Federal Student Loans
Overview
A loan is money that is borrowed and is expected to be paid back with interest (an fee for borrowing money). With federal student loans the U.S. Department of Education is lending money to students who:
- Apply using the FAFSA
- Complete the financial aid process
- Meet the minimum academic requirements
- Are enrolled in at least 6 credit hours towards their program of study
On This Page
What types of student loans are available?
How do I accept or decline student loans?
What if I am a first time loan borrower?
When do I begin to repay my loans?
What if I pay late or default on my loans?
What types of student loans are available?
The U.S. Department of Education’s federal student loan program is the William D. Ford Federal Direct Loan (Direct Loan) Program. There are three types of Direct Loans available:
- Subsidized loans
- Unsubsidized loans
- Parent Plus Loans
There are also private loans, where the lender is a bank, credit union, or other private company.
A subsidized loan is awarded based on financial need. If you are eligible for a subsidized loan, the government will pay (subsidize) the interest on your loan while you are enrolled at least half time, for the first six months after you cease to be enrolled at least half time, and if you qualify to have your payments deferred.
Depending on your financial need, you may borrow money for an amount up to the annual loan borrowing limit for your level of study. There is a lifetime aggregate limit of $23,000 for subsidized loans.
Unlike a subsidized loan, you are responsible for loan interest from the time the unsubsidized loan is disbursed until the loan is paid in full. You can choose to pay the interest while in school or allow it to accumulate and be added to the principal amount of your loan. If you do not pay the interest while in school, the accumulated interest will increase the loan amount you have to repay.
Parent PLUS Loans are unsubsidized loans that a parent may apply for to funs their dependent undergraduate student's education. These loans can help pay a student's education expenses by borrowing up to the Cost of Attendance, less the total financial aid already awarded to the student.
Who is eligible for a Direct PLUS Loan?
- Must be a parent (biological, adoptive, or in some cases stepparent) of a dependent undergraduate student.
- Borrower and dependent must be US citizens or eligible non-citizens
- Borrower and dependent must not be in default on any other federal loans or owe over-payment to the any previous federal aid program.
- Student must be enrolled at least half-time (6 credit hours) and enrolled in course work in the degree they are seeking
- Student must meet the general requirements for federal student aid, including requirements for Satisfactory Academic Progress (SAP).
How do I apply for a Parent Plus Loan?
- Student must complete the Free Application for Federal Student Aid (FAFSA).
- Parents must complete a Federal Direct Plus Loan application at StudentAid.gov. The borrower is subject to a credit check.
- If approved, parents must complete a Master Promissory Note (MPN) at StudentAid.gov.
Other Important Information
- Interest Rates and Fees: Parent Plus Loan Interest Rates & Loan Origination Fees
- Disbursements: PLUS loans are disbursed with the same parameters as other Direct Loans. All deferments will be paid prior to the remaining balance being disbursed based on the borrower's preference.
- Repayments: PLUS loan repayments begin once the loan has been fully disbursed.
- PLUS loans are not transferable to the student. The borrower is responsible for repaying the loan(s).
- If a PLUS is denied a dependent student may request to be awarded additional unsubsidized loans by contacting the Financial Aid Office.
Private (alternative) loans are nonfederal loans, made by a lender such as a bank, credit union, state agency or other entity. A private loan may make sense for you if you are unable to qualify for federal student aid (which includes federal loans).
Before accepting private loans, you should diligently explore scholarships and other funding sources. You can learn about more ways to cover educational costs on our Ways to Pay page.
For more information about Private Loans at Santa Fe College visit the Private Loans page.
How do I accept or decline student loans?
Accepting Student Loans
You can accept your loans by following the steps on the "Awards" page in your financial aid portal. You may choose to accept student loans to:
- have loan funds available to defer fees (hold your class schedule),
- use loan funds to purchase books before classes begin (bookstore line of credit)
- receive your remaining loan funds in a disbursement
There are three steps you may be required to complete to receive federal student loans:
- Entrance Counseling: a brief online course that ensures you understand the responsibilities and obligations of student loan borrowing.
- Master promissory Note (MPN): a legal document in which you promise to repay your federal student loan(s) and any accrued interest and fees to your lender or loan servicer.
Entrance Counseling is required counseling that ensures you understand the responsibilities and obligations of student loan borrowing. If this is your first Federal Direct Loan, you must complete Loan Entrance Counseling before you can use your bookstore line of credit or before any loan funds will be disbursed (paid out).
The Master Promissory Note (MPN) is a legal document in which you promise to repay your federal student loan(s) and any accrued interest and fees to your lender or loan holder. If this is your first Federal Direct Loan, you must sign a MPN before you can receive student loans.
Declining Student Loans
If you do not want some or all your loans, you may decline them by going to the "Awards" page in your financial aid portal. Make sure you have enough aid to cover your classes before declining loans.
