Student Loan Program

Federal Direct Subsidized and Unsubsidized Student Loans

A federal student loan allows you to borrow money to help pay for college through loan programs supported by the federal government. The loans usually have low interest rates (3.76% - 2016-2017) and offer attractive repayment terms, benefits and options. Generally, repayment of the federal loan does not begin until after you leave school. The lender is the U.S. Department of Education rather than a bank or other financial institution. You borrow directly from the federal government and you have a single contact, the Direct Loan Servicing Center, for everything related to the repayment of the loans, even if a Direct loan is received from different schools. You will have online access 24 hours a day, 7 days a week at studentloans.gov. You are able to choose from several repayment plans designed to meet the needs of almost any borrower and you can also switch repayment plans if your needs change.

There are two types of Federal Direct loans: subsidized and unsubsidized. The subsidized loans provide low interest rates and are available to students who demonstrate financial need based on income and other information provided on the FAFSA. A credit check is not required to receive these loans. The federal government pays the interest on these loans until you are no longer enrolled in school at least half-time. The unsubsidized loans provide low interest rates and are available to you regardless of your financial need (although the FAFSA still must be filed). A credit check is not required to receive these loans. You are responsible for the interest, which may be paid while you are in school or accrued and then added to the principal balance when you enter repayment, which occurs six months after you are no longer enrolled in school at least half-time.  The interest begins accruing as soon as the loan is disbursed to GCC.  Families of all income levels are eligible. You may also qualify for a combination of the two loans up to the maximum loan amounts.

The maximum amount you can borrow each school year depends on your grade level and a number of other factors. The base amount cannot exceed $3,500 for first-year dependent undergraduate students and $4,500 for second-year dependent undergraduate students. There is an additional $2,000 available in the Federal Direct unsubsidized loan for each of these grade levels if you are eligible for the increased amounts. Independent undergraduate students need to discuss any increased loan amounts with the GCC Financial Aid Director. First- year students are defined as students who have earned up to 27 credit hours, inclusively. After you have earned 27 credit hours, you are considered a second-year student. The loan limits are based on grade levels within your program of study. No student at GCC is considered above second-year standing. You are not required to apply for the full maximum each year. In fact, you are advised to apply for a minimal amount based on your actual educational needs.

Federal student loans can be used to pay eligible school costs such as tuition and fees, room and board, books, supplies miscellaneous and transportation expenses. The cost of attendance for these items is determined by the school and all student loan requests are reviewed on an individual basis. You may receive less than the maximum loan amounts for the following reasons: you are receiving other types of financial aid used to cover the cost of attendance, you do not have some of the expenses listed in the cost of attendance, you have other resources to pay for the cost of attendance components, you request loan money to pay for ineligible costs, your loan request exceeds allowable costs, etc. GCC can refuse to certify a loan or can certify a loan for an amount less than you would otherwise be eligible as long as the refusal is documented and it is explained to you in writing. GCC's decision is final and cannot be appealed to the U.S. Department of Education.

Students who have an outstanding debt of more than $20,000 (includes past loan history at other institutions) in federal student loans may be required to submit an academic plan outlining their courses by semester, anticipated graduation date, educational needs and future loan borrowing. The academic plan must be approved by the Director of Financial Aid before any loan funds will be granted.

All students receiving loan funds are required to participate in both entrance and exit counseling. Entrance counseling takes place prior to the first disbursement of the loan and exit counseling is conducted prior to or at the time the student borrower ceases enrollment. Student loan counseling discusses information regarding the responsibilities of indebtedness, repayment options and consequences should you fail to repay the loan. Student loan counseling is an online process with the U.S. Department of Education at studentloans.gov. Exit counseling packets are mailed to all students with instructions on the exit counseling process. The deadline date for processing loans for first semester is November 15 and April 15 for second semester.

GCC will disburse student loans in at least two installments. No installment will be greater than half of the amount of the loan. First year students borrowing for the first time will not have their loans disbursed until 30 days after the first day of the enrollment period for the student. Student loan money must first be used to pay for tuition, fees, books and room and board, if applicable. If loan funds remain, the balance will be disbursed to you. You need to be enrolled at least half-time in order to receive your loan funds. If you are not attending your classes. You will be contacted and the withdrawal process may need to begin.

Student loans, unlike grants and work-study, are borrowed money you must repay, with interest, just like car loans and home mortgages. You cannot have these loans canceled because you didn't like the education you received, you were not hired in a job in your field of study or because you are experiencing financial problems. Loans are legal obligations, so before a you decide to take out a loan, you need to think about the amount you will need to repay over the years. You must recognize a loan is a debt incurred by you, not your parents. The responsibility for understanding the conditions and regulations of the loan process, as well as the repayment schedules, rests with the you, the borrower. You can find out more about student loans at studentloans.gov.

