- What are Direct Loans?
- How do I apply for a Direct Stafford Loan?
- How much money should I request?
- How do I get my money?
- What else do I need to know?
- I’m no longer attending 6 credit hours because I’ve dropped or graduated. Now what??
- What if I have trouble making my payments?
- What other types of loans are available?
- How can I find out who I owe and how much I owe on all of my loans?
1. What are Direct Loans?
Due to regulation changes, Stafford loans approved after July 1, 2010 come under the Direct Loan program. With Direct Loan, the US Department of Education is the lender, not a bank. There are two types of Stafford Loans: subsidized and unsubsidized (neither requires a credit check). Both types demand that students are enrolled in at least six credit hours and making satisfactory academic progress in a degree or certificate program. Subsidized Stafford Loans setup after July 1, 2012 have an interest rate of 6.8% and are for students whose FAFSA results show financial need. No interest is charged while the student is enrolled in at least 6 credit hours. Unsubsidized Stafford Loans have an interest rate of 6.8% and are for students who meet eligibility requirements but do not qualify, at least in part, for a subsidized loan. They are not based on financial need and interest on the loan accumulates regardless of the circumstances.
2. How do I apply for a Direct Stafford Loan?
All of these steps must be completed before we will process a loan:
- Complete your financial aid file, including the FAFSA and all requested paperwork
- Complete an OC Stafford Loan Request Form and return it to our office
- Make sure that your current major and correct address are on record in the Registrar’s Office
- Make sure that all transcripts from all other colleges attended are on file and evaluated for transfer credit by the Registrar’s Office
- Complete both a Master Promissory Note (MPN) and Entrance Counseling at www.studentloans.gov You will need your FAFSA PIN.
3. How much money should I request?
Student loans should be considered only after exhausting all other aid sources. Loans are serious financial obligations that must be repaid with interest. Loans are to be used only to pay for direct college expenses such as tuition and fees, books and supplies, and dorm charges; or indirect expenses incurred as a result of attending college such as increased child care or transportation costs. “Applying for Direct Loans” at http://direct.ed.gov/applying.html has both a budget calculator and repayment calculator to help you determine your expenses and monthly loan payments. Keep in mind that there is an upfront origination fee of 1.0% that is withheld from your loan award.
Your grade level in your current program of study, your dependency status, and cost of attendance determine the maximum amounts you can borrow in an academic year (not to exceed the cost of attendance). Your dependency status is determined by information provided on your FAFSA. Your grade level in your program of study is determined according to the scale below.
Year in School
|# of Hours Being Transferred Or Earned in Current Major
Independent students may borrow the maximum in both subsidized and unsubsidized money as long as the cost of attendance is not exceeded. For example, an independent second year student may borrow up to $10,500 (if the cost of attendance is not exceeded). Dependent students are unable to get loan increases without first applying for and being denied a Parent Plus loan. Due to regulatory restraints we may not be able to certify your entire requested amount and we can never certify a loan for more than you request.
4. How do I get my money?
All loans will be divided into two disbursements per semester, one be at the beginning and another at the mid-point of the semester (mid-October for Fall & mid-March for Spring, Summer dates vary depending on enrollment). Students who are both first time borrowers and new in their major may not receive loan funds until 30 days after the first class day. You will receive a disclosure statement listing your loan amounts, fees deducted, interest rates and disbursement dates. We will disburse your loan by crediting your school account to pay tuition and fees, dorm charges and other authorized charges. Any remaining funds will be placed on the OC Wrangler ID card, which acts as a debit card, within 14 days. Contact the Cashier’s Office at 432-335-6419 for more details.
5. What else do I need to know?
Notify both OC and Direct Loan Servicing Center:
- If you change your name, address or phone number
- If you change schools
- If you stop attending or drop below 6 credit hours at the school that certified the loan
- If you graduate.
6. I’m no longer attending 6 credit hours because I’ve dropped or graduated. Now what?
You are required to do exit counseling from the studentloans.gov website. You will receive a 6 month grace period from the date you stopped attending and then begin repayment of your loans. You will typically have from 10 to 25 years to repay your loan depending on the repayment plan that you choose. The Direct Loan Servicing Center will notify you of the date your first payment is due and give you the option to set up an automatic draft which reduces your interest rate by .25%.
7. What if I have trouble making my payments?
Don’t stop making your payments and contact the Direct Loan Servicing Center right away. They can help you change your repayment plan, get a deferment or set up a period of forbearance. For more information about any of these options, check out the Department of Education Direct Loans site for students. If you quit making payments and default on the loan you could face:
- Being sued for the unpaid balance, court costs and attorney’s fees
- Having your wages and/or your tax refunds garnished
- Charged for collection fees
- Being denied a professional license
- Being denied other federal aid
- Having your credit score lowered which could impact buying a home or car
- Losing all of the loan repayment benefits and having the entire loan note called
8. What other types of loans are available?
The federal parent loan, called PLUS, is for available for parents or step-parents of dependent students to cover school costs, less any other aid. Applicants must have satisfactory credit and complete an OC PLUS Loan Request Form. The interest rate is variable. Parents may choose to start repaying the loan 60 days after the date of the last disbursement or they can defer payments until six months after the student ceases to be enrolled at least half-time. In addition, the interest that accrues can either be paid by the parent monthly, quarterly, or be capitalized quarterly. A complete financial aid file including, but not limited to, the submission of a completed FAFSA is required by the student. The parent must complete the OC PLUS loan request form and the MPN at www.studentloans.gov . The parent signs the MPN with the Department of Education PIN used on the FAFSA. The entrance counseling and the 30 day delay of the Stafford do not apply to the PLUS. Additional Unsubsidized loans may be awarded to independent students or to dependant students whose parents were denied a PLUS loan.
Students and their families may also apply for a loan through a private lender of their choice. A credit check is required and some lenders ask the school to approve the loan amount and set the disbursement dates. We recommend that students explore Stafford loans and the FACTS payment plan first as interest rates and repayment options are usually better, but private loans can be used to pay for non-school expenses or delinquent balances owed to the college.
9. How can I find out who I owe and how much I owe on all of my loans?
Go to the National Student Loan Data System website to see the status of all of your federal loans. You will need your FAFSA pin number to login.
OC Student Financial Services adheres to the National Association of Student Financial Aid Administrators ethical principles and code of conduct.