Home » Students » Financial Aid » Federal Programs » Federal Direct Loan Program

Federal Direct Loan Program

The U.S. Department of Education offers eligible students at participating schools Direct Subsidized Loans, Direct Unsubsidized Loans and PLUS loans. These loans are federal student loans for eligible students and/or parent to assist with the cost of higher education at a four-year college or university, community college, trade, career, or technical school.

Please note that information disclosed to students and or their parents regarding the HEA Loan is submitted to the National Student Loan Data System (NSLDS) and to the Department of Education. This information may be accessible by authorized agencies, vendors, lenders, and institutions. Borrowers can also access their records via studentaid.gov

Basic eligibility requirements for students requesting a Direct Loan:

  • Students must be enrolled in at least 6 units at the Coast Community College District.
  • Students must have met satisfactory academic requirements.
  • Students must be enrolled in an eligible program of study.
  • First-time borrowers may not receive subsidized loans for more than 150% of the length of program of study. For example, if you are enrolled in a 2-year associate degree program, the maximum period for which you can receive a Direct Subsidized Loan is 3 years (150% of 2 years = 3 years). If you are enrolled in a certificate program that is 32 weeks, the maximum period for which you can receive a Direct Subsidized Loan is 48 weeks (150% of 32 = 48 weeks).The Department of Education may stop paying your interest subsidy if you exceed that limit. Please check with your financial aid specialist at your campus for additional information. Please click here for comprehensive information on the terms and conditions of loans and borrower's responsibilities.

Before any loan funds will be disbursed: Students must accept, cancel, or change a loan either through the financial aid online portal or at the campus financial aid office once the loan request has been placed on your financial aid account.

Direct Loans are subject to a loan fee, minus an up-front interest rebate that is contingent upon 12 months of on-time payments when the loan enters repayment. You can find more information about the loan fees and interest rates on the studentaid.gov website.

Right to Cancel

As a borrower, you have a right to cancel all or any part of these loans within 14 days of receiving notification from your campus of the award. If you do wish to cancel any part of the loan, please notify your campus financial aid office and pay any outstanding balance to the Business Office immediately. If you accept the loans as awarded, no further action is necessary on your part.

If you would like to cancel and or modify your loans, please complete this form Loan Cancellation-Reduction Form.docx to you campus financial aid office.

Military Students

In acknowledgement of your service to our country, there are special benefits and repayment options for your student loans available from the U.S. Department of Education and the U.S. Department of Defense. For more information about Federal Student Aid for military students Click Here.

How to Apply

As with all federal student aid, you apply for Direct Loans by filling out the Free Application for Federal Student Aid (FAFSA). The information on your FAFSA is transmitted to the schools that you list on the application, and those schools use the information to assess your financial need for student aid.

Steps to apply for a loan after the FAFSA has been completed.
Contact your financial aid office; they will guide you in the completion of the required documents. A Loan Request Form is required by each campus for all loans. This is available online in your student portal once the review of your eligibility is complete.

Once you have completed the Loan Request Form from your campus, go to https://studentloans.gov/myDirectLoan/index.action and complete the following:

I. Required Counseling Sessions: Students who are requesting loans must complete the entrance counseling sessions.

Entrance Counseling

II. Once you have completed the Direct Loan entrance counseling sessions, you will need to complete the Master Promissory Note -

Master Promissory Note

III. If this is your last semester, you will need to complete the exit counseling sessions prior to the second disbursement of your loan.

Exit Counseling

Repayment begins six months after you graduate or cease to be at least a halftime student. You will generally have 10 years to pay back your loan. Your monthly payment will usually be more than $200, but never less than $50. It is the borrower's responsibility to maintain contact with the United States Department of Education and to establish a repayment schedule. The borrower's failure to inform the United States Department of Education of changes in enrollment status, anticipated graduation dates, current address, name, deferment eligibility, or college of attendance may result in default on the student loan.

Accepting a Loan

The Financial Aid Office will tell you the loan amounts that it is offering, check your online financial aid account with your campus for the amount of your loan. You should evaluate the loan offer carefully. In the case of loans, keep in mind that whatever amount you borrow must be paid back with interest. If your living expenses are not as high as the standard allowance projected by your school, you may not have to borrow as much as the amount offered. The Department of Education offers financial awareness counseling - Financial Awareness Counseling

You have the right to decline/cancel the loan or to request a lower loan amount. This is done through your online financial aid account.

PLUS Loans

This is a loan that parents may request to assist a student with his/her costs of attendance.

A credit check will be performed and used to determine the loan amount.

