Financial Aid - Federal School Code: 006972

 Federal Student Loan


What is a Federal Student Loan?

How to Apply

Direct Loan Application Process

Types of Direct Loans for Students

Maximum Eligibility Period for Subsidized Loans

Federal Direct Loan Borrowing Limits

Butte College High Student Debt Load and Loan Limits

Interest Rates and Fees

Loan Delays, Cancellations, and Other Potential Problems

 

What is a Federal Student Loan?

A federal student loan is financial aid that must be paid back with interest. Butte College participates in the Federal Direct Loan Program. Direct loans are low-interest education loans for students and parents to help pay for college costs. The lender is the U.S. Department of Education, which assigns its loans to servicers throughout the country.

Repayment is necessary:

»when you graduate
»when you drop below 6 units a semester
»when you withdraw from all your classes

Student deferments are available for students who move directly into a bachelor's degree program after graduating from Butte College.

Two Annual Requirements of ALL Borrowers:

1. Entrance Counseling REQUIRED

Entrance Counseling is required of ALL borrowers at the beginning of each academic year and is completed as STEP 1 of the application process. Without Entrance Counseling, your loan will not be linked between the Department of Education and Butte College, and will not disburse. For additional information, see the federal publication, Entrance Counseling Guide for Direct Loan Borrowers, available in the publications display outside the Financial Aid Office on main campus.

2. Exit Counseling REQUIRED

Exit Counseling is required of ALL borrowers at the end of each academic year, when a student borrower drops below 6 units during a semester, or completes just one semester. Students who are graduating or transferring are also required to complete Exit Counseling. Exit Counseling is completed at https://studentloans.gov.  Additional information is available in the federal publication, Exit Counseling Guide for Direct Loan Borrowers, available here.


How to Apply

By filing the Free Application for Federal Student Aid, you may be eligible for a loan as part of your financial aid award. Most students and their families are eligible for some form of federal educational loan assistance. Submitting a FAFSA is the first step.

Loan Application Criteria

  • You must have received a Financial Aid Award Notification email for the current academic year, which indicates your financial aid file is complete and your eligibility for federal aid has been determined.

  • You must be enrolled in a degree-granting or eligible certificate program (Associate degree or Certificate of Achievement).

  • You must be registered in and actively attending a minimum of 6 units (at least half-time) per semester.

  • You must not be in default on any type of student loan

  • You must not owe a repayment on a federal student grant

  • You must meet Satisfactory Academic Progress (SAP) requirements. In order to maintain continued eligibility to borrow, you must also complete at least 6 units during each semester that you receive loan funds

Students who do not meet these eligibility requirements cannot apply for a student loan or will be subject to a delayed process. Please plan accordingly.


Direct Loan Application Process

Come in person to the Financial Aid Office to request a Butte College Direct Loan Request Form packet. Only students who have received a Financial Aid Award Notification email will be eligible for a loan request packet. Loan application packets are available solely at the Financial Aid Office or from a Financial Aid representative (see Contact Hours for FA rep hours at Chico Center and Glenn County Center). Loan forms are not online.

•Submit a completed packet with all requested information. Incomplete packets will not be accepted. Specific instructions are included in the packet.

•Last Day to Submit Direct Loan Request for 2014-2015: April 20, 2015

•Timeline for 2014-2015 Direct Loan Requests: Student must first receive their Award Notification email. First notifications will begin 2nd week in July, 2014.


Disbursement Timing

Federal regulations require loans to be released in at least two payments

Types of Direct Loans for Students

Subsidized Direct Loan is awarded on the basis of financial need. Unmet "need" is determined by subtracting the Expected Family Contribution (EFC) and all other forms of aid from the Cost of Attendance (COA), or budget. Interest is paid for you by the federal government while you are enrolled in school at least half-time and during periods of authorized deferment. The federal government "subsidizes" your loan, by paying the interest during these periods.

How Subsidized Loan Eligibility is Calculated

COA - EFC - all other aid (grants + scholarships + work-study) = Subsidized Loan eligibility up to annual limit (see annual limits below)

Unsubsidized Direct Loan is not awarded on the basis of need and is available to you regardless of income. Interest will be charged from the time the loan is disbursed until it is paid in full. You may choose to make periodic interest payments or opt to have the accrued interest capitalized (added on) to the principle loan amount.

How Unsubsidized Loan Eligibility is Calculated

COA - all other aid (grants + scholarships + work-study = Unsubsidized Loan eligibility up to annual limit (see annual limits below)


Maximum Eligibility Period for Subsidized Loans

1st-TIME BORROWERS ONLY: Per Department of Education regulations, the "maximum eligibility period" for subsidized loans may not extend beyond 150% of the published length of a student's Academic Program (Major), as officially described in the Butte College Catalog.

