William D. Ford Federal Direct Loan Program

These fixed-rate loans, guaranteed by the federal government, are available to students who apply for financial aid using the FAFSA. The application process must be initiated through the Financial Aid Office. Payment on the principal is not required until six (6) months after the student leaves school, or fall below halftime enrollment status of six (6) credits.

If you decide to take out a loan, make sure you understand the terms and conditions of the loan. Loans made by the Federal government, called federal student loans, usually offer borrowers lower interest rates and have more flexible repayment options.

What types of federal student loans are available?

The U.S. Department of Education has the following Federal Student Loans available to finance your education:

1. The William D. Ford Federal Direct Loan (Direct Loan) Program is the largest

federal student loan program. Under this program, the U.S. Department of Education

is your lender. There are four types of Direct Loans available:

Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.
Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but in this case the student does not have to demonstrate financial need to be eligible for the loan.
Direct PLUS Loans are loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.
Direct Consolidation Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.

2. The Federal Perkins Loan Program is a school-based loan program for

undergraduate and graduate students with exceptional financial need. Under

this program, the school is lender.

What Type of Loans does HCC Use?

Housatonic Community College primarily participates in two types of Federal Student Loans:

Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.
Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but in this case the student does not have to demonstrate financial need to be eligible for the loan.

Is there a Time Limit on how long I can receive loans?

NEW Direct Subsidized Loan Limit effective on May 16, 2013, if you are a first-time borrower on or after July 1, 2015, 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 usually find the published length of any program of study in your school’s catalog.

Limits Direct Subsidized Loan eligibility for first-time borrowers as of July 1, 2013.
- No effect on unsubsidized or PLUS eligibility.
First-time borrower is a borrower who has no outstanding balance of principal or interest on a Direct Loan or FFEL loan on July 1, 2013, or on the date the borrower obtains a Direct Loan after July 1, 2013.

Borrower who had loan balance and paid off in full prior to receiving loans on/after July 1, 2013, becomes “first-time borrower”.

For example, if you are enrolled in a two-year associate degree program, the maximum period for which you can receive Direct Subsidized Loans is three years (150 percent of 2 years = 3 years). If you are enrolled in a four-year bachelor’s degree program, the maximum period for which you can receive Direct Subsidized Loans is six years (150 percent of 4 years = 6 years).

What are the Interest Rates for federal student loans?

The interest rate varies depending on the loan type and (for most types of federal student loans) the first disbursement date of the loan. Click here to find out the latest interest rates for federal student loans.

All interest rates shown in the chart above are fixed rates for the life of the loan.

Note: The interest rates for federal student loans are determined by federal law. If there are future changes to federal law that affect federal student loan interest rates, we will update this page to reflect those changes.

Are there any other Fees for federal student loans?

Most federal student loans have loan fees that are deducted proportionately from each loan disbursement you receive. 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. Click here to find out the latest fees for federal student loans.

There are no loan fees for Perkins Loans.

Why should I take out federal student loans?

Federal student loans are an investment in your future. You should not be afraid to take out federal student loans, but you should be smart about it.

Federal student loans offer many benefits compared to other options you may consider when paying for college:

The interest rate on federal student loans is almost always lower than that on private loans—and much lower than that on a credit card!
You don’t need a credit check or a cosigner to get most federal student loans.
You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time.
If you demonstrate financial need, you can qualify to have the government pay your interest while you are in school.
Federal student loans offer flexible repayment plans and options to postpone your loan payments if you’re having trouble making payments.
If you work in certain jobs, you may be eligible to have a portion of your federal student loans forgiven if you meet certain conditions.

What should I consider when taking out federal student loans?

Before you take out a loan, it’s important to understand that a loan is a legal obligation that you will be responsible for repaying with interest. You may not have to begin repaying your federal student loans right away, but you don’t have to wait to understand your responsibilities as a borrower.

Be a responsible borrower.

Keep track of how much you’re borrowing. Think about how the amount of your loans will affect your future finances, and how much you can afford to repay. Your student loan payments should be only a small percentage of your salary after you graduate, so it’s important not to borrow more than you need for your school-related expenses.
Research starting salaries in your field. Ask your school for starting salaries of recent graduates in your field of study to get an idea of how much you are likely to earn after you graduate. You can use the U.S. Department of Labor's Occupational Outlook Handbook to estimate salaries for different careers or research employment opportunities advertised in the area where you plan to live to get an idea of a local starting salary. You also can use the Department of Labor's career search tool to research careers and view the average annual salary for each career.
Understand the terms of your loan and keep copies of your loan documents. When you sign your promissory note, you are agreeing to repay the loan according to the terms of the note even if you don’t complete your education, can’t get a job after you complete the program, or you didn’t like the education you received.
Make payments on time. You are required to make payments on time even if you don’t receive a bill, repayment notice, or a reminder. You must pay the full amount required by your repayment plan, as partial payments do not fulfill your obligation to repay your student loan on time.
Keep in touch with your loan servicer. Notify your loan servicer when you graduate, withdraw from school, drop below half-time status, transfer to another school, or change your name, address, or Social Security number. You also should contact your servicer if you’re having trouble making your scheduled loan payments. Your servicer has several options available to help you keep your loan in good standing.

How do I get a federal student loan?

To apply for a federal student loan, you must complete and submit a FAFSA. Based on the results of your FAFSA if you do not qualify for any free grants you may be offered Federal student loans.

You will have to come into the HCC Financial Aid Office and meet with the Financial Aid Associate to apply for a loan. Before you receive your loan funds, you will be required to:

What is a Master Promissory Note?

The Master Promissory Note (MPN) is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s). For instance, it will include information on how interest is calculated andwhat deferment and cancellation

provisions are available to you.

Unless your school does not allow more than one loan to be made under the same MPN, or you obtain an endorser when borrowing a Direct PLUS Loan, you can take out additional Direct Loans on a single MPN for up to 10 years.

It’s important to understand what you’re signing. For instance, the MPN states the following:

You must repay your loan even if you don’t complete your education.
You must repay your loan even if you can’t get a job after you leave school.
You must repay your loan even if you didn’t like the education you received. Before—or at the time of—the first disbursement (payment to you or on your behalf) of your loan(s), you'll receive a disclosure statement that gives you information about any loan that the school plans to disburse under your MPN, including the loan amount, fees, and the expected disbursement dates and amounts.

*For further questions or helpful information you can visit: http://studentaid.ed.gov/types/loans

Federal Loan Program