There is a limit on the maximum period of time (measured in academic years) you can receive Federal Direct Subsidized loans. In general, you may not receive Federal Direct Subsidized loans for more than 150% of the published length of your program. This is called the "maximum eligibility period". You can find the published length of any program in GCC's school catalog. For example, if you are enrolled in a 4-year bachelor's degree program, the maximum period for which you can receive Federal Direct Subsidized loans is 6 years (150% of 4 years = 6 years). If you are enrolled in a 2-year associate degree program, the maximum period for which you can receive Federal Direct Subsidized loans is 3 years (150% of 2 years = 3 years). The maximum eligibility period is based on the published length of your current program. This means the maximum eligibility period can change if you change programs. Also, if you receive Federal Direct Subsidized loans for one program and then change to another program, the Federal Direct Subsidized loans you receive for the earlier program will generally count against the new maximum eligibility period. You may also lose your subsidized eligibility on the first loan when changing programs or if you do not complete your program in the 150%  time frame.

You must fill out the FAFSA to determine your loan eligibility as well as submit a Master Promissory Note (MPN), a Federal Direct Student Loan Request Form and participate in an entrance counseling interview. Loan application materials can be obtained from the GCC Financial Aid Office as well as online.

Federal Direct PLUS Loans for Parents

Federal Direct PLUS loans are loans parents can obtain to help pay the cost of education for their dependent undergraduate children. Parents with good credit histories are able to borrow up to the cost of education minus the financial aid the student is receiving. The interest rate is currently 6.31% and begins to accrue as soon as the loan is disbursed to GCC with repayment beginning within 60 days unless a deferment has been requested.

In order to qualify for a Federal Direct PLUS Loan, a person must be the biological or adoptive parent (or, in some cases, the stepparent) of the student for whom the parent is borrowing; the student must be a dependent student (FAFSA defined) who is enrolled at least half-time; the parent cannot have an adverse credit history (a credit check will be done); the parent and student must be U.S. citizens; must not be in default on any federal education loans or owe an overpayment on a federal education grant; and meet other general eligibility requirements for the federal student aid programs.

The applicant needs to complete a Federal Direct PLUS Loan application which includes a Master Promissory Note (MPN) online. The MPN explains the terms and conditions of the loan and is a legally binding agreement to repay the loan to the Department of Education. In most cases, one MPN can be used for loans that are received over multiple academic years. GCC will send the loan application checklist to the applicant upon request. The student also needs to complete the FAFSA. The disbursement of the loan money is normally credited to the student's account or sent directly to the parent after any direct charges have been deducted. In some cases, with the parent's written permission, GCC will disburse the PLUS loan money directly to the student. Loan money will be disbursed in two installments.

Private Loans

The only types of loans GCC administers are the Federal Direct Subsidized Loan, the Federal Direct Unsubsidized Loan and the Federal Direct Plus Loan. GCC does not have any institutional private loans or any loan funds allocated by an outside agency that are administered through GCC.

GCC informs prospective borrowers of private loans to apply for all state and federal assistance before applying for a private loan. Prospective borrowers are also told that the terms and conditions of the Title IV loans may be more favorable than the provisions of the private education loans. This information is given to the borrowers when they request the Self-Certification Form or when they inquire about private education loans. The U.S. Department of Education brochure, Direct Loan Basics for Students, is also distributed to prospective borrowers of private loans.

The Self-Certification Form is given to you upon request. GCC will assist you in completing the form and you are then required to send the form to your lender. The financial aid information needed to complete the form will be filled in by the Financial Aid Office after you complete the required information on the form. The form is available (paper only) through the Financial Aid Office. It is not available electronically.

All private loans will be tracked to your cost of attendance. Adjustments will be made as needed. Normally, GCC is required to fill out a lender certification form which is received by the lender before the loan proceeds are disbursed to you. At this time, the private loan is added to your aid package. If a certification is not received, the private loan is added when information is received regarding the amount of your private loan. This is received when the loan check is received or when you decide to disclose this information to us. GCC prefers to receive the loan certification forms. Currently, GCC does not have any formal direct certification arrangements with any lender.

GCC does not have a private loan preferred lender list and private loans are not advertised through any marketing materials or on the GCC website

How to Apply for a Federal Direct Student Loan

Note: Your student loan will not be processed until all three steps are completed.

STEP 1:

Complete your Federal Direct Student Loan Request Form for the year you are applying and return it to the GCC Financial Aid Office.

2017-2018 Federal Direct Student Loan Request Form

STEP 2:

Complete your Entrance Counseling online.

  • Go to StudentLoans.gov
  • Log in with your FSA ID. If you do not have a FSA ID, you must apply for one. There is a direct link to the FSA ID website as soon as you enter StudentLoans.gov.
  • Click on Complete Loan Counseling
  • Click on Start – Entrance Counseling

STEP 3:

Fill out your student loan application online. This is called your Master Promissory Note (MPN).

