Student Loans

How to get started with the 2014-2015 loan process

The 2014-2015 loan requirements and process will begin as of July 1, 2014. Any requirements received earlier than July 1, 2014 will not be accepted and delay the process.

As with all federal student aid, you apply for Direct Loans by first filling out the FAFSA. The information on your FAFSA is sent to Sacramento City College, where your financial aid eligibility will be assessed.

Loan Application Deadlines:

Fall 2014             November 6, 2014
Spring 2015       April 9, 2015
Summer 2015    July 9, 2015

Complete all the below loan counseling and MPN requirements beginning July 1, 2014:

  1. Sign in and complete “Direct Loan Entrance Counseling” at www.studentloans.gov
  2. Sign in and sign the 2014 – 2015 “Master Promissory Note” (MPN) at http://www.studentloans.gov/

NOTE:   Allow 1 week for posting of your completion dates.   View your dates on “My City Aid” Message Tab under “Loan Status Dates.”

Once your Financial Aid file has been reviewed, you will receive an email Award Notification. Students who meet all of the below criteria will have the Online Loan Application available for completion at My City Aid, click the “Apply Online” tab:

a.  Meet Step One loan completion requirements
b.  Received an 2014-2015 Financial Aid Award Notification
c.  Meeting the 2014-2015 SCC Financial Aid Satisfactory Academic Progress Policy (SAP)
d.  Enrolled in 6 eligible units beginning with the Fall 2014 term

  • Financial Aid will review your Online Loan Application based on your eligibility and amounts requested. The loan certification process may take up to 6 weeks from your loan application submission date.
  • You may view the weekly loan submission date the office is currently processing on the SCC Financial Aid Homepage under the News “Financial Aid Update.”
  • After the loan certification, students will receive an updated email loan award notification to view their loan award amounts and types on My City Aid with information on the “Disbursement Timeline” and cancellation options.

Facts about Federal Student Loans

Borrower's Rights and Responsibilities

When you accept a loan, you accept legal responsibilities that last until the loan is repaid.

You agree to:

  1. Repay your loan(s), including accrued interest and fees, whether or not you complete your education, complete the program within the regular time frame, obtain employment or are satisfied with your education;
  2. Attend exit counseling before you leave school or drop below half-time enrollment;
  3. Notify the current holder of your loan within 10 days if you change your name, address or phone number, drop below half-time status, withdraw from school or transfer or change your graduation date;
  4. Direct all correspondence to the current holder or servicer of your loan;
  5. Make monthly payments on your loan after leaving school, unless you’re granted a deferment or forbearance; and
  6. Notify the current holder of your loan of anything that might change your eligibility for an existing deferment.

As a student borrower, you have the right to:

  1. Receive a copy of your promissory note either before or at the time the loan is made;
  2. Receive a disclosure statement before repayment on your loan begins, including information about interest rates, fees, loan balance and the size and number of payments;
  3. A grace period after you leave school or drop below half-time enrollment and before your loan payments begin (if applicable);
  4. Prepay all or part of your loans without a repayment penalty;
  5. Receive written notice if your loan is sold to a new holder;
  6. Apply for deferment for your loan payments for certain specified periods, as long as you are eligible;
  7. Request forbearance from the holder of your loan if unable to make payments and don’t qualify for deferment (you must qualify according to the loan holder’s requirements); and
  8. Receive proof when your loan is paid in full.

Loan Qualifications

To qualify for a student loan, students must:

  1. Submit a Free Application for Federal Student Aid (FAFSA)
  2. Be determined eligible for financial aid by your college
  3. Have a high school diploma or its equivalenta. (GED), or
    b. Complete a high school education in a state approved home-school setting, or
    c. Pass the “Ability to Benefit” test, or
    d. Complete 6 degree applicable units
  4. Be a U.S. citizen or eligible non-citizen
  5. Enroll in an eligible degree or certificate program
  6. Maintain the SCC Financial Aid Satisfactory Academic Progress Policy
  7. Have a Social Security Number
  8. Register with the U.S. Selective Service (for males age 18 to 25)

Loan Types

Subsidized Loans:

The federal government pays the interest on the subsidized loan while you are in school at half-time enrollment, during the six-month grace period, or are in an approved deferment. You are not required to make loan payments until your 6-month grace period ends.

Subsidized loan eligibility is based on “financial need”. You can determine your financial need by taking the college’s cost of attendance (COA) minus your expected family contribution (EFC). The information you report on your Free Application for Federal Student Aid (FAFSA) is used to calculate your EFC.

The Expected Family Contribution (EFC) is a measure of your family’s financial strength and is calculated in a formula established by law. Your family’s taxed and untaxed income, assets, and benefits (such as unemployment or Social Security) are all considered in the formula. Also considered are your family size and the number of family members who will attend college or career school during the year.

Unsubsidized Loans:

You, not the government, are responsible for the interest on the unsubsidized loan. The interest never stops on an unsubsidized loan until the loan has been paid in full.

You can delay interest “payments” while in school at least half-time enrollment or have an approved deferment or forbearance by your loan servicer. If you do not make interest payments while in school, the interest will accrue and be added to the amount you borrowed when your loan enters into repayment. This is called capitalization.

Example of how your interest is Capitalized
You borrow $10,000 in unsubsidized loan over a period of four years. You choose to defer paying the interest while you are in school for four years plus the six-month grace period. The interest you did not pay is known as accrued interest. After four and a half years, about $2,040 in interest will have accrued at a fixed rate of 6.8%. When you begin repayment, you’ll owe $12,040 (the original $10,000 PLUS the $2,040 in accrued interest). The interest you will repay will be based on this new higher amount. The process of adding interest to the amount borrowed rather than repaying it as it accrues is called “capitalization”.

Loan Limits

Loans are borrowed money you must PAY BACK to the federal government. Be smart, borrow what you can afford to repay. Failure to make payments and defaulting on your student loan can be the most damaging mark on your credit report, worse than bankruptcy.

  1. You cannot discharge a student loan in bankruptcy. You can file bankruptcy but not get rid of a student loan in bankruptcy court. You will be required to repay your student loan.
  2. Loans can build credit if you have no credit
  3. Loans can rebuild credit if you have bad credit by making your payments
  4. BUT loans can ruin your credit if you failed to make your payments

Students attending a 2-year community college may borrow up to “Second Year” annual loan limits.

Annual (single year) and Lifetime Aggregate (maximum overall for undergraduate) Loan Limits a student may borrow up to:

YearDependentIndependent
First Year
(0 to 29.9 units)
$5,500No more than $3,500 of this amount may be in subsidized loans.$9,500No more than $3,500 of this amount may be in subsidized loans.
Second Year
(30 or more units)
$6,500No more than $4,500 of this amount may be in subsidized loans.$10,500No more than $4,500 of this amount may be in subsidized loans.
Lifetime Limits$31,000No more than $23,000 of this amount may be in subsidized loans.$57,500No more than $23,000 of this amount may be in subsidized loans.

The annual loan limit amounts are the maximum yearly amounts you can borrow in both subsidized and unsubsidized loans. You can have one ype or a combination of both. You cannot borrow more than your cost of attendance minus any other financial aid you have been awarded.

Fees and Interest

Fees

A 1 percent fee will be deducted from each loan disbursement. This fee is charged and kept by the Department of Education.

Interest Rates

Subsidized Loan Interest Rate

The interest rate for new Subsidized loans for undergraduate study disbursed between July 1, 2014 and June 30, 2015 will be fixed at 4.66 percent. The federal government pays the interest while you are in college and during the first six months after you drop below half-time enrollment.

Unsubsidized Loan Interest Rate

Unsubsidized loans have a fixed 4.66 percent rate for the life of the loan.

 

Loan Award Notification

SCC Award Notification

After the loan certification has been completed, students will receive an updated email loan award notification to view their loan award amounts and types on My City Aid with information on the disbursement timeline and cancellation options.

Loan Disclosure Statement

When your loan award is sent for funding, the Department of Education will send a loan disclosure statement with your fees, gross award, estimated disbursement dates and more. See the link for example.

How Will My Loans Be Disbursed

You’ll be paid in at least two installments. No disbursement can exceed one half of your loan award(s).

One semester attendance:

Loans will be disbursed in 2 payments. The first payment will be disbursed after the loan has been certified. The second disbursement will be funded at the midway point of the semester (student must still be eligible).

Fall and Spring attendance:

Loans will be disbursed in 2 payments. The first payment will be disbursed after the loan has been certified. The second payment will be funded when the spring semester begins (student must still be eligible).

PLEASE NOTE: If you’re a first year undergraduate student and a first-time borrower, your school cannot disburse the first payment until 30 days after the first day of your enrollment period.

 

Repayment and Grace Period

Repayment Begins

Repayment on your loans begins when your loan’s 6-month grace period has expired. Generally, you have 10 years to repay your loans.

Grace Period

When you drop below half-time enrollment, you have a period of time before your loan enters into repayment, called “Grace Period“. A loan’s grace period lasts for 6 months.

  • If you fail to begin classes at half-time enrollment before the 6 month grace period expires, your loan will enter into repayment status. During this period, you’ll receive repayment information from your loan servicer and you will be notified of your first payment due date.
  • If you should attend classes at half-time enrollment after you entered into repayment, you can request a deferment from your loan servicer to postpone payments. The next time you drop below half-time enrollment, you must begin making payments within 30 days. You are not eligible for another 6 month grace period.
  • If you begin classes again at half-time enrollment before the 6 month grace period expires, your loan will not enter into repayment. In addition, your grace period will renew to a 6-month time period the next time you drop below half-time enrollment again. Think of the grace period as recycling itself.

Repayment Options

Visit the Department of Education’s website for your options of repayment plans and calculators to determine your interest rate and loan payment amounts. You also have the option to change repayment plans once each year by contacting the Direct Loan Servicing Center.

Standard Repayment:

The standard plan allows you to pay the same amount each month, with up to 10 years to repay. Your monthly payment must be at least $50.

Graduated Repayment:

Your payments start out low (as little as interest only) and gradually increase over time, with up to 10 years to repay.

Extended Repayment:

This plan is for outstanding student loan debt greater than $30,000. Payments can be fixed or may gradually increase over time, with up to 25 years to repay.

Income-Based Repayment (effective July 1, 2009):

Income Based Repayment (IBR) is a new repayment plan. Under IBR, the required monthly payment is capped at an amount that is intended to be affordable based on income and family size.

Income Contingent Repayment (ICR) (Direct Loans Only):

Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse’s income if you’re married), family size, and the total amount of your Direct Loans.

Below is an example of a 10-Year repayment Chart with loan payment amounts and interest rates

 

 

Missed a Payment - Don't Default

Deferments and forbearances allow you to temporarily stop making payments on your loan.

Let the Direct Loan Servicing Center know if you can’t make your payments. If you meet certain requirements, you may receive a deferment or forbearance that allows you to temporarily stop making, reduce, or extend payments on your loan. Do not delay this request for help. If you fall behind on your payments, your delinquency will likely be reported to a national credit reporting.

Deferments

Interest stops on a subsidized loan while in deferment. Deferments are not automatic, you must request for an approval. There are many types of deferments so be sure to ask. Below are the three most common deferments:

  1. Unemployment (6-month period with a maximum of 3 years)
  2. Economic Hardship (12-month period with a maximum of 3 periods)
  3. Returning to school at least half-time enrollment (unlimited)
  4. Be on active duty (including National Guard duty) during war, national emergency or military operation

Forbearances

Interest is still charged on a subsidized loan while in forbearance. If you do not qualify for a deferment but are having a hard time repaying your student loan, you may be eligible for a forbearance. Forbearance is allowed at the discretion of the lender.

Some common reasons for forbearances are:

  1. Poor health
  2. A rigorous residency program, or
  3. Financial hardship

Forbearance often results in an extended repayment period

Don’t default. If you don’t repay your loan, you’ll face serious consequences.

Student loans can ruin your credit if you are not smart

  • You will lose the privilege of making monthly payments; the entire amount of your loan will become due
  • You will no longer be eligible to receive additional federal financial aid (grants and/or loans)
  • A portion of your paychecks or tax refunds can be taken to pay back your loan
  • You can be hit with collection costs
  • You may not be eligible for certain jobs, as some employers check credit
  • You will damage your credit rating, making it harder and more expensive to borrow money in the future
  • You may lose your professional license

 

National Student Loan Data System (NSLDS)

Access your Loan (and Grant) Information at www.nslds.ed.gov with your FAFSA pin.

What you will find at NSLDS

  • Loan servicer contact information
  • Account number(s)
  • Current balance(s)
  • Loan status
  • Loan types
  • Loan periods
  • Interest rate
  • Deferment, forbearance and repayment periods
  • School name and contact information
  • Grant history and remaining eligibility

You may also call the Federal Student Aid Information Center at 1-800-4-FED-AID (1800-433-3243; TTY 1-800-730-8913) to find out the loan servicer of your loan.

Ombudsman

An ombudsman resolves disputes from a neutral, independent viewpoint. The Federal Student Aid (FSA) Ombudsman will informally conduct impartial fact-finding about your complaints. They will recommend solutions, but they don’t have the authority to reverse decisions.

Private Loans

SCC Private Loan Process

SCC Financial Aid students have the option of applying for a Private Loan if they have received the following notifications from the Financial Aid Office: Award Notice, Denied Final Notice, SAP Denied Notice or a No Need Notice. SCC does not advise or promote Private Loans or Lenders. It is the student’s responsibility to research and determine what lender they will select. Some of the Lenders students have selected are:

•          Sallie Mae

•          Wells Fargo

 

PRIVATE LOAN REQUIREMENTS

SCC provides private student loan certification services for students meeting the following requirements:

1.       All students must complete a FAFSA application with SCC at http://www.fafsa.ed.gov/ ; and

2.       All students must have an SCC eligible educational goal and major; and

3.       All student must be enrolled (in session) at least halftime in eligible units (Fall/Spring with 6 units; Summer with 3 units)

4.       Students enrolled in less than 6 SCC units but enrolled within The Los Rios Community College District for a minimum of six eligible units combined, must submit a consortium request form for consideration to meet the six-unit requirement.

Please Note: In certain cases, a student who is eligible to receive direct student loan(s) may opt to have a private loan instead and will need to make an appointment to meet with a Financial Aid Staff.  The Financial Aid Staff will discuss available options and the completion of an award adjustment form to decline federal/state financial aid.

PRIVATE LOAN PROCESSING DATE ORDER

Private loans are given the following processing date order of the later of:

A.      Private loan application receipt date; OR

B.      The latest date you have met all the private loan requirements.

CHECK YOUR PRIVATE LOAN STATUS

View your private loan dates under the “My City Aid” Message Tab and the processing date the office is working on under the SCC Financial Aid webpage “Financial Aid Update.”