Federal Direct Stafford Loans
Funds to pay for your education should first come from family resources, scholarships and grants. If
you’ve exhausted those options, federal student loans are your next best option. Receipt of a federal
student loan may make you ineligible to receive other forms of financial aid. Be certain that you have
exhausted all scholarship and grant opportunities before turning to student loans.
Direct Loans are low-interest loans for 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 rather than a bank or other
financial institution.
There are two kinds of Direct Loans available:
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Direct Subsidized Loans are for students with financial need, as determined by federal
regulations. No interest is charged while you are in school at least half-time, during your grace
period and during deferment periods.
Direct Unsubsidized Loans are not based on need. Interest starts accruing (accumulating) from
the time the funds are disbursed, and you’re responsible for paying that interest. You can chose
to pay it while you are in school or let it accrue and be added to the outstanding balance of your
loan. This is called “capitalization.” Capitalization increases your loan balance because you will
then have to pay interest on the increased loan principal amount. The total amount you repay
over the life of your loan will be greater than if you paid interest while you were in school.
A completed FAFSA is the first step in applying for a student loan. Complete a FAFSA at
www.fafsa.ed.gov.
You must complete a promissory note available at https://studentloans.gov. You must have a Federal
Personal Identification Number (PIN) to log into the site. A master promissory note (MPN) can be used
to make one or more loans for one or more academic years (up to 10 years). The same note can be used
for all of your loans over multiple academic years. The promissory note is a legally binding agreement
that contains the terms and conditions of the loan. By signing the note, you are promising to repay your
student loan.
Entrance Loan Counseling is also required before your loan application can be finalized. Visit
https://studentloans.gov to complete a quick and easy interactive counseling session designed to help
you understand your loan responsibilities. Enter CFCC as the school you are attending so that we will
receive confirmation that the entrance counseling requirement has been completed.
Federal Direct PLUS Loans
Direct PLUS Loans are for the biological or adoptive parents of dependent students. The parent is
responsible for repaying a Direct PLUS Loan; the loan cannot be transferred to a student. Interest is
charged during all periods.
A completed FAFSA is the first step in applying for a parent loan. Complete a FAFSA for your dependent
student at www.fafsa.ed.gov.
You must complete a promissory note available at https://studentloans.gov. You must have a Federal
Personal Identification Number (PIN) to log into the site.
Additional forms are required to complete the Direct PLUS Loan application process at CFCC. Click here
to view and print forms. Complete and submit to the Financial Aid Office.
Borrower’s Rights and Responsibilities
As a Direct Loan borrower, you have the right to:
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Written information on your loan obligation.
A grace period and an explanation of what this means.
A disclosure statement, received before repayment begins, that includes information about
interest rates, fees, balance owed, and the number of payments.
Deferment of repayment or forbearance for certain defined periods, if you qualify and if you
request deferment or forbearance.
Prepayment of your loan in whole or in part any time without an early repayment penalty.
A copy of your master promissory note either before or at the time your loan is disbursed.
Documentation that your loan has been paid in full.
As a Direct Loan borrower, you are responsible for:
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Maintaining half-time enrollment (six credits per semester). After you drop below half-time
enrollment, your loans that were made for that period of study typically have 6 months before
payments are due.
Completing exit loan counseling before leaving school or dropping below half-time enrollment,
even if you plan to transfer to another school. Federal regulations require that you complete an
exit session which will provide information about how to manage your student loans after
college. Visit https://studentloans.gov to complete an exit counseling session.
Repaying your loan even if you do not complete your academic program, you are dissatisfied
with the education received or you are unable to find employment after graduation.
Notifying your school and the Direct Loan Servicing Center if you move or change addresses;
change your name; withdraw from school or drop below half-time status; transfer to another
school; fail to enroll or re-enroll in school for the period for which the loan was intended;
change your expected graduation date or graduate.
Making monthly payments on your loan after your grace period ends, unless you have received
a deferment or forbearance.
Notifying the Direct Loan Servicing Center of anything that might alter your eligibility for an
existing deferment or forbearance.
Repayment
Generally, you’ll have from 10 to 25 years to repay your loan, depending on the repayment plan that
you choose. Your monthly payment amount will be based on how much you borrowed and how long
you take to repay.
You may choose from one of several repayment plans:
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Standard Repayment Plan. Fixed monthly payments for up to 10 years.
Graduated Repayment Plan. Payments that start off lower, then gradually increase, usually
every two years. The loan must be repaid in 10 years.
