Loans

FEDERAL DIRECT LOANS

The William D. Ford Federal Direct Loan Program is the largest federal student loan program. Under this program, the U.S. Department of Education is the lender. Loans are money that a student must pay back once they leave higher education. These loans are made to eligible undergraduate students that demonstrate financial need or parents of dependents that want to help pay for the education expenses not covered by other fund.

Texas Higher Education Fair Lending Practices

All students interested in taking out a federal Direct Loan must complete the following steps:


Step 1 - FAFSA

Fill out the FAFSA and complete any required additional documentation.

Applying for FAFSA


Step 2 - Complete Financial Aid file

Make certain that your financial aid file is complete; this includes high school transcript and all verification and supporting documents if selected.

Step 3 - High School Transcripts

Make sure your FINAL high school transcript, high school diploma or GED Certification is on file with Midland College.

Step 4 - College Transcripts

Make sure all transcripts from previously attended colleges are on file and have been evaluated by the Midland College Registrar’s Office.

Step 5 - Complete the MC Loan Application

The Loan Coordinator will email a confirmation that the application has been received.

Loan Application


Step 6 - Entrance Counseling & Master Promissory note

Complete Entrance Counseling and sign your Master Promissory Note (MPN). 

www.studentloans.gov


Step 7 - Loan Coordinator Session

If you are a first-time borrower at Midland College, attend a mandatory group, individual or phone session with the Loan Coordinator.

Step 8 - Direct Deposit Account

Make certain that you have designated a Direct Deposit account on your My MC Portal or that you have an activated Chap Card for refunds from Midland College.

Step 9 - Accept your loan award

Make certain to accept your loan award using the Financial Aid Widget in My MC Portal.

Loan Application Deadlines

Loans will not be disbursed until all of the above steps are completed.

Fall – October 31

Spring – March 31

Summer – July 1

Annual Direct Loan Limits for Undergraduate Students

Freshman (0-29 Hours)

        Dependent

$5,500 – no more than $3,500 in Subsidized

        Independent

$9,500 – no more than $3,500 in Subsidized

 

Sophomore (30-59 Hours)

         Dependent

$6,500 – no more than $4,500 in Subsidized

         Independent

$10,500 – no more than $4,500 in Subsidized

 

Junior/Seniors (60+ Hours) or Prior Bachelor’s

          Dependent

$7,500 – no more than $5,500 in Subsidized

          Independent

$12,500 – no more than $5,500 in Subsidized

*The loan limits for Juniors and Seniors will only be considered for students in the Bachelor of Applied Technology and Bachelor of Applied Science programs.

 

The aggregate loan limits (maximum amounts) undergraduate students are allowed to take out:

Dependent Students - $31,000 – no more than $23,000 in Subsidized Loans

Independent Students - $57,500 – no more than $23,000 in Subsidized Loans

 

Interest Rates for Direct Loans 

Loan Type

Loans disbursed between

7/1/17 – 6/30/18

Direct Subsidized Loans

4.45%

Direct Unsubsidized Loans

4.45%

Direct Parent PLUS Loans

7%

 

Loan Fees

Most federal student loans have loan fees that are a percentage of the total loan amount. The loan fee is deducted from each loan disbursement you will receive. This means the money you receive will be less than the amount you actually borrow. You are responsible for repaying the entire amount you borrowed and not just the amount you received.

Loan Type

First Disbursement Date

 

Loan Fee

 

Direct Subsidized and Unsubsidized Loans

Between 10/1/16 and 9/30/17

1.069%

Between 10/1/17 and 9/30/18

1.066%

Direct Parent PLUS Loans

Between 10/1/16 and 9/30/17

4.276%

Between 10/1/17 and 9/30/18

4.264%

 

Interest rates and loan fees are determined by Congress and are subject to change every academic year.

