CAUTION About Student Loans:
It takes time for a loan application to be processed by the school, and/or the government. Student loans are certified after all financial aid requirements have been verified and awarded.
Direct Loan Program
(Direct Loan Workshop is Recommended for New Borrowers!)
Financial Aid Transitions to the Direct Loan Program
West Los Angeles College will transition to the William D. Ford Direct Loan Program (DL) from the U.S. Department of Education, effective Fall 2010. We are excited to be joining thousands of U.S. colleges and universities in the DL program with the knowledge of providing continuous financial assistance to the students at West Los Angeles College.
Things you Should Know about Direct Loans
As low-cost public institutions with limited entrance requirements, we are concerned about our students and believe that it is critical that we establish a clear rationale for student loan eligibility at our institutions. We wish to be certain that when students transfer they have sufficient loan eligibility to complete their education, and that students who do not intend to go beyond the community college level will not be overly burdened by debt. If students need additional loans when they are receiving a fee waiver and grant assistance, they will almost certainly need to continue to borrow when they transfer. For most community college students, loans in addition to other financial assistance are not recommended.
West Los Angeles College is dedicated to supporting student success. Students often need to borrow funds to help with school related expenses and ultimately help students finish their educational goal which is a good investment. However, many students enter into debt without a clear picture of how their loan debt will affect them in the future. Remember, student loans must be repaid with interest. Before you borrow, consider your ability to repay your loans. Defaulting on a student loan will negatively affect your credit history.
WHAT IS A DIRECT LOAN?
Direct Loans are low interest loans to students and parents to help pay for the cost of a student’s education after high school. The lender is the U.S. Department of Education. There are no banks or lending institutions. There are two types of Direct Loans: Subsidized loans and unsubsidized loans.
o Subsidized loans are awarded on the basis of financial need. You won't be charged any interest until you graduate or drop below six units because the federal government subsidizes the interest during the time you are enrolled. Effective July 2012, the government will no longer subsidize the interest during the six month grace period.
o Unsubsidized loans charge interest from the time the money is first disbursed until it is paid in full. The interest is capitalized when you enter repayment, meaning that you pay interest on any interest that has already accrued. One way to minimize how much interest accrues is to pay the interest as it accumulates. If you still have several years until you receive your degree, this can become very expensive – NOT RECOMMENDED.
ATTENTION FIRST TIME LOAN BORROWERS
A first time borrower is someone who has no outstanding balance of principal or interest on a Direct Loan or FFELP Loan on July 1, 2013 or on the date the borrower obtains a Direct Loan after July 1, 2013.
Effective July 1, 2013, subsidized Stafford loans will be limited to 150% of a student’s program. This means that if a student is pursuing a two-year program at a community college, students will be limited to three (3) years of subsidized Stafford loan.
ENTRANCE LOAN COUNSELING REQUIREMENT
Federal laws require all first time borrowers to participate in Student Loan Entrance Counseling. The counseling explains the terms and conditions for the loan you plan to borrow. It also provides borrowers with information about the various Direct Loan repayment options. Your campus will inform you about its counseling requirements.
If this will be your first student loan request, you must complete the Entrance Loan Counseling before submitting your loan request document. This will ensure that you understand your rights and responsibilities as a student loan borrower. Go to www.studentloans.gov and click on “Sign In” under “Manage My Direct Loan”.
You will need your FSA log in information to complete the Entrance Loan Counseling. Your institution may have additional requirements.
EXIT LOAN COUNSELING REQUIREMENT
West Los Angeles College requires borrowers to complete Student Loan Exit Counseling annually or when the borrower drops below six (6) approved units during the semester or when the borrower graduates. The Direct Loan Servicing Center will send you information on your loan and when repayment begins.
In order to request a Direct Student Loan, you must meet the following requirements:
• Complete a 2016-2017 Free Application for Federal Student Aid (FAFSA) at www.fafsa.gov.
• Have received a 2016-2017 Award Notification or a letter stating you are ineligible for any need-based aid.
• Satisfy the general student financial aid eligibility requirements.
• Be enrolled in a minimum of six (6) approved units. Students who are on an Extension Petition must be enrolled in six (6) approved units.
• Comply with Entrance and Exit Loan Counseling requirements.
• Maintain Satisfactory Academic Progress standards.
Even though it is a loan, the college has the right to refuse to certify a loan for high-risk borrowers. West Los Angeles College has a responsibility to evaluate all student loan requests on a case-by-case basis and West Los Angeles College has the federal authority [HEA Sec, 479 (A)(c), 34 CFR 685.301(a)(8)] to reduce or deny loan requests for students that in our professional judgment, are at serious risk of loan default. High levels of indebtedness, coupled with a small amount of progress in an academic program, are common indicators of high risk for default. After evaluation, your student loan request may be denied or reduced due to conditions below:
• A previous default on a federal student loan.
