Loans Frequently Asked Questions

Do students need to fill out the FAFSA to receive a student loan?
Yes, these are federal loans and a type of financial aid. The FAFSA determines how much and what kind of loan students will qualify for.

How do students let the FAO know they want a loan?
The JCJC FAO requires students to complete a loan application. If students indicate, "interested in student loans" on the FAFSA, a loan will not automatically be processed. A loan application may be obtained by: (1) printing out the loan application under "Forms" from the JCJC financial aid website or (2) requesting an application from the FAO.

What is the difference between a Subsidized and an Unsubsidized Federal Direct Loan?
Subsidized Loan is a federal loan awarded to students who demonstrate financial need as a result of filing the FAFSA. Maximum amounts available per student are set by the federal government and are based on the student's grade level classification at the institution. The government pays the interest on the Subsidized Loan while the student is in school, and the student begins repaying the principal and interest of the loan 6 months after graduation or ceasing at least half-time enrollment.  For new loans disbursed on or after July 1, 2012, and before July 1, 2014, the repayment period still begins six months after the student is no longer enrolled at least half-time, but interest that accrues during those six months will be payable by the student rather than be subsidized by the federal government.
Unsubsidized Loan is identical to the Subsidized Loan in terms of interest rates and application process. The only difference is that interest on the Unsubsidized Loan is not paid by the government while the student is enrolled. The student has the choice to either make interest payments while enrolled or defer the interest until repayment of the principal begins.

When do students start repaying student loan(s)?
Students are responsible for repaying the principal balance of student loans after completion of degree or when enrollment is ceased on at least a half-time basis (half-time enrollment for most undergraduates is defined as 6 credit hours per semester). Federal loans allow students a six-month grace period after enrollment is ceased on at least a half-time basis before repayment. The lender will notify students when repayment is scheduled to begin.

If a student is in default because of a previous student loan, can they receive financial aid?
Yes, if the lender sends a letter stating that the student is in satisfactory repayment and eligible for Title IV aid. However, a loan in the future will not be processed by the JCJC FAO for students who previously defaulted on a student loan.

Who is the lender for Federal Direct Student Loans?
The U.S. Department of Education is the lender for Federal Direct Student Loans.

Are students required to sign a Master Promissory Note for Federal Direct Student Loans?
Students who are first time borrowers of Federal Direct Student Loans at JCJC are required to sign a Master Promissory Note with the Department of Education. Master Promissory Notes must be completed online at www.studentloans.gov .

Are students required to participate in Entrance Counseling?
Students are required to complete Entrance Counseling. Entrance Counseling must be completed online at www.studentloans.gov .

Are students required to participate in Exit Counseling?
When students graduate, withdraw, or drop below half time status, Exit Counseling must be completed. Complete Exit Counseling online at www.nslds.ed.gov .

How much can students borrow in Direct loans?
A number of factors determine how much students may borrow such as: grants, cost of attendance, etc…. The FAO will determine how much students qualify for based on students' budgets.

Why is the maximum amount of loan money limited?
Students applying for the Federal Direct Loan are subject to annual and aggregate loan limits that are based on current major, academic level, dependency status, and length of the academic program. The Federal Direct Loan Program presets the loan limits.

Will an origination fee be charged on Direct Loans?
A 1.0% origination fee less a 0.5% rebate fee will be charged against Federal Direct Loans by the U.S. Department of Education. If the first 12 monthly payments are not made on time, the Department of Education will add the rebate fee back to the loan balance.  For new loans disbursed on or after July 1, 2012, the rebate fee will no longer be offered.  Because of this fee, the amount of student loan applied to a student's account will be less than what appears on the student's award notification.