Loans

Important Steps for First-Time Borrowers

There are two important steps that first-time borrowers must be aware of:

  1. All first-time borrowers must receive loan counseling before loan funds can be disbursed. Students must complete a Master Promissory Note and Entrance Loan Counseling at StudentLoans.gov.
  2. Federal regulations require that the College delay delivering the proceeds of educational loans to first-time borrowers until 30 days after the start of classes.

Types of Federal Loans

Direct Subsidized Loan

The Federal Subsidized Loan is a loan that must be repaid upon completion of school or interruption of studies. The student who qualifies may borrow up to $3,500 for the academic year as a freshman and $4,500 as a sophomore. All borrowers are required to complete an Entrance Counseling Interview online at StudentLoans.gov.

Here are some facts about Direct Subsidized Loans.

  • Awarded to students who have a financial need.
  • Students must be enrolled in school at least half-time (6 credits fall, spring and summer).
  • This is a loan and must be repaid. The payments start 6 months after student exits, graduates from program, or drops below part-time (less than 6 hours).
  • Fixed interest rate not to exceed 6.8%.
  • 1.5% Loan Origination Fee does apply.
  • Amount offered is determined by grade level or hours earned at Delgado Community College.
  • Students are required to be actively enrolled for at least six credit hours each semester to maintain loan eligibility.

150 Percent Direct Subsidized Loan Limit

In July 2012, President Obama signed the Moving Ahead for Progress in the 21st Century Act to cover the temporary extension of the 3.4 percent interest rate on Direct subsidized loans through June 30, 2013. This new law, commonly called the “150 percent limit,” includes two key changes for certain Direct subsidized loan borrowers:

  • Limitation on Direct subsidized loan eligibility.
  • Potential loss of interest subsidy.

On May 16, 2013, the U.S. Department of Education issued an Interim Final Rule which became effective on the date of publication. These regulations only apply to first-time borrowers on or after July 1, 2013, and limit the time students may borrow Direct subsidized loans to no more than 150 percent of the published length of the students educational program.

New borrowers who reach the 150 percent limit:

  • Do not qualify for Direct subsidized loans for future enrollment unless they enroll in a longer program of study.
  • May lose interest subsidy for prior loans when they:
    • Received Direct subsidized loans for 150 percent of the length of a program of study; AND
    • Have not completed their programs; AND
    • Continue to be enrolled on at least a half-time basis in the same program, a different program of the same length, or a program of shorter duration.

For students who lose interest subsidy, interest on affected loans may begin to accrue in the same manner as interest on unsubsidized loans. Those prior loans do not become unsubsidized loans; they remain Direct subsidized loans but no longer qualify for interest subsidy.

Direct Unsubsidized Loan

Loan Direct Unsubsidized Loans enable students to borrow regardless of need. A Direct Unsubsidized Loan is not based on need. Interest will accrue on this loan while the student is enrolled and may be paid or capitalized as agreed by the borrower and the lender. If a student elects to pay the interest payments during school, the student can complete a Master Promissory Note (MPN) electing to pay. If a student elects to not pay the interest payments during school, the interest will be added or capitalized onto the principal balance at repayment, which means the interest will be added to your principle balance.

Here are some facts about Direct Unsubsidized Loans.

  • Financial need not required to receive this loan.
  • Interest begins to accrue once the first disbursement is made.
  • Payments on the principal may be deferred while students are enrolled at least half-time, during authorized periods of deferment and through the grace period. Students may choose to capitalize the interest (have it added to the principal). Capitalization increases the total cost of the loan.
  • Payments on total amount of loan start 6 months after student leaves, graduates from program, or drops below part-time (less than 6 hours).
  • Fixed interest rate not to exceed 6.8%.
  • 1.5% Loan Origination Fee does apply.
  • Amount offered is determined by dependency status.

Direct Plus Loans for Parents

The Direct Plus Loan for Parents allows parents of dependent students to borrow per year up to the cost of education less any other aid. The repayment period begins on the day the loan is disbursed, and the first installment to the Department of Education is due within 60 days of that date. This loan is not based on need.

The student must meet the eligible student definition according to Federal Regulations and Delgado Community College criterion; he/she must be meeting Satisfactory Academic Progress and enrolled at least half-time in credit hour courses.

The parent applying for the loan is responsible for repaying the loan. In this case, parent means your parent, adoptive parent, or step-parent.

A PLUS loan is available without regard to financial need and may include the full cost of education minus other forms of financial aid. The lender is required, however, to verify that the parent borrower does not have an adverse credit history.

Here are some facts about Direct Plus Loans for Parents.

  • Must be repaid.
  • Available only to parents of dependent undergraduate students.
  • Fixed interest rate of 7.9%, interest begins to accrue when the funds are disbursed.
  • 4% Loan Origination fee does apply.
  • Borrower has the option to start repayment 60 days after the loan is fully disbursed or 6 months after student leaves school, graduates from program, or drops below part-time (less than 6 hours).
  • Subject to a credit check.

Mandatory Exit Counseling

Each loan recipient is required by federal regulations to participate in an exit interview. Students should complete Exit Counseling online at StudentLoans.gov. Exit counseling must be completed each time a student:

  • Drops below 6 credit hours
  • Graduates
  • Leaves school