Repayment Options

  • Standard Repayment
    • Fixed monthly payments of at least $50 until loan is paid in full (up to 10 years)
    • Loan is highest payment, repaid in shortest amount of time with the least interest paid
  • Graduated Repayment
    • Payments start low and increase every two years (for up to 10 years)
    • This plan is a good option if you expect your income to increase steadily over time
    • Amount due each month must cover interest
  • Extended Repayment
    • Fixed annual or graduated repayment (up to 25 years)
    • Must have a total amount of Direct Loans exceeding $30,000
    • More interest is paid due to the longer loan term
    • Loans must have been disbursed on or after October 7, 1998
  • Income-Based Repayment (IBR)
    • Payments are capped at the amount determined to be affordable based on your Adjusted Gross Income (AGI) and family size and are adjusted every year
    • In order to be initially eligible, you must have a Partial Financial Hardship, which is based on your total loan debt, AGI and family size
    • After you are no longer in Partial Financial Hardship status, payments will not be any higher than they would have been under a 10-year standard repayment schedule
    • Balance remaining after 25-year term is forgiven
  • Income-Contingent Repayment (ICR)
    • Payments are calculated based on AGI, family size and total Direct Loan debt and are adjusted annually
    • Any unpaid interest (due to payment amount) is capitalized annually, meaning that it is added to the principal balance
    • Remaining balance after 25-year term is forgiven
  • Pay as You Earn (PAYE)
    • You must be a new borrower with no outstanding loan balances as of October 1, 2007 and your federal student loan debt must be high, relative to your income
    • Monthly payments will be lower and if your payment amount does not cover the full amount of interest that accrues on your loans each month, the government will pay your unpaid accrued interest on subsidized loans for up to three consecutive years from the date you begin paying your loans under Pay As You Earn
    • Remaining balance will be forgiven after 20 years of qualifying repayment
    • You will more than likely pay more total interest over the life of the loan and you must submit annual documentation each year about income and family size
  • Revised Pay as You Earn (REPAYE)
    • Any Direct Loan borrower with an eligible loan type may choose this plan
    • You will more likely pay more total interest over the life of the loan  and you must submit annual documentation each year about income and family size
    • Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 or 25 years of qualifying repayment

 

Avoiding Default:  Forbearance and Deferment Options

  • Deferment — A period when payment on the principal of a loan is postponed. After the grace period (the six months after graduating or dropping below half-time status) has expired, borrowers are entitled to a deferment if they meet regulatory requirements. Your eligibility for deferment depends on when the loan was made and the individual deferment’s requirements. Any unpaid interest will be capitalized (added to the principal balance) at the end of the deferment period, likely increasing the total balance and your monthly payments.

Common Types of Deferment:

      • In-School Deferment
      • Unemployment Deferment
      • Economic Hardship Deferment
      • Military Deferment
      • Temporary Total Disability, Parental Leave
  • Forbearance — A borrower who is willing but unable to make payments and does not meet the qualifications for a deferment, may request a forbearance. Forbearance allows you to temporarily postpone your payment for a specified period of time. The forbearance will eliminate any delinquency that currently exists on the account, but won’t reverse any derogatory credit information previously reported. No fees are assessed for obtaining forbearance, but interest will continue to accrue on your loan during the forbearance period. Any unpaid interest will increase the amount that must be repaid and may result in an increased monthly payment amount.

Common Types of Forbearance

      • Hardship
      • Reduced Payment
      • Internship/Residency
      • Student Loan Debt Burden
      • Department of Defense Loan Repayment Program
      • Corporation for National and Community Service Loan Repayment Program/Hardship

Consequences of Delinquent Payments and Default

  • The entire amount of your loan, including accrued interest and late fees, can become immediately due and payable, unless payments are placed in forbearance or deferment.
  • Delinquency and default will be reported to all national credit bureaus, making it difficult to buy a car, a home, lease an apartment, apply for a credit card, etc.
  • Legal action can be taken against you and you could possibly be responsible for all attorney fees and court costs.
  • A collection agency can be hired to collect the loan balance and you will be responsible for paying all collection costs.
  • Your wages and federal income tax return can be withheld (garnished) to pay the loan balance.
You will not be eligible for any other federal financial aid until your loan is in acceptable payment status.
On July 6, 2012, Congress enacted legislation to permanently limit eligibility for Subsidized Direct Loans to 150 percent of the length of a student’s academic program. 
 

150% SUBSIDIZED LOAN LIMIT APPLIES ONLY TO:

  • Undergraduate students
  • Students who are first-time borrowers as of July 1, 2013 OR
  • Students who have 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
  • Students who have taken or will take out a Subsidized Direct Loan on or after July 1, 2013

LOSS OF SUBSIDIZED LOAN ELIGIBILITY

  • The student that the Subsidized Loan Limit applies to will no longer be eligible for Direct Subsidized Loans once the borrower has received Subsidized Loans for a period that is 150% of the published length of the borrower’s current educational program. 

  • Examples of maximum time of eligibility for academic program periods:
    • 4-Year Bachelor’s Degree            x 1.5 = 6 years eligibility
    • 2-Year Associate’s Degree           x 1.5 = 3 years eligibility
    • 1-Year Certificate Program           x 1.5 = 1.5 years eligibility
    • 18-Week Certificate Program       x 1.5 = 27 weeks eligibility
  • The Subsidized Loan Limit calculates TIME, not the dollar amount students take out in loans (referred to as the Subsidized Usage Period)
    • If a full-time student takes out a Subsidized Loan for both the Fall and Spring semesters, the Subsidized Usage Period = 1.0
    • If a full-time student takes out a Fall Only or Spring Only Subsidized Loan, the Subsidized Usage Period = .50
    • The Subsidized Usage Period for students less than full-time time is prorated according to enrollment status (half-time and three-quarter time)
      • Prorated SUPs will not take affect for three-quarter time students until 2014-2015
    • The amount of time a student uses in one program will transfer to other programs and schools
  • This does not affect eligibility for Unsubsidized Direct Loans or Parent PLUS Loans

LOSS OF INTEREST SUBSIDY BENEFITS

A first time borrower who has no remaining eligibility for Subsidized Loans will lose interest subsidy on Subsidized Loans if the borrower:

  • Received Subsidized Loans to fund enrollment for 150% of the length of the program of study; AND
  • Did not complete the program; AND
  • Continues enrollment on at least half-time basis in the same program; OR
  • Enrolls in another program of the same or shorter length on at least a half-time basis

Borrower is responsible for interest triggered from the date of continued or subsequent (at least half-time) enrollment in an eligible undergraduate program of equal or lesser length:

  • Whether or not student continues Direct Loan borrowing
  • Unpaid accrued interest is capitalized in same manner as for Direct Unsubsidized Loans.
  • Responsible for loans accruing interest during
    • Periods of at least half-time enrollment
    • Grace period
    • Deferment periods
    • Certain periods when repaying under Pay As You Earn or Income-Based Repayment Plans
  • Loan remains a Direct Subsidized Loan
  • Lost interest subsidy on a loan cannot be regained!!!

WHO TRACKS AND CALCULATES THE 150% SUBSIDIZED LOAN LIMIT?

  • The Department of Education will track, calculate and inform students and institutions regarding all Subsidized Usage Periods, Maximum Eligibility Periods, and the Remaining Eligibility Period based on information provided by institutions 
  • Direct Loan Servicers will inform students of loss of subsidy benefits

Example of Recalculation of Maximum Eligibility Period and Remaining Eligibility Period

If a student is originally in a two-year program and uses the maximum amount of three years’ eligibility, and then transfers to a four-year program, the Department of Education will recalculate the Maximum Eligibility Period and Remaining Eligibility Period. In this instance, it will increase from three years of eligibility to six years of eligibility.

2 year program x 150% = 3 year Maximum Eligibility Period

                          

  3 year Maximum Eligibility Period

- 3 year Subsidized Usage Period_

  0 year Remaining Eligibility Period                                       

 RECALCULATED TO:

 4 year program x 150% = 6 year Maximum Eligibility Period

  6 year Maximum Eligibility Period

- 3 year Subsidized Usage Period  

  3 year Remaining Eligibility Period

 

Private Loans

Students may have the option of taking out a private loan from a qualified lending company. These loans are not part of the federal government loan programs – they are credit-based and may require a cosigner.
 
  • Interest rates are variable and may depend on your credit rating or that of your cosigner.
  • Private loans are generally more expensive than federal guaranteed loans, so it is important to research which one suits your needs best and only take one out after all other options have been exhausted.
  • A student can borrow up to the cost of attendance minus other financial aid awarded for the loan period, which is certified by the school before the first disbursement is made.

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Thank you for choosing Midland College! If you are here to collect a few credits, take courses to transfer, or here to start a new career, we welcome you.

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