Applying for Federal Direct Student Loans

Federal Direct Loans

The Atlantic Cape Community College Financial Aid Office encourages students to explore various grants and scholarship opportunities and to evaluate loan options carefully. While loans are a source of financial assistance that allows you to spread the cost of education over time, students should borrow only what is needed and remember that loans must be repaid.  Federal Direct Student loans are a form of student “self help” financial aid where students borrow money for college from the federal government.  We urge all first-time borrowers to spend some extra time learning about the loan process so that they can make informed choices throughout their education.

Federal Direct Loan Annual Limits:

Dependent

Subsidized

Unsubsidized

 Total

Freshman (0-29 credits)

$3,500

$2,000

 $5,500

Sophomore (30+ credits)

$4,500

$2,000

 $6,500

 

Independent

Subsidized

Unsubsidized

 Total

Freshman (0-29 credits)

$3,500

$6,000

 $9,500

Sophomore (30+ credits)

$4,500

$6,000

 $10,500

Before you submit the request for a Direct Student Loan, you must complete the following steps:

Go to www.studentloans.gov, sign in using your Federal PIN, and complete Entrance Counseling and the Master Promissory Note (MPN)

 

  • Entrance Counseling is required by federal law for all students who wish to borrow through the Federal Stafford Student Loan Program. Entrance Counseling will help you understand all of your rights and responsibilities as a borrower. To contact your counselor, call (609)343-5082 or 625-1111 or 886-7189, ext. 5082. Visit https://studentloans.gov/myDirectLoan/index.action to see the steps of the direct loan process.
  • The MPN is an agreement between you and your lender. You and the lender agree to the terms of the loan and you promise to repay the loan.
  • Remember to print out a copy of both your Entrance Counseling confirmation page and your completed MPN.
  • You need to be enrolled for a minimum of 6 (per semester) to be eligible for a Federal Direct Student loan.  Students who are enrolled for only one term will only be eligible to receive half of the total yearly limit.
  • Your loan can be cancelled any time before the loan is disbursed or within 14 days of disbursement. You are notified electronically on the date of disbursement of your loan and it can be monitored by checking web services.

Loan Type

General Information

Interest Rate

Origination Fee *

Subsidized Loan

You are not responsible for paying the interest on the loan while you are in school at least half-time and during deferment periods. Interest will accrue on this loan during the grace period.

 

3.76%

1.069%

Unsubsidized Loan

You are responsible for paying interest that accrues on the loan from the time the loan is disbursed until it is paid in full. 

3.76%

1.069%

 

* Origination Fee – A loan processing fee is charged as a percentage of the amount of each loan you receive.  The Direct Loan program will deduct the loan origination fee at the time of disbursement.
Parent PLUS Loan: The parent of a dependent student can apply for a parent PLUS loan, with an interest rate of 6.31%, for the remaining cost of the student’s education.  The parent applies for the loan at www.studentloans.gov.  Once the parent has been approved for the loan, the student can submit the loan request form and a copy of the parent PLUS loan MPN to the Financial Aid Office.  If a parent is not approved for the Parent PLUS loan, then a dependent student may be able to borrow additional funds under the unsubsidized loan program.


Repayment of Your Loan:
 In most cases, you must begin making payments six months after you graduate, leave school, or drop below half-time enrollment. Depending on the type of loan you have, the six-month period is called a grace period or a deferment period. Your loan servicer handles the billing, customer service, and other administrative tasks on your loan.   For most types of loans, interest will accrue (accumulate) while you are in school and during the six-month period.

Servicer of Your Loan: You will make payments to your loan servicer. Each servicer has its own payment process, so check with your servicer if you aren’t sure how or when to make a payment. If you don’t know the loan servicer for your loan, you can find that information at www.NSLDS.ed.gov.  Your payment depends on the type of loan you received, how much money you borrowed, the interest rate on your loan, and the repayment plan you choose.  If you can’t make your loan payments, contact your loan servicer immediately. Don’t ignore bills. You have options, including a change in repayment plan, request a deferment, request a forbearance, or apply for forgiveness, cancellation or discharge. For more information, visit

https://mappingyourfuture.org/oslc/counseling/index.cfm?act=Intro&OslcTypeID=2

https://studentloans.gov/myDirectLoan/index.action

Understanding Default

If you don’t make your loan payments, you risk going into  default. Defaulting on your loan has serious consequences. Your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe. Understand how missing a loan payment can be a problem, what default means and the consequences of default, and what you need to do if your loan is in default or if you think the default on your loan is an error.  After reading this information, you may want to review   Avoiding Default* or  Getting Out of Default

What is “default”? 

“To default” means you did not make your payments on your student loan as scheduled according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. To learn what may happen if you default, what steps you can take to keep your loan from going into default, and what your options are for getting out of default, go to   StudentAid.gov/end-default *

Did You Know?

You are responsible for staying in touch with your loan servicer and making your payments, even if you do not receive a bill. If you don't, you may end up in default, which has serious consequences

Who is my Student Loan Servicer?

The Loan Servicer is used by the Loan Holder to assist with managing the repayment of the loans that they hold. The loan servicer collects loan payments, responds to your questions about your loan account, and performs other administrative tasks for the loan lender. Your loan servicer may be the same as your loan holder, or it may be a company that woks on behalf of the loan holder. Why pay for help with your federal student loans when your loan servicer will help you for FREE? If you need help identifying your federal student loans, check your loan Servicer * at StudentAid.gov. StudentAid.gov will not include information about any private student loans you may have received

What are my options out of default?

You have several options for getting your loan out of default. These include:

Repayment in full

Loan rehabilitation

Loan consolidation

How to Manage Your Student Loans*

This guide does not provide information about repayment of the following types of loans:  PLUS loans made to parents; private education loans (made by a bank or other financial institution under that organization’s own lending program, not the FFEL Program); school loans (not Perkins Loans); or loans made through a state loan program.

For information about repayment of private student loans, contact the organization that made the loan. For repayment information about PLUS loans made to parents, contact your loan servicer. For a list of servicers, see  StudentAid.gov/servicer

Disclaimer:   * Some of the Web addresses in this publication are for sites created and maintained by organizations other than Atlantic Cape Community College. They are provided for the reader’s convenience. Atlantic Cape does not control or guarantee the accuracy, relevance, timeliness, or completeness of this outside information. Further, the inclusion of particular Web addresses is not intended to reflect their importance, nor is it intended to endorse any views expressed or products or services offered on these outside sites, or the organizations sponsoring the sites.

More Information

Students talking in front of student center
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Types of Loans

Atlantic Cape Student Center
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Preparation for Borrowers