Types of Loans

• Direct Subsidized Loans

Provides low interest rates and are available to students who demonstrate financial need as determined by the information provided on the Free Application for Federal Student Aid (FAFSA). The Federal government pays the accruing interest on the loan while the student is attending school at least half time or during deferment.

Provide low interest rates and are available to all students regardless of financial need. The student’s interest begins to accrue from the date the loan is disbursed, and payment is delayed if the student has an in -school, grace or deferment status. If the accruing interest is not paid, it will be added to the principal amount of the loan and increase the repayment amount. Students have the option of paying interest as it accrues, reducing the total cost of the loan.

Effective 2013-2014, Southwestern College has been approved by the US Department of Education to participate in an experimental initiative to reduce over -borrowing and risk of loan default. This allows us to eliminate Unsubsidized Loan eligibility for certain groups of students. This decision is final and cannot be appealed to the US Department of Education.

• 1st Year, California resident students – 1st year is defined as students who have completed less than 30 units in their current program of study, of which 24 units must be degree applicable.
• Students with aggregate loan debt of $12,500 or more – Students who have borrowed subsidized and unsubsidized loans with a combined total of $12,500 or more (includes loans from all schools attended).
• Students with an approved Satisfactory Academic Progress (SAP) appeal – Students who were SAP disqualified, and then were approved for financial aid on approved appeal.

Federal Loan Limits

Annual maximum loan limits are dependent upon financial aid eligibility, dependency status and grade level (including transfer units).A student’s status as a dependent or independent is determined by information provided by the student to the US Department ofEducation on the FAFSA. Students who have no need (no financial aid need) and who do not qualify for the subsidized Loan maybe eligible for the unsubsidized Loan. See Annual and Aggregate Loan Limits below. Dependent students whose FAFSA is rejectedbecause they did not include parent information may be allowed to borrow up to $2,000 for the academic year from unsubsidizedloan only. This is assuming the student is actually eligible to borrow unsubsidized loan (see Direct unsubsidized Loans above).

The minimum loan that Southwestern College will certify is $100. Students with less than $100 of eligibility will not receive a loan.

*Grade level is based on units either earned at Southwestern College or already transferred and accepted to SouthwesternCollege. Students for whom our records show less than 30 units earned at Southwestern College or already transferred toSouthwestern College will be considered Grade level 1 for loan purposes. Units taken at other colleges previously and not yettransferred to Southwestern College will not be considered

Subsidized Direct Loan Lifetime Eligibility.

Effective , students who are considered new borrowers (students who have never borrowed a subsidized loan and those who previously borrowed and repaid a subsidized loan) will have a lifetime limit on subsidized loan eligibility of 150% of their . The https://getbadcreditloan.com/payday-loans-mo/richmond/ 150% limit is calculated using the required timeframe for each student’s ple, a student enrolled in a two year Associate’s degree program will be limited to three years of subsidized loan eligibility. Once a student reaches the 150% limit, there is no further eligibility for subsidized loans at a two year school. Students who transfer to a community college from a four year university and who have already borrowed three years (or more) of subsidized loans prior to transfer have reached the 150% limit and will not be eligible for additional subsidized loans.

Interest Rates

Under the new interest rate structure, all Direct Loans will be variable-fixed, meaning students would receive a new rate with each new loan, but then that rate is to be fixed for the life of the loan. There are also interest rate caps at 8.25% for Direct Subsidized Loans and Direct Unsubsidized Loans for undergraduate students.

The chart below shows the interest rates for Subsidized and Unsubsidized loan programs. Both types of loans have the same repayment terms and interest rates are fixed rates for the life of the loan.

Borrowers are required to pay an origination and insurance fee. These fees are deducted from the proceeds of the loan. For 2021-22 loans disbursed before , the origination fee is 1.057%. For loans disbursed on or after , the origination fee is 1.057% (no change this year). If your loan is certified prior to the October fee change date, but cannot be disbursed prior to October 1 (ex. missing promissory note, Entrance Counseling not complete, etc.), then your loan will be cancelled and reinstated with the new fees (not applicable this year due to no fee change).