Credit check & endorser alternative

When you apply for a Direct PLUS Loan, the Department will check your credit history. To be eligible to receive a PLUS loan, you must not have an adverse credit history. If you are determined to have an adverse credit history, you may still receive a Direct PLUS Loan if you obtain an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS Loan if you do not repay the loan. If you are a parent borrowing on behalf of your dependent student, the endorser may not be the student on whose behalf a parent obtains a Direct PLUS Loan. In some cases, you may also be able to obtain a Direct PLUS Loan if you document to our satisfaction that there are extenuating circumstances related to your adverse credit history.

Loan Limitations

California public two year institutions have the lowest enrollment fees and tuition in the nation; and, Direct Loans have aggregate limitations for undergraduate students. As such, students are advised to borrow wisely and only borrow what you need so that you have remaining funds to complete your four-year degree.

The amount of financial aid a student may receive cannot exceed the student's cost of attendance (COA) and/or financial need. Your student budget is located on your online financial aid file; log in through MyOCC, MyGWC, or MyCCC. If your expenses are over and above the budget, please schedule an appointment to meet with a financial aid specialist at your campus.

Direct Stafford Loan Limits (Subsidized and Unsubsidized)

  Undergraduate students Graduate students
  Dependent1 Independent2  
1st-year $5,500 ($3,500)3 $9,500 ($3,500)  
2nd-year $6,500 ($4,500) $10,500 ($4,500) $20,500 ($8,5004) for each year
3rd- and 4th-year $7,500 ($5,500) $12,500 ($5,500)  
Aggregate $31,000 ($23,000) $57,500 ($23,000) $138,5005 ($65,500)

1Except those whose parents are unable to borrow a PLUS loan.
2These limits also apply to dependent students whose parents are unable to borrow a PLUS loan.
3The numbers in parentheses represent the maximum amount that may be subsidized.
4Graduate and professional students are not eligible to receive Direct Subsidized Loans for loan periods beginning on or after July 1, 2012.
5The aggregate amounts for graduate students include loans for undergraduate study.

The actual loan amount you are eligible to receive for an academic year is determined by your school and may be less than the maximum annual amounts shown in the chart above. The aggregate limits include both Direct Subsidized and Unsubsidized Loans and any subsidized and unsubsidized Stafford Loans received through the Federal Family Education Loan (FFEL) Program.

With a Direct PLUS Loan, a graduate/professional student or the parent of a dependent student can borrow up to the cost of the student's attendance minus other financial aid the student receives.

Generally, you'll have from 10 to 25 years to repay your loan, depending on which repayment plan (there are several) you choose.

The Direct Loan Servicing Center will notify you of the date your first payment is due. If you do not choose a repayment plan, you will be placed on the Standard Repayment Plan, with fixed monthly payments for up to 10 years. Most Direct Loan borrowers choose to stay with the Standard Repayment Plan, but there are other options for borrowers who may need more time to repay or who need to make lower payments at the beginning of the repayment period.

You can change repayment plans at any time by going to the Direct Loan Servicing Center's website and logging in to your account.

Interest for loans

How is interest calculated?

The amount of interest that accrues (accumulates) on your loan between your monthly payments is determined by a daily interest formula. This formula consists of multiplying your loan balance by the number of days since you made your last payment and multiplying that result by the interest rate factor.

Simple daily interest formula:
Interest Amount = (Outstanding Principal Balance x Interest Rate Factor) x Number of Days Since Last Payment

What is the interest rate factor?
The interest rate factor is used to calculate the amount of interest that accrues on your loan. It is determined by dividing your loan's interest rate by the number of days in the year.

To view student loan interest rate information, please visit https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized#what-are-the-current-interest-rates.

Loan Fees

Most federal student loans have loan fees that are a percentage of the total loan amount. The loan fee is deducted proportionately from each loan disbursement you receive while enrolled in school. This means the money you receive will be less than the amount you actually borrow. You’re responsible for repaying the entire amount you borrowed and not just the amount you received.

Repayment Terms

Although you may select or be assigned a repayment plan when you first begin repaying your student loan, you can change repayment plans at any time—for free.

To make your payments more affordable, repayment plans can give you more time to repay your loans or can be based on your income. To view all repayment plan options, please visit: https://studentaid.ed.gov/sa/repay-loans/understand/plans

Contact your loan servicer if you would like to discuss repayment plan options or change your repayment plan. You can get information about all of the federal student loans you have received and find the loan servicer for your loans by logging in to studentaid.gov.