EXAMPLES of How "Maximum Eligibility Period" Works

♦  If you are enrolled in an Academic program for a 2-year Associate degree goal, the maximum period for which you can receive Subsidized Loans is 3 years (150% of 2 years = 3 years).

♦  If you are enrolled in a Certificate of Achievement goal with a published length of 1 year, the maximum period for which you can receive Subsidized Loans is 1½ years (150% of 1 = 1½ years).

Because the maximum eligibility period is based on your current Academic Program, your eligibility can change if you change programs. If you receive Subsidized Loans for one program and then change to another, the Subsidized Loans you received for the earlier program will count against your new maximum eligibility period.

THREE COMPONENTS OF CURRENT SUBSIDIZED LOAN ELIGIBILITY POLICY

  1. "Maximum Eligibility Period". 150% of the published length of the Academic Program (major) in which the student borrower is currently enrolled.
  2. "Subsidized Usage Period". Period of time for which a borrower received a Subsidized Loan.
  3. "Remaining Eligibility Period". Difference between the Maximum Eligibility Period and the total of all Subsidized Usage Periods.

LOSS OF ELIGIBILITY FOR ADDITIONAL SUBSIDIZED LOANS

After you have received Subsidized Loans for your Maximum Eligibility Period, you are no longer eligible to receive Subsidized Loans. You may receive Unsubsidized Loans.

LOSS OF INTEREST SUBSIDY: Responsibility for Paying Interest on Subsidized Loans

If you continue to be enrolled in any undergraduate program after you have reached your maximum eligibility period for Subsidized Loans, the Department of Education will no longer pay the interest that accrues on your Subsidized Loans. After meeting the 150% ceiling, you become responsible for the interest that accrues on all your Subsidized Loans from the date of your enrollment. Your loan servicer will notify you if you become responsible for paying the interest.

REGAINING ELIGIBILITY FOR SUBSIDIZED LOANS

A student may again be eligible to receive Subsidized Loans if enrolled in a new program that is longer than the previous one. In this case, the Department of Education will pay the interest that accrues on any new loans within eligible pay periods.

EXAMPLE 1: A student who borrows for 3 years to complete a 2-year Associate's degree in 3 years has reached their maximum eligibility period for Subsidized Loan (2 x 150% = 3) and would not be able to receive any additional Subsidized Loan if they enrolled in another associate degree or in a certificate program.

EXAMPLE 2: A student who transfers into a 4-year Bachelor's degree program, however, would still have 3 years of remaining eligibility for Subsidized Loans. 150% of a 4-year program is 6 years. The student has already used 3 years of their Subsidized Loan eligibility; they have 3 years remaining.


Federal Direct Loan Borrowing Limits  

Your grade level affects how much you can borrow. The annual maximum subsidized amount for a student with up to 29 units is $3,500. The annual maximum subsidized loan for a student with 30 or more units is $4,500. See the table below for grade level definitions.

2014-2015 ANNUAL Federal Direct Loan Limits

Dependent Student  Subsidized Unsubsidized Total
1st year  (up to 29 units completed) up to $3,500 up to $2,000 $5,500
2nd year (30+ units completed) up to $4,500 up to $2,000 $6,500
Independent Student * Subsidized Unsubsidized Total
1st year (up to 29 units completed) $3,500 up to $6,000 $9,500
2nd year (30+ units completed) $4,500 up to $6,000 $10,500

*You are an Independent student if you were not required to provide parental information when completing the FAFSA. Dependents whose parents are unable to borrow under the PLUS program will be treated as Independent for loan purposes.

Combined Federal Undergraduate Loan Limits*

  Subsidized Subsidized & Unsubsidized
Dependent Student  $23,000 $31,000
Independent Student $23,000 $57,500

Butte College High Student Debt Load and Loan Limits

Student loan debt is an issue for individuals and well as a national concern. The federal government has set a maximum amount that undergraduates may borrow. Since "undergraduate" includes all course work through a Bachelor's degree, it is important not to "over-borrow" at the community college level.

