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Loans

 

Federal Direct Loan Program

Grossmont College participates in the Federal Direct Loan Program (FDLP). All students applying for a loan must have an "Entrance Interview" prior to the receipt of the loan application and an "Exit Interview" prior to the receipt of the second check. Exit interviews are required on a yearly basis.

Federal Direct Loans (FDL) are low-interest loans made to students by the federal government to help students pay for educational expenses. These loans are insured by the federal government. The interest rates for undergraduate loans disbursed after July 1, 2013 and prior to July 1, 2014 is fixed at 3.86% for Subsidized loans and Unsubsidized loans.
First year students (0 to 29.5 units completed) may borrow up to $3,500; second year students (30 or more units completed) may borrow up to $4,500 per academic year. Total borrowing may not exceed $23,000 for all undergraduate study. Students who request a Federal Direct Loan who are interested in obtaining additional unsubsidized loans or who have already borrowed $10,500 or more will be required to meet with their Advisor and/or Director of Financial Aid for additional loan counseling prior to certification of any additional loans.  The Director of Financial Aid (or their designee) has the discretion to deny a request for a student loan on a case-by-case basis.

To apply for a subsidized FDL, a student must first apply for federal financial aid via the FAFSA. The student may then complete the on-line Entrance Interview and submit a Loan Request Form to the Financial Aid Office.

Subsidized Federal Direct Loan: These loans are available to students who demonstrate financial need. Students who are eligible to apply for a subsidized Federal Direct Loan based upon need qualify to have the federal government pay the interest on their loan while they are in school and during deferment periods.

Tuition payments will not be deferred for Federal Direct Loans. FDL funds will not be disbursed during the first 30 days of each semester. Payment of principal will not be required while the student is enrolled at least half-time. Regular monthly payments on both the principal (the amount borrowed) and the interest (the amount charged for borrowing) will begin six months after leaving school, dropping below half-time status or graduating. Depending upon the total amount borrowed, it may take up to ten years to repay the loan(s).

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

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

Satisfactory Arrangement to Repay: If you are in default, you are not eligible to receive federal grants or loans unless you have made satisfactory arrangements to repay the owners of your defaulted loans. Satisfactory arrangements to repay means that you must make minimum monthly payments that are on time and acceptable to the holder of your loan for six months in a row. Lump sum payments don’t count when determining satisfactory arrangements to repay; nor do payments that are made involuntarily, such as those due to wage garnishment.

The owner of your defaulted loan must verify that you have made satisfactory arrangements to repay. If you default on your student loan, the owner is generally the agency that guaranteed it. The guarantee agency’s name should be present on your promissory note and other correspondence made to you after your loan defaulted. In some cases the owner may be the Department of Education.

Once you receive a letter verifying that you have made satisfactory arrangements to repay and are authorized to receive additional federal grants and loans, you cannot miss any more loan payments for any reason. If you do, you cannot regain eligibility for federal grants and loans a second time using this option. Satisfactory arrangements to repay will not remove your defaulted loan from your credit report.

Loan Consolidation: If you are in default, you can return to repayment status through loan consolidation. To be eligible to consolidate, you must have made satisfactory arrangements to repay your defaulted loans with the owners of the loans for three consecutive months. Through this program your eligible federal education loans can be combined in to one loan. Depending on the size of the debt, you may have 12 to 30 years to repay your loans. When you consolidate you regain eligibility for loan deferment. After consolidation, your credit records will show the loan as paid in full. You are eligible for federal grants and loan.

Loan Rehabilitation: If you are in default, you can return to repayment status through loan rehabilitation. Each guarantor is responsible for operating a Loan Rehabilitation Program for the defaulted loans it owns. Normally, you would have to make satisfactory repayment for 9 consecutive months. Contact your guarantor for further information.

Loans Discharged in Bankruptcy: Few people meet the criteria necessary for having their loans discharged in bankruptcy, so this section may not apply to you. If your loan is discharged in bankruptcy you remain eligible for federal education grants and loans.

Borrowers Whose Loans Have Been Canceled Due to Permanent Disability: If your loan has been canceled due to permanent disability, you can regain eligibility for federal grants and loans. You must get a signed statement from the doctor indicating that your condition has improved sufficiently to work and attend school. You must also acknowledge that future federal loans cannot be canceled on the basis of any disability present when the new loan is made unless the disability get significantly worse.

Loan Forgiveness for Service in Area of National Need:  Borrowers may qualify for forgiveness of some (or all) of their outstanding principal balance on their existing loans if they agree to serve in an area of national need as defined by the Higher Education and Opportunity Act.

For more detailed information on all of your student loan options, including repayment and consolidation, please visit Direct Student Loans on-line.

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