The William D. Ford Direct Loan Program |
| The Direct Loan Program is considered to be a federal entitlement program. This means that funding is available through the entire year to as many eligible students as wish to apply. |
| Direct Loans are a serious obligation and need to be repaid. Thus, students are encouraged to borrow wisely and to borrow only the amount that is needed to meet their current educational costs. |
| Direct Loans may be subsidized or unsubsidized. Subsidized loans are based on financial need and the federal government pays (subsidizes) the interest on the loan until six months after the borrower leaves school. |
| Unsubsidized loans are available to those with or without documented financial need. The interest on an unsubsidized loan begins to accrue as soon as the loan is disbursed. Students have the option of paying the interest quarterly or letting the interest capitalize (in which case it is added to the loan, making it grow while the student is still in school). Unsubsidized loans are not recommended at LBCC, unless the student has exceptional need for one. |
| The interest charged on a Direct Loan is set each year by the federal government and is based on the 91-day Treasury bill interest rate as of July 1st. You can get information about the current interest rate by visiting the Direct Loan web site. |
| The amount of Direct Loan a student may receive depends on the amount of financial need (see the eligibility link to the left). First year students (those who have completed less than 30 units or college work) may borrow up to $3,500 per year, second year students may borrow up to $4,500 per year. There are no third or fourth year students at a community college. In addition, independent students may request an additional unsubsidized loan of up to $6,000 per year and dependent students $2,000 per year through an appeal process. See the Apply for a Direct Loan link below for information on the petition process and the Dependent vs. Independent link to the left for more information on dependency status. |
| Direct Loans must be disbursed in two payments. Typically, half in the fall and half in the spring. One semester loans are disbursed at the beginning and at midterm of the semester. First disbursements for new borrowers cannot be authorized until 30 days into the semester. Students must take at least 6 units to receive a Direct Loan. |
The Free Application for Federal Student Aid (FAFSA), plus any additional documentation needed to complete the financial aid application, are required in order to receive a Direct Loan. In addition, there is a separate application procedure, which is fully explained in Apply for a Direct Loan.
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| Recommended for All Student Loan Borrowers |
- Accounting 400--Personal Financial Management--3 units
- This course is designed for students interested in learning concepts and skills relevant to effective personal financial management. These topics include saving, budgeting, debt management, retirement planning, insurance, home buying, investment, and estate planning. This is a hands on course involving problem solving in the above areas.
FACS 350M1--Consumer Awareness: Money Mangement--1 unit
- This course covers the handling of debt, applying for credit, credit rights, and wise money management.
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