*High-Risk Borrower Delay. A student whose Satisfactory Academic Progress (SAP) status is Warning, Probation Approved, Excess Units, or who has reached what Butte College considers a high debt load for a two-year institution, will be subject to a delayed review process. Requested loan amounts may be reduced or denied. Please plan accordingly for a delayed loan review

High Debt Load Management. For a student enrolled at Butte College, pursuing an Associate degree or Certificate of Achievement, the college considers the following amount totals to be excessive debt load for a student attending community college:

Dependent Students Debt load of $15,500 in all loans (including all prior loans)
Independent Students Debt load of $25,000 in all loans (including all prior loans)

Students who have reached these debt loads are considered High-Risk Borrowers and are subject to delay, reduction or denial of their loan request.

Be money smart. Review your aggregate loan totals online at www.nslds.ed.gov. Sign in with your federal PIN number. If you borrow the annual maximum every year, you may reach the aggregate limit before you have completed your educational goal. Be aware that NSLDS may not yet include your most recent loan, so keep an accurate track of your loans. Loans must be repaid.


Interest Rates and Fees

Interest rates and fees are adjusted by Congress and begin July 1 for each academic year.As per changes authorized by the Bipartisan Student Loan Certainty Act of 2013, the Direct Loan interest rate will be the sum of a uniform "index rate" plus an "add-on" that varies depending on the type of loan and the borrower's grade level. The interest rate for a loan, once established, will apply for the life of the loan -- that is, the loan is a fixed-rate loan. As a result, student borrowers who borrow in more than one award year, will likely have a number of fixed-rate loans, each with a different interest rate. Loans borrowed in the academic year 2013-2014 had a 3.86% interest rate for Subsidized and a 3.86 % interest rate for Unsubsidized.

Interest. Loans must be repaid in full. In addition to the principal (the amount you borrow), interest accumulates on the loan as an expense paid by the borrower for the use of the money. The expense is calculated as a percentage of the unpaid principal amount. 

 DIRECT STUDENT LOAN INTEREST RATES

Subsidized Loans disbursed on or after July 1, 2014 and before July 1, 2015

4.66%     

Unsubsidized loans disbursed on or after July 1, 2014 and before July 1, 2015

4.66%

Fees. All loans have loan fees (also called origination fees) that are deducted proportionately from each loan disbursement you receive. This means that the money you receive will be less than the amount you actually borrow. You are responsible for repaying the entire amount.

An origination fee will be automatically deducted before disbursement.

•For loans disbursed before Oct. 1, 2014, the fee is 1.072% of the loan.

•For loans disbursed on or after Oct. 1, 2014, and before Oct. 1, 2015, the fee is 1.073%.


Loan Delays, Cancellations, and Other Potential Problems

What kinds of problems could cause my loan to be delayed or cancelled?

 

First-year Students Who Are First-Time Borrowers
First-year freshmen with no prior Federal Direct Loan are required by law to complete 30 days of their first semester of enrollment before receiving their first loan disbursement.


Default Status
Students who are in default on a student loan or owe a repayment for any Title IV financial aid program are not eligible to receive federal student aid and may not apply for student loans.
Default is the result of failure to repay a loan on time, or in accordance with the terms and conditions of the promissory note. Most student loans go into default after six months of delinquent payments. The penalties for defaulting may include loss of financial aid eligibility, reporting to credit bureaus, withholding of tax refunds, garnishing of wages, and the loss of monthly payment options. The entire loan balance becomes due and payable immediately.


Non-Degree Status
Students must be enrolled at Butte College in an eligible degree or certificate program to be eligible to apply for financial aid, including student loans.


Enrolled less than half-time (6 units)
Students must be enrolled in and attending Butte College at least half-time (6 units) for the entire loan term. Open Entry/Open Exit and late-starting courses must be added by freeze dates to count toward loan eligibility.


Lack of Satisfactory Academic Progress
•Students failing to meet required standards of Satisfactory Academic Progress are not eligible to receive financial aid including loans.
• Loans for students on Financial Aid Probation or approved Excess Units Petitions may be delayed or denied until their Satisfactory Academic Progress status is confirmed.
• Students who have been disqualified due to lack of Satisfactory Academic Progress must be reinstated before they can apply for a loan, and may be subject to reduction or cancellation of loans.
At-Risk Status for Loans. Students must complete at least six (6) payable units with a "C" or better in the fall semester to be eligible for the spring portion of their loan. Spring-only loans may not be approved for students who were enrolled in fall and did not complete six (6) payable units.


Incarcerated Students
Incarcerated students are not eligible for Direct Loans.
-A student is considered to be incarcerated if serving a criminal sentence in a federal, state, or local penitentiary, prison, jail, reformatory, work farm, or similar correctional institution (whether it is operated by the government or a contractor).
-A student is not considered to be incarcerated if in a half-way house or home detention or is sentenced to serve only weekends.