Before you contact your loan servicer to discuss repayment plans, you can use the Repayment Estimator to get an early look at which plans you may be eligible for and see estimates for how much you would pay monthly and overall.

While you're in repayment

Generally, you'll have from 10 to 25 years to repay your loan, depending on which repayment plan (there are several) you choose.

Your loan servicer will notify you of the date your first payment is due. If you do not choose a repayment plan, you will be placed on the standard repayment plan, with fixed monthly payments for up to 10 years. Most Direct Loan borrowers choose to stay with the standard repayment plan, but there are other options for borrowers who may need more time to repay or who need to make lower payments at the beginning of the repayment period.

You can change repayment plans at any time by contacting your loan servicer.

Repayment Estimator

There are two ways to access the Repayment Estimator:
1. Log in to Studentaid.gov

  • your federal student loan information available in studentaid.gov will be used to estimate:
    • initial monthly payments
    • repayment plan eligibility
    • repayment plan cost comparison
    • total interest paid

You must log in using your own FSA ID. If you are a new user or have forgotten your FSA ID, click here.

Use of another person's FSA ID constitutes fraud. Use only your own FSA ID information.

2. Select "Start from Scratch"

  • You may add your loans, or use average loan balances provided to estimate:
    • initial monthly payments
    • repayment plan eligibility
    • repayment plan cost comparison
    • total interest paid

Your spouse's eligible federal student loans and income may be taken into account if:

  • you file a joint federal income tax return with your spouse.
  • you and your spouse have a joint Direct or FFEL Consolidation Loan.

If either of these apply, your spouse's income, loan amount(s) and interest rate(s) should be added to provide more accurate payment information.

Calculations assume income increases of 5 percent a year, and poverty guideline increases of 3.3 percent a year.

Useful information to have:

  • loan balances and interest rates for loans
  • your spouse's loans and interest rates
  • your Adjusted Gross Income (AGI)
    Adjusted Gross Income is an individual (or couple's) total taxable income minus specific reductions. You can find your Adjusted Gross Income on your most recently filed IRS Form 1040, 1040A, or 1040EZ, or by requesting a tax return transcript online at http://www.irs.gov/Individuals/Get-Transcript

Loan Repayment Calculator

Another tool to assist you with calculation your loan repayment can be found at this link: http://www.finaid.org/calculators/loanpayments.phtml

Automated payments (electronic debit)

When you receive your first bill, you'll learn how you can sign up for the electronic debit account (EDA) option and have your bank automatically make your monthly loan payments for you from your checking or savings account. You won't have to write checks, use stamps, or worry if your payment will arrive by the due date. In addition you'll receive a 0.25% reduction in the interest rate on your loans during any period when your payments are made through EDA.

Trouble making payments

If you're having trouble making payments on your loans, contact your loan servicer as soon as possible. Their staff will work with you to determine the best option for you. Options include:

  • Changing repayment plans.
  • Deferment, if you meet certain requirements. A deferment allows you to temporarily stop making payments on your loan.
  • Forbearance, if you don't meet the eligibility requirements for a deferment but are temporarily unable to make your loan payments. A forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments

If you stop making payments and don't get a deferment or forbearance, your loan could go into default, which has serious consequences—see below.

Your loan first becomes "delinquent" if your monthly payment is not received by the due date. If you fail to make a payment, you'll receive a reminder that your payment is late. If your account remains delinquent, you'll receive warning notices reminding you of the consequences of default and of your obligation to repay your loans.

If you are delinquent on your loan payments, contact your loan servicer immediately to find out how to bring your account current. Late fees may be added, and your delinquency will be reported to one or more national consumer reporting agencies (credit bureaus), but this is much better than remaining delinquent on your payments and going into default.

Consequences of default

If you default:

  • We will require you to immediately repay the entire unpaid amount of your loan.
  • We may sue you, take all or part of your federal and state tax refunds and other federal or state payments, and/or garnish your wages so that your employer is required to send us part of your salary to pay off your loan.
  • We will require you to pay reasonable collection fees and costs, plus court costs and attorney fees.
  • You may be denied a professional license.
  • You will lose eligibility for other federal student aid and assistance under most federal benefit programs.
  • You will lose eligibility for loan deferments.
  • We will report your default to national consumer reporting agencies (credit bureaus).

Loan cancellation (forgiveness or discharge)

Under certain conditions, you can have all or part of your loan cancelled or discharged. Please contact your loan servicer.

What's next?

Stay in touch with your loan servicer—let them know if you've changed your name or permanent address, and make sure that they know when you've completed your educational program or transferred to another school.

For a Q&A, please follow this link: https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized