Federal Direct Loan

Federal Student Loans - Basic for Students

What types of Federal Direct Student loans are available?

Los Angeles Trade Technical College started offering the Federal Direct loan programs since fall of 2010. The student loan programs are available to students whose financial aid awards are insufficient to cover the cost of their educational expenses. Unlike grants, work-study or scholarships, a loan must be repaid with interest by the student borrower to the lender of the loan. Students who plan to transfer are advised to consider borrowing student loans after they transfer to a four-year university if possible.

Federal Direct Loans (subsidized and unsubsidized) are loans borrowed directly from the federal government which serves as the lender.  The student’s annual borrowing limit may vary based upon the following:

  • The amount of unmet need after other financial assistance has been considered;
  • The applicant’s grade level in their academic program;
  • The applicant’s current level of indebtedness;
  • The applicant’s academic progress;
  • The applicant’s previous delinquent or defaulted loan history.

What is the difference between a subsidized and an unsubsidized loan?

 

Federal Direct Loans (subsidized)

Students must complete the FAFSA and demonstrate financial need according to the federal formula in order to be eligible for subsidized direct loans. These loans are processed through the U.S. Department of Education. Under this program, the federal government will pay the interest on behalf of qualified borrowers for as long as the borrower is enrolled at least half-time in a degree-seeking program.

Effective July 1, 2013, eligibility for subsidized Direct loans is limited to 150% of a student’s program.  For example, if you are pursuing an associate degree (2-year program) your eligibility for a subsidized loan will be limited to three (3) years.  Students must also maintain satisfactory academic progress towards completing their degree requirements.

Information regarding annual and aggregate loan limits may be found at www.studentloans.gov.

Fees may be charged by the U.S. Department of Education and deducted from each loan disbursement.  Interest may be charged during the 6-month grace period, after a student drops below half-time, completes their educational program, or withdraws from college.

Interest rates are set by the U.S. Department of Education and are fixed rates for the term of the loan.

 

Federal Direct Loans (unsubsidized)

Eligibility for the Unsubsidized Direct Loan is not based on a family’s demonstrated need. The U.S. Department of Education is the lender under this program. The government does not pay the interest on behalf of borrowers under the Unsubsidized Direct Loan Program. The student borrower can choose either to make periodic payments of the interest or to have the interest added back into the principal of each loan.

Fees may be charged by the U.S. Department of Education and deducted from each loan disbursement.

Interest rates are set by the U.S. Department of Education and are fixed rates for the term of the loan.

Federal Parent (PLUS) Loans

What is a PLUS Loan?

A creditworthy parent of a dependent undergraduate can apply for Federal PLUS loan. Federal PLUS loans are not based on demonstrated need and may be used to replace all or portions of the calculated family contribution for students who completed a FAFSA.

Not all colleges participate in PLUS loans.

Contact the Financial Aid Office to learn about loan programs that are offered at your specific college and for details about interest rates, fees, repayment terms, etc.

 

Master Promissory Note

Before you receive a Federal Direct Loan, you will need to sign a Master Promissory Note (MPN) which is your legally binding promise to repay the loan funds you receive.  The college will not disburse your Federal Direct Loan until your MPN has been signed/e-signed and approved by the U.S. Department of Education. Students can complete their Master Promissory Note (MPN) online at www.studentloans.gov. Students only need to sign/e-sign one Direct Loan MPN while attending college.

 

Mandatory Loan Counseling

ENTRANCE LOAN COUNSELING FOR FIRST-TIME BORROWERS

All first-time Federal Direct borrowers must complete loan entrance counseling, even if they have borrowed at a previous institution. Entrance counseling for direct loans can be completed online at www.studentloans.gov

 

EXIT LOAN COUNSELING

All borrowers of Federal Direct Loan funds are required to have an exit interview during their final semester, if their enrollment status drops below half-time, or if they withdraw from the college.  Students will be notified when Exit Loan Counseling needs to be completed.

 

Contact information for the FSA Student Loan Ombudsman

Effective February 28, 2016, please use the following information to contact the FSA Student Loan Ombudsman Group.

Via on-line assistance: https://studentaid.gov/repay-loans/disputes/prepare

Via telephone: 877-557-2575
Via fax: 606-396-4821
Via mail: FSA Ombudsman Group
P.O. Box 1843
Monticello, KY 42633

 

NSLDS Disclosure

Please note that any loan borrowed by the student or parent will be submitted to the National Student Loan Database System (NSLDS), and will be accessible by guaranty agencies, lenders, and schools determined to be authorized users of the data system.

NOTE

Repayment Information

Applying for Federal Direct Loans is available only for those students whose financial aid applications have been processed and they have received their award letter at Los Angeles Trade Technical College.  Students must be enrolled at least half-time or six (6) eligible units within the Los Angeles Community College District to apply for a loan (at least one of the eligible units must be at Los Angeles Trade Technical College).