Office of Financial Aid

William D. Ford Federal Direct Loan Program

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Since 1995-96, Schenectady County Community College has been selected to participate in the new William D. Ford Federal Direct Loan Program. Under this program, students borrow money from the federal government to pay for their college costs. The U.S. Department of Education makes the loans, through the College, directly to the students. The College will use the student's Direct Loan to pay college charges and will give the student any remaining money for living expenses.

Under the Federal Family Education Loan Program (FFELP), private lenders provide the money for loans, and lenders deliver the loan money to schools. Direct Loans simplify the loan process and eliminate the need for an outside lender, such as a bank. Direct Loans make loan repayment much easier--payments go directly to the federal government. SCCC does not participate in the FFELP program. Additional information on Federal Direct Loans is available from the Department of Education at http://www.ed.gov/DirectLoan or 800-848-0979.

There are three types of Direct Loans:

Federal Direct Stafford Loans

These are based on financial need. The government will pay the interest on the loan while the student is in school.

Federal Direct Unsubsidized Stafford Loans

Students get Federal Direct Unsubsidized Stafford Loans regardless of need, but will have to pay all interest charges.

Federal Direct PLUS Loans

Parents of dependent students can borrow a Federal Direct PLUS Loan to help pay for their child's education.

Application Procedures

All students must complete the Free Application for Federal Student Aid (FAFSA) by using “FAFSA on the Web” at http://www.fafsa.ed.gov. Once the FAFSA has been completed and SCCC has the results, the student loan application process consists of four basic steps:

Step 1. Locate or apply for your Federal PIN

You should have received a Federal PIN from the U.S. Dept. of Education shortly after the first time that you completed a Free Application for Federal Student Aid (FAFSA). The PIN serves as your electronic signature and holds the same legal status as your written signature. You should keep your PIN in a safe place and not share it with anyone.

If you do not have a PIN, go to http://www.pin.ed.gov and choose either “Apply for a PIN” if you have never had one or “Request for a Duplicate PIN” if you had one but do not know it. You will need to submit your name, social security number, date of birth, and email or mailing address. A PIN will be generated and sent to you. You will have the option of receiving your PIN either through your email account (2-3 days) or your PIN can be mailed to you (7-10 days).

Step 2. Complete your Online Entrance Counseling

Every first time Federal Direct Loan borrower must complete student loan entrance counseling. Borrowing a student loan is a serious financial obligation, and the entrance counseling will provide you with the important information you need to know to be able to make an informed decision about student loan borrowing. The entrance counseling must be completed before the Financial Aid Office will accept and process your loan application.

Complete your online entrance counseling on the Federal Direct Loan Servicing website at http://www.dlssonline.com. This tutorial reviews basic facts about Federal Direct Loans, and your rights and responsibilities as a borrower. After you complete the tutorial, you will be required to take and pass a quiz. To pass the quiz, you must answer 12 out of 15 questions correctly. The tutorial and quiz will take approximately 20-30 minutes to complete. Once you have passed the quiz, the system will display your quiz results and ask you to choose a school. You should type in Schenectady and find Schenectady County Community College in the drop down box. You may print your passing entrance counseling quiz results along with a copy of your rights and responsibilities by clicking “Retrieve Quiz Results” from the main page.

Step 3. Complete and Sign your Electronic Master Promissory Note (MPN)

First time Direct Loan borrowers need to sign a Federal Direct Loan Master Promissory Note (MPN). If you have already signed a Federal Direct MPN previously for SCCC or another Direct Loan college (online or paper), you do not have to complete a new MPN.

Students now are able to sign their MPN electronically on the web at http://dlenote.ed.gov. Go to: “Complete New MPN for Student Loans”. To complete an electronic MPN, students will need to use their U.S. Dept. of Education issued PIN. Students who do not have a computer or the appropriate software may use computers available on campus to complete the process.

Completing an electronic MPN is very simple and easy. You must complete the entire process in a single session so be prepared and give yourself plenty of time. If you exit the site before signing your electronic MPN, you will be required to start over from the beginning.

