Federal Student Loans

What is a Federal Student Loan

A federal student loan is financial aid that must be paid back with interest. Repayment is necessary:

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

Deferments are available for students who move directly into a bachelor’s degree program after graduating from Butte College.

How to Apply

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.

Student Loan Eligibility

All eligibility requirements must be met:

• Have received a Financial Aid Notification email for the current academic year, which indicates your financial aid file is complete and your eligibility for Pell Grant has been determined.
• Be enrolled in a degree-granting or eligible certificate program
• Be registered in and actively 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

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

Federal Direct Loan Program

Butte College participates in the Federal Direct Loan Program. 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.

3-Step Direct Loan Application Process

Step 1: Request a Butte College Direct Loan request form packet from the Financial Aid Office and submit a completed packet with all requested information.
Please note: Loan application packets 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 Loan Entrance Counseling 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.

Step 3: Complete Master Promissory Note (MPN) at https://studentloans.gov 
(new Direct Loans borrowers only).
The promissory note is your promise to repay loan funds disbursed to you. You are required to submit only one MPN while you are attending Butte College.

Types of Direct Loans for Students

Subsidized Direct Loan is awarded on the basis of financial need. "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.

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. 

Simplified Calculations

For Subsidized Loan: 
COA - EFC - all other aid (grant+scholarship+work-study) = Subsidized Loan
For Unsubsidized Loan:
COA - all other aid (grant + scholarship + work-study) = Unsubsidized Loan

Direct Loan Borrowing Limits

Your grade level also has an effect on 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.

2012-2013 Annual Direct Loan Limits

Dependent Student	Subsidized	Subsidized & Unsubsidized
1st yr    (29 units completed)	$3,500	up to $5,500
2nd yr    (30+ units completed)	$4,500	up to $5,500
Independent Student*	Subsidized	Sub & Unsub
1st yr    (29 units completed)	$3,500	up to $9,500
2nd yr    (30+ units completed)	$4,500	up to $10,500

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

Direct Loan Aggregate (Combined) 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. "Undergraduate" includes both associate and bachelor's degrees. We strongly suggest that students not exceed $25,000 in loan debt while at Butte College.

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

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. 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, 2012

     Subsidized loans fixed 3.4%

     Unsubsidized loans fixed at 6.8%

Fees
An origination fee of 1% of the loan is automatically deducted before disbursement.

Loan Delays, Cancellations, and Other Potential Problems

What kinds of problems could cause my loan process 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 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.

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 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.

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.