Even if you decline loans, if you do not intend to enroll at SantaFe College, you must actively drop classes before the “last day to drop with refund.” Otherwise, you will be held financial and academically responsible for those courses, per your signed Registration Agreement.
How much can I borrow?
There are limits on the amount of subsidized and unsubsidized loans that you may be eligible to receive each academic year (annual loan limits) and the total amounts that you may borrow for undergraduate study (aggregate loan limits). The actual loan amount you are eligible to receive each academic year may be less than the annual loan limit. These limits vary depending on:
- what year you are in school
- whether you are a dependent or independent student
If you are a dependent student whose parents are ineligible for a Parent PLUS Loan, you may be able to receive additional Federal Unsubsidized Loan funds.
| Year | Dependent Students (except students whose parents are unable to obtain PLUS Loans) | Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans) |
| First-Year Undergraduate Annual Loan Limit | $5,500—No more than $3,500 of this amount may be in subsidized loans. | $9,500—No more than $3,500 of this amount may be in subsidized loans. |
| Second-Year Undergraduate Annual Loan Limit | $6,500—No more than $4,500 of this amount may be in subsidized loans. | $10,500—No more than $4,500 of this amount may be in subsidized loans. |
| Third-Year and Beyond Undergraduate Annual Loan Limit | $7,500—No more than $5,500 of this amount may be in subsidized loans. | $12,500—No more than $5,500 of this amount may be in subsidized loans. |
| Subsidized and Unsubsidized Aggregate Loan Limit | $31,000—No more than $23,000 of this amount may be in subsidized loans. | $57,500 for undergraduates—No more than $23,000 of this amount may be in subsidized loans. |
What is loan proration?
Loan proration reduces an undergraduate student's standard annual loan limit. Proration of the loan amount is required if the student's program, or the remainder of the student's program, is less than a full academic year (24 credits) in length.
What if I am a first-time loan borrower?
If you are a first-year undergraduate student and a first-time borrower, federal regulations require your loan disbursement not occur until 30 days after the first day of the term you are enrolled in. This ensures you will not have a loan to repay if you withdraw during the first 30 days of classes.
When do I begin to repay my loans?
After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you must begin repayment. If you are a parent reading this and you have a Direct PLUS Loan, you do not have a grace period and must begin repayment within 60 days after the loan is fully disbursed. You have a choice of repayment plans. Your monthly payment will depend on the size of your debt and the length of your repayment period. For a guide that explains available repayment options, includes examples of monthly payments for different loan amounts, and covers other topics you need to consider when managing your loans, go to studentaid.gov to access useful Student Loan Repayment Calculators.
Exit counseling helps students gain the fundamentals they need to understand and manage their student loan debt. The institution is required to notify every student at the school who borrowed a Federal Direct loan if the student ceases to be enrolled at least half time. You will receive exit counseling information through your eSantaFe account and/or via email or mail. It is important that you complete exit counseling to understand repayment options and your rights and responsibilities as a borrower.
Inform your loan servicer if any changes that take place in your name, permanent address, and the name and address of your employer. Your loan servicer can be found using at studentaid.gov.
What if I pay late or default on my loans?
About six months after graduating, leaving school, or taking less than 6 credit hours, you will be informed by your loan servicer that you must begin payment on your student loans. If you don’t make your loan payments by the due date, your loan is considered in delinquency. After 270 days of being behind on payment, you risk those loans going into default. More information is on the U.S. Department of Education's website.
Defaulting on your loan has serious consequences. If you default on student loans, among other consequences:
- You are not eligible for financial aid, including many scholarships or additional loans
- You may be unable to get your college transcripts
- Your credit score is negatively impacted, your tax refund may be forfeit, and your wages can be garnished. In some cases, you may be unable to obtain your professional license while in default on your loans
- Lastly, your loan may be turned over to a collection agency with associated fees.
The good news is that there is help for resolving the delinquency or default status of student loans! See the sections below for more information.
Be aware of the Borrower Responsibilities listed above. Be sure to inform your loan servicer of any changes in your situation, especially your ability to pay. It is tempting to be embarrassed to ignore money issues that affect your ability to repay, but it is better to work with your servicer so they can help. You may even qualify for a $0/month payment! See more tips at studentaid.gov.
Depending on your situation, there may be the option of forbearance, deferment or a payment plan to get your loans back in good standing.
See studentaid.gov for the requirements to get your loans back in good standing (loan rehabilitation), and how you can possibly regain financial aid eligibility. Plan ahead! It can take six (6) months or more for this process to be completed.
To get the process started, or if you need help identifying your defaulted loan(s), you will need to contact the holder of your defaulted loan, called a loan servicer. Find out who holds your loan by logging in to studentaid.gov.