal financial aid via the FAFSA. All students applying for a loan must complete “Entrance Counseling” before the processing of the loan application and “Exit Counseling” before the receipt of the second check. Entrance and Exit counseling are required on a yearly basis.

The deadline to submit a Federal Direct Student Loan application is December 3 , 2012 for the Fall 2012 semester, and May 20, 2013 for the Spring 2013 semester. Tuition payments will not be deferred for Federal Direct Student Loans. Loan funds will not be disbursed during the first 30 days of each semester.

If your total borrowing is $15,000 or more, in addition to your student loan application, you will be required to provide a budget worksheet with documentation of expenses and resources as well as an educational plan based on your educational goal. The Financial Aid Director has the discretion to deny a request for a student loan on a case-by-case basis.

Payment of principal (the amount borrowed) will not be required while you are enrolled at least half-time. Regular monthly payments on the principal (the amount borrowed)  will begin six months after you leave school, drop below half-time status, or graduate. The 6-month Grace Period no longer applies to the interest rate for Subsidized Stafford Direct loans.   Interest on Subsidized Direct Loans begins accruing immediately when the student is no longer enrolled at least ½-time.  It may take up to ten years to repay the loan(s).

Deferment is available while enrolled at least half-time (6 or more units). Once the initial grace period ends and repayment begins, deferment for resumption of study requires half-time enrollment. Units cannot be combined between two colleges for deferment purposes.

The following examples show typical monthly payments and total interest charges for 6.80% loans of varying amounts, with typical repayment periods:

      Typical Repayment Plan          

                    Total Loan Debt      Number of Payments    Monthly Payment      Interest Charges        Total Repaid

                      $ 3,500                 90                               $ 50                               $   971                        $4,471

                         6,500                120                                75                                  2,476                          8,976

                       10,500                120                                121                                4,000                         14,500

                       20,000                120                                230                                 7,619                        27,619

Loan Default

If you have defaulted on a student loan, you have some options. Depending on which one you chose you may regain your eligibility for financial aid, improve your credit and in some cases remove the default status from your credit report.

For more detailed information on all of your student loan options, including repayment and consolidation, please visit Department of Education at www.studentloans.gov

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