  • Go to StudentLoans.gov
  • Log in with your FSA ID
  • Click on Complete Loan Agreement
  • Click on Start – MPN for Subsidized/Unsubsidized Loans

After you complete your Entrance Counseling session, you have the option of filling out your MPN without logging back in to StudentLoans.gov.  Click on Complete a Master Promissory Note/Start – MPN for Subsidized/Unsubsidized Loans.

Repeat Borrowers - You do not need to complete another loan application (MPN) or participate in entrance counseling if you have borrowed as a student at GCC within the last year. Submit the Federal Direct Student Loan Request Form to complete the loan process.

You should not submit your Federal Direct Loan Request Form until Step 2 and Step 3 have been completed.

GCC will receive an electronic message from the U.S. Department of Education when you have completed the online steps.


How to Apply for a Federal Direct Parent PLUS Loan

Note: Your parent loan will not be processed until all three steps are completed. The parent completes the below information with parental data, not with student information. “You” refers to the parent, not the student.

STEP 1:

Complete your Federal Direct Parent PLUS Loan Request Form for the year you are applying and return it to the GCC Financial Aid Office.

2017-2018 Federal Direct Parent PLUS Loan Request Form

STEP 2:

Complete your application for a PLUS loan credit check.

  • Go to StudentLoans.gov
  • Log in with your FSA ID. If you do not have a FSA ID, you must apply for one. There is a direct link to the FSA website as soon as you enter StudentLoans.gov.
  • Click on Apply for a Direct PLUS Loan
  • Click on Start - Direct PLUS Loan Application for Parents

STEP 3:

Fill out your parent loan application online. This is called your Master Promissory Note (MPN).

  • Go to StudentLoans.gov
  • Log in in with your FSA ID
  • Click on Complete Loan Agreement
  • Click on Start – PLUS MPN for Parents

You should not submit your Federal Direct Parent PLUS Loan Request Form until Step 2 and Step 3 have been completed.

GCC will receive an electronic message from the U.S. Department of Education when you have completed the online steps.

Repaying Your Student Loans

Student loans, unlike grants and work-study, are borrowed money that must be repaid, with interest, just like car loans and home mortgages. You cannot have these loans canceled because you didn't like the education you received, you didn't get a job in your field of study or because you are experiencing financial problems. Loans are legal obligations, so before you decide to take out a loan, you need to think about the amount you will need to repay over the years. The recipient of a student loan must recognize a loan is a debt incurred by the student, not the parents. The responsibility for understanding the conditions and regulations of the loan process, as well as the repayment schedules, rests with you, the student borrower. You can find out more about the terms of student loans at studentloans.gov or from your servicer at NSLDS.gov for your federal loans or if you are borrowing a private loan, you need to discuss the terms with your individual lender.

Don't miss a payment! If you don't pay the full amount due on time or if you start missing payments, even one payment, your loan may be considered delinquent and late fees can be charged to you. If you are making late or partial payments, contact your loan servicer immediately for help. You may be able to change your repayment plan to one that allows for a longer repayment period or to one that is based on your income. Also, ask your loan servicer about your options for loan consolidation, deferment, or forbearance. NEVER ignore delinquency or default notices from your loan servicer. If you don't make your loan payments, you risk going into default. Defaulting on your loan has serious consequences. Your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe. Always contact your loan servicer. They are very nice people and will assist you in any way they can. There are times when your loan payment may be $0.

WHAT ARE THE CONSEQUENCES OF DEFAULT?

The consequences of default can be severe:

  • The consequences of default can be severe:

    • The entire unpaid balance of your loan and any interest is immediately due and payable.
    • You lose eligibility for deferment, forbearance, and repayment plans.
    • You lose eligibility for additional federal student aid.
    • Your loan account is assigned to a collection agency.
    • The loan will be reported as delinquent to credit bureaus, damaging your credit rating. This will affect your ability to buy a car or house or to get a credit card.
    • Your federal and state taxes may be withheld through a tax offset. This means that the Internal Revenue Service can take your federal and state tax refund to collect any of your defaulted student loan debt.
    • Your student loan debt will increase because of the late fees, additional interest, court costs, collection fees, attorney's fees, and any other costs associated with the collection process.
    • Your employer (at the request of the federal government) can withhold money from your pay and send the money to the government. This process is called wage garnishment.
    • The loan holder can take legal action against you, and you may not be able to purchase or sell assets such as real estate.
    • Federal employees face the possibility of having 15% of their disposable pay offset by their employer toward repayment of their loan through the Federal Salary Offset.
    • It will take years to reestablish your credit and recover from default.