IMPORTANT: Before beginning your electronic MPN session:

Paper Option: If you do not wish to sign your MPN with your PIN, you may request that the Financial Aid Office print a copy of your MPN. The printed copy will be mailed to your home address for your signature, but this will delay the processing of your loan application.

Step 4. Complete the Request for Federal Direct Student Loan Form

This form is in an Adobe Acrobat .pdf format. If you are unable to view .pdf files please download Adobe's free Acrobat Reader by clicking on this link: Free Adobe Acrobat Reader

You should submit it to the Financial Aid Office (Elston 221). You should attach a copy of your entrance counseling rights and responsibilities and a copy of your electronic MPN.

Eligibility Criteria

To be eligible for a Federal Direct Loan a student must:

be a U.S. citizen or permanent resident alien;
be taking at least six credit hours and be matriculated in a degree program;
not owe any refunds on a Pell Grant or other awards received and not be in default on repayment on any type of student loan.

Each new student loan recipient will be required to attend an entrance interview before a loan application is processed and an exit interview when graduating or terminating from school.

Exit Counseling

Federal regulations require that all student loan borrowers must have an exit interview/exit counseling during their final semester at the College. All borrowers should plan to attend exit counseling with the Financial Aid Office at this time. During the exit counseling, students are reminded of their rights and responsibilities as a student loan borrower. The Federal Direct Loan Exit Counseling Guide for Borrowers is the primary resource used. Topics include: when repayment starts, various repayment plans, deferments, loan consolidation, and consequences of default. All borrowers are requested to complete the Rights and Responsibilities Checklist and Borrower Information Form.

Students may access information about Exit Counseling at http://www.ed.gov/DirectLoan. This provides access to the Exit Counseling Guide as well as the Borrower's Information Form and the Borrower's Rights and Responsibities Form which must be completed in the exit interview process.

Students who have a pin number have the option of using the online Exit Couseling at http://www.dlssonline.com/exitcounseling/ecec-main.asp. This will satisfy all requirements for exit counseling and give the borrower up to date information on their student load balances. This is the quickest and easiest way to satisfy the exit couseling requirement.

Maximum Loan Amounts

A first-year dependent undergraduate student (with less than 30 earned credits) may borrow up to $3,500 per year with eligibility increasing to $4,500 in the second year. Additionally, a dependent undergraduate student may only borrow up to an aggregate limit of $23,000. Independent students may have up to $4,000 per year in additional unsubsidized loan eligibility.

Repayment Terms

Effective 2008-2009, the fixed interest rate for subsidized Federal Direct Loans is 6% and unsubsidized Federal Direct Loans is 6.8%. In addition, all Federal Direct Loans are charges an origination fee of 2.0%. With the current rebate allowances for on time payments of 1.5%, the actual origination fee charged is 0.5%.

For a Federal Direct PLUS loan, the fixed interest rate is 7.9% which is less than the FFELP PLUS loan rate of 8.5%. In addition, the Federal Direct PLUS loan has an origination fee of 4%. With the current rebate allowances for on-time payment, the actual origination fee charged is 2.5%.

There are several ways to repay a Federal Direct Loan:

A standard repayment plan has a fixed monthly repayment amount for a fixed period of time, usually 10 years.

Anextended repayment planhas a lower fixed monthly payment amount, and loan repayment can be extended beyond the usual 10 years.

A graduated repayment plan usually begins with lower monthly payments, and payment amounts increase at specified times. Payments may be the usual 10 year period, or they may be extended beyond the usual 10 years.

income-contingent repayment plan sets annual repayment amounts based on the borrower's income after leaving school. The loan is repaid over and extended period of time, not to exceed 25 years.

A servicing agency will be responsible for maintaining the loan account and repayments. It is the student's responsibility to maintain contact with that agency.

Loan Consolidation

Students who have previously borrowed FFELP student loans through a lending institution and who are now borrowing a Federal Direct Loan are encouraged to consolidate all of their student loans into one Federal Direct Consolidation Loan. This will help the borrower avoid the situation of owing two separate loans to two different lenders. Borrowers who are interested in consolidation of all their student loans into one Consolidation Loan can contact the U.S. Department of Education for more information at http://loanconsolidation.ed.gov.

Last Updated 2/28/08