• Notification of previously discharged federal student loans due to disability or bankruptcy.
• Notification of delinquent federal student loan repayment status.
• Instances of inconsistent, fraudulent FAFSA, or admissions application information.
• Inability to repay -- Applicants with loan indebtedness in excess of a maximum for two-year public institutions.
• Consistent NOT meeting satisfactory academic progress standards.
The college will transmit the loan information to the Direct Loan Servicing Center. You will then receive loan disclosure notice from the U.S. Department of Education approximately two weeks after the loan has been originated. Watch for correspondence from your loan servicer. Take careful note of their contact information. It is critical that if your address or phone number changes, you notify your servicer. Maintaining correct information can help you protect your credit and keep your loan in good standing. You can also find your loan servicer at www.nslds.ed.gov
THE RIGHT TO REDUCE OR CANCEL THE STUDENT LOAN
If it is determined that you are eligible, an award notification will be sent via email to your LACCD assigned email. You have the right to reduce or cancel the loan. Requests for reductions or cancellations must be submitted in writing to the Financial Aid Department within 30 days of the date that on the award notification.
DROPPING BELOW HALF TIME
If you drop below half-time prior to the scheduled Fall semester disbursement, the disbursement will be cancelled and loan fund(s) will be returned promptly to the U.S. Department of Education. If you drop below half-time after the scheduled fall disbursement and before the Fall semester is completed, you will not be eligible for a Spring semester loan disbursement. In both scenarios you may be eligible for a loan for the spring semester only, and a new loan request must be submitted. If you drop below half-time prior to the scheduled spring semester disbursement the disbursement will be cancelled. We are concerned and you should be concerned about accruing debt when your progress is limited.
FEDERAL LOAN BORROWING LIMITS
A student’s financial need and annual loan limits determine how much a student may borrow. Students will either be classified as Grade Level One (0-30 units completed) or Grade Level Two (over 30 units completed and student is enrolled in a program of more than one year). Grade Level Three only for the students accepted into the Dental Hygiene Bachelors Degree program.
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.
Important reminder: If you have several years remaining until you achieve your Bachelors degree, you should consider limiting borrowing so you retain loan eligibility. You should also know that Pell Grant eligibility is now capped at 12 full-time semesters (600%).
How does this change affect me?
New and returning student borrowers will be required to e-sign a Federal Direct Loan Master Promissory Note and Federal Direct Loan Entrance Counseling at:studentloans.gov. To complete an MPN online, you will be required to use your FSA User Id and Password. If you do not have a FSA User ID you may request one from www.fsaid.ed.gov.
First time Direct Loan Borrowers.
If you are a first-time borrower on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans. This time limit does not apply to Direct Unsubsidized Loans or Direct PLUS Loans. If this limit applies to you, you may not receive Direct Subsidized Loans for more than 150 percent of the published length of your program. This is called your “maximum eligibility period.” Your maximum eligibility period is based on the published length of your current program. You can find the published length of any program of study in the West Los Angeles College catalog.
What is the difference between the Direct Loan Program and the Federal Family Education Loan Program (FFELP)?
The most important difference between the two programs is the source of loan funding. Direct loans come through the U.S. Department of Education and are obtained from the U.S. Treasury. This program offers student one point of contact because the loans are made, backed and serviced by the U.S. Department of Education. FFELP funds come from independent lenders (banks). The guarantor and servicer may be other agencies. Very often the student's loan is "sold" to another lender or servicer. This can be confusing for the student and can complicate the repayment process.
What will happen to the existing loans that I have borrowed from other lenders?
After graduation, you have a choice. You may either make individual payments to your previous lender(s) and to the Department of Education for your Direct Loans, or you can consolidate your loans into one simple payment. You may either consolidate all your loans with your previous lender, or with the Department of Education. However, many private lenders have discontinued their consolidation services.
Will the change in loan programs cause my prior loans to go into repayment?
No, your prior Stafford loans will not go into repayment as long as you remain enrolled at least half time.
Will I have to undergo a credit check to borrow a Direct Loan?
Neither FFELP nor the Direct Loan Program requires credit checks for students seeking Subsidized or Unsubsidized loans.
If you still have questions regarding Direct Loans, or if you need any other financial aid information, please contact 310-287-4532.
LOS ANGELES COMMUNITY COLLEGE DISTRICT
Central Loan Administration Unit (CLAU)
770 Wilshire Boulevard, 5th Floor
Los Angeles, California, 90017
To determine eligibility for loan rehabilitation or loan cancellation for teaching, qualified employment, military service and total and permanent disability, please contact the CLAU at (800) 822-5222.