Student Loan Information

 

What Is a Student Loan?
A student loan is money you can borrow for educational purposes that must be paid back with interest. The specific sum of money you borrow is called the principal. Interest is a percentage of the principal paid as a fee for borrowing. Repayment is usually made in monthly installments. Repayment is necessary when you graduate, drop below 6 units a semester, or withdraw from all your classes. Deferments are available for students who move directly into a bachelor’s degree program after graduating from Butte College.

By filing the Free Application for Federal Student Aid (FAFSA), loans may be included as part of your financial aid award. Most students and their families are eligible for some form of federal educational loan assistance. We highly recommend that you file a FAFSA, regardless of income.

 

Direct Loans
In 2010-2011, Butte College began participation in the Federal Direct Loan Programs. Direct Loans are low-interest loans for students and parents to help pay for the cost of a student's college education. The lender is the U.S. Department of Education, which assigns its loans to servicers throughout the country. There are two types of Direct Loans for students:

 

• A subsidized Direct Loan is awarded on the basis of financial need. "Need" is determined by subtracting the Expected Family Contribution (determined by federal formula applied to your FAFSA information) and all other forms of aid from the Cost of Attendance, or budget. The federal government pays the interest for you while you are enrolled in school at least half time; during the six-month grace period after you stop attending school at least half-time; and during periods of authorized deferment. You will not be charged interest before you begin repayment or during deferment periods. The federal government "subsidizes" your loan, by paying the interest during these periods.

 

• An unsubsidized Direct Loan is not awarded on the basis of need and is available to you regardless of income. Because this loan is not subsidized by the government, you are responsible for all interest which accrues during in-school, grace and deferment periods. You will be charged interest 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.

 

Subsidized Direct Loan Calculation 

Cost of Attendance

minus

Expected Family Contribution (EFC)

minus

Other Financial Aid (grants, scholarships, work-study, etc.)

equals

Subsidized Loan Amount (up to loan maximum)

 

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Unsubsidized Direct Loan Calculation

Cost of Attendance

minus

Other Financial Aid (grants, scholarships, work-study, etc.)

minus

Subsidized Direct Loan

equals

Unsubsidized Direct Loan Eligibility (up to loan maximum)

 

How to Apply for a Direct Loan
You must have a completed financial aid file for the current academic year, which includes the Free Application for Federal Student Aid (FAFSA) and any requested documents. We will not accept a student loan request until your FAFSA and all other required documents have been processed and all holds removed. Lack of Satisfactory Academic Progress will delay completion of your file. You will know you are eligible to apply for a loan when you receive a Financial Aid Notification email.

STEP 1: Complete the Butte College Direct Loan request form.
Beginning mid-July, 2011, the Butte College Direct Loan request form will be available at the Financial Aid Office for those students who received their 2011-2012 Financial Aid Notification email. Please note: Loan applications are available only at the Financial Aid Office and are not online. Loan applications will be discarded for students who have not yet been notified that their file is complete.

STEP 2: Complete Entrance Counseling online at https://studentloans.gov
Loan Entrance Counseling is required by the Department of Education when you take out your first Direct Loan. IMPORTANT: Make sure you do the Entrance Counseling. Your loan will be delayed if you do not complete "Entrance Counseling.” Sign in using your Federal PIN, the PIN you used for your FAFSA. We will automatically receive confirmation when you complete Entrance Counseling. After you finish the session print the rights and responsibilities page and save it for your records.

STEP 3: Sign Master Promissory Note (MPN) online at https://studentloans.gov
A Master Promissory Note is also required by the Department of Education when you take out your first Direct Loan. First–time borrowers of Direct Loans must complete and submit a master promissory note before the first loan disbursement may be released. The promissory note is your promise to repay loan funds disbursed to you. You are required to submit only one note while you are attending Butte College.

 

Direct Loan Borrowing Limits
How much you can borrow each year depends on the Cost of Attendance, other financial aid received, and your grade level. The maximum subsidized amount for a student with up to 29 units is $3,500. The subsidized maximum loan for a student with 30 or more units is $4,500. See the table below for grade level definitions.

2011-2012 Direct Loan Limits

ANNUAL LIMITS (Maximum amounts for each year of study)

Type of student Subsidized Subsidized and unsubsidized

Dependent Undergraduates

First Year (29 units completed) $3,500 Up to $5,500
Second year (30+ units completed) $4,500 Up to $6,500

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Independent Undergraduates* (and dependents whose parents are unable to borrow under the PLUS program)

First Year (29 units completed) $3,500 Up to $9,500
Second year (30+ units completed) $4,500 Up to $10,500

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AGGREGATE LIMITS** (Maximum amounts over undergraduate academic career. This includes bachelor’s degree if you go on to that)

Dependent Undergraduates $23,000 $31,000

Independent undergraduates* (and dependents whose parents are unable to borrow under the PLUS program) $23,000 $57,500

*You are an independent student if you were not required to provide parental information when completing the Free Application for Federal Student Aid (FAFSA).

**Be money smart. Review your aggregate loan totals online at www.nslds.ed.gov (you will need your Federal Student Aid pin number to access this site). Please note: If you borrow the annual maximum every year, you may reach the aggregate limit before you have completed your educational goal. Insider tip: The site may not yet include your most recent loan so include that in your total if necessary.

Interest and Fees
Interest rates and fees are adjusted by Congress for each academic year, and begin July 1 each year.

Interest Rate for loans made on or after July 1, 2011

Subsidized loans fixed 3.4%

Unsubsidized loans fixed at 6.8%

Fees
An origination fee of 1% of the amount borrowed will be deducted from the loan. The U.S. Department of Education gives you a 0.5% rebate of this fee upfront. Net fee: 0.5 percent.

Student Loan Eligibility

Are you eligible to borrow a Direct Loan?

All eligibility requirements must be met:

• Have a completed Financial Aid file including determination of Pell Grant eligibility and Financial Aid Notification email.

• Complete the 3 steps to apply for a Direct Loan:

Step 1 Submit a Butte College Direct Loan request form to the Financial Aid Office

Step 2 Complete Loan Entrance Counseling at https://studentloans.gov

Step 3 Complete Master Promissory Note (MPN) at https://studentloans.gov

• Be enrolled in a degree-granting or eligible certificate program

• Be registered in and attending a minimum of 6 units (at least half-time) per semester

• Not be in default on any type of student loan

• Not owe a repayment on a federal student grant

• Meet Satisfactory Academic Progress (SAP) requirements

 NOTE: In order to maintain continued eligibility to borrow, you must also complete at least six units during each semester that you receive loan funds

 

Loan Delays, Cancellations, and Other Potential Problems

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

Default Status
Students who are in default on a student loan or owe a repayment to any Title IV financial aid program are not eligible to 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 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. t

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 Excess Units Petitions may be delayed until their Satisfactory Academic Progress status is resolved.

• 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.

• Students must complete at least six (6) payable units in 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
Definition of Incarcerated.
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).

Not considered incarcerated.
A student is not considered to be incarcerated if in a half-way house or home detention or is sentenced to serve only weekends.

Eligibility
Incarcerated students are not eligible for Direct Loans.