Fixed or Extended Graduated Repayment Plan. Fixed or graduated monthly payments over a
period of time, not to exceed 25 years. Extended repayment plans are available only to new
Direct Loan borrowers.
Income Contingent Repayment Plan. Monthly payment is adjusted each year based on annual
income (and spouse’s income, if borrower is married), family size, and total amount of
outstanding Direct Loans. After 25 years, any unpaid loan amount will be forgiven.
You may change plans at any time. There is no penalty if you make payments before they are due or pay
more than the amount due each month.
Call the Direct Loan Servicing Center at 1-800-848-0979 or visit https://studentloans.gov for additional
information.
Postponing Loan Payments
Under some conditions you may receive a deferment or forbearance that allows you to temporarily stop
or lower your payments.
You may qualify for a deferment if:
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You return to school at least half-time.
You are unemployed or meet the criteria for “economic hardship” (limited to three years).
You are serving on active duty or qualifying National Guard duty during a war or other military
operation or national emergency.
You are a member of the National Guard or other reserve component of the U. S. Armed Forces
(current or retired) and were called to active duty service while you were enrolled at an eligible
school, or within six months after having been enrolled (additional conditions apply).
If you don’t qualify for a deferment but are temporarily unable to make loan payments for such reasons
as illness or financial hardship, you may be granted forbearance.
Loan Cancelation, Discharge, Forgiveness
All or a portion of your loan may be discharged (forgiven) if:
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Your school closed before you completed your program of study.
Your school forged your signature on the promissory note or falsely certified that you were
eligible for financial aid.
Your loan was falsely certified through identity theft.
Your loan may also be discharged if you have your loan discharged in bankruptcy or if you become
totally and permanently disabled, or if you die.
You may also qualify for forgiveness of some of your loan if you teach full-time for five years in certain
low-income schools.
You may also qualify for forgiveness of the remaining balance due on your Direct Loans after you have
made 120 payments on those loans while employed in certain public service jobs (additional conditions
apply).
Call The Direct Loan Servicing Center at 1-800-848-0979 or visit https://studentloans.gov for additional
information.
Loan Default
Student loans are real loans – just as real as car loans or mortgages. We can’t emphasize enough the
importance of making your full loan payment on time either monthly (which is usually when you’ll pay)
or according to your repayment schedule.
You must repay your loan even if you don’t complete or can’t find a job related to your program of
study, or are unhappy with the education you paid for with your loan.
If you don’t, you could end up in default. Default is failure to repay a loan according to the terms agreed
upon when you signed the promissory note. For the Direct Loan Program, default occurs when you
become 270 days delinquent on your loan if you make monthly payments or 330 days delinquent if you
pay less often than monthly.
You’ve made a commitment to yourself and your future. Be a responsible borrower; loan default has
serious consequences:
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Your entire loan balance (principal and interest) will be due in full immediately.
Your college records may be placed on hold.
You’ll lose your student loan deferment options.
You won’t be eligible for additional federal student aid.
Your account may be turned over to a collection agency and you’ll have to pay additional
charges, late fees and collection costs, all of which become part of your debt.
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Your credit rating will be damaged for several years because defaulted loans are reported to
national credit bureaus.
You’ll have difficulty qualifying for credit cards, a car loan, a mortgage, or renting an apartment
(credit checks are required to rent an apartment).
Your federal and state income tax refunds can be withheld and applied to student loan debt.
This is called a tax offset.
You may have a portion of your wages garnished (withheld).
You may not be able to obtain a professional license or get hired by an employer that performs
a credit check.
Access your Loan Information
The U.S. Department of Education’s National Student Loan Data System (NSLDS) provides access to your
loan and federal grant history. CFCC will submit your (and your parent’s PLUS) loan and Federal Pell
Grant information to the NSLDS, where it will be accessible to you, guaranty agencies, lenders, and
institutions determined to be authorized users of the data system. Visit www.nslds.ed.gov. You will
need your Federal Student Aid PIN (Personal Identification Number) to access your record.
Ombudsman
The Office of the Ombudsman is available to assist in resolving any federal student loan disputes and to
provide an unbiased and independent opinion. If you have not been able to resolve your problem
through normal channels, contact the Federal Student Aid Ombudsman at 877-557-2575 or
http://studentaid.gov/repay-loans/disputes/prepare.
U.S. Department of Education
FSA Ombudsman Group
830 First Street, N.E., Mail Stop 5144
Washington, D.C. 20202-5144
Fax: 202-275-0549
Have additional questions about your rights and responsibilities as a borrower or the terms and
conditions of your loan? Contact the Office of Financial Aid at 910-362-7055.