Loans are borrowed money that the student and/or parent will have to repay with interest. Subsidized and Unsubsidized Federal Stafford Loans are the most common source of student loan funds.
William D. Ford Federal Direct Student Loan Program (Direct)
The William D. Ford Federal Direct Subsidized and Unsubsidized Loan is a fixed interest rate loan made to a student who is enrolled at least half-time in an eligible program. The lender is the U.S. Department of Education. Repayment begins six months after a student leaves school or drops below half-time enrollment.
The Direct Loans include the following types of loans:
- Direct Subsidized Loans—Direct Subsidized Loans are for students with financial need and the government pays the interest while the student is enrolled. The financial aid office will review the results of the student’s Free Application for Federal Student Aid (FAFSA) and determine the amount the student is eligible to borrow. The subsidized Stafford loan is the best, first choice for the students looking to borrow money for education. Federal regulations limit the benefits of the direct loan subsidy to an aggregate period of no more than 150% of program length and applies only to first-time borrowers as of July 1, 2013. Once that limit has been exceeded, a student may borrow only subsidized loans, and will begin to incur interest charges on outstanding subsidized loans.
- Direct Unsubsidized Loans—Direct Unsubsidized Loans are not need based; therefore, students are not required to demonstrate financial need. Like subsidized loans, the school will determine the amount the student is eligible to borrow. Interest accrues (accumulates) on an unsubsidized loan from the time it’s first paid out. Students can pay the interest while they are in school and during grace periods and deferment or forbearance periods, or they can allow it to accrue and be capitalized (that is, added to the principal amount of your loan). If the student chooses not to pay the interest as it accrues, this will increase the total amount the student has to repay because they will be charged interest on a higher principal amount.
The Financial Aid Office will determine the student’s loan eligibility in accordance with the Department of Education regulations. A dependent student can borrow combined subsidized and unsubsidized loans not to exceed the annual loan limits. The loan limits are $3,500 per year for freshmen and $4,500 per year for sophomores. Independent students may borrow additional unsubsidized loans not to exceed $6,000. Dependent students may borrow additional unsubsidized not to exceed $2,000. The actual amount the student is eligible to borrow is determined by the financial aid office and may be less than the maximum amount. There are also aggregate limits on the total amount a student can borrow. For loan purposes, a student’s classification will be determined by the number of hours completed toward his or her selected degree or certificate at the time of initial certification. A student’s classification will not be reevaluated until the beginning of the next academic year (fall through summer). A student who transfers in the middle of an academic year and has received his or her annual loan limit while at the transfer institution will not be eligible for a loan at VC until the beginning of the next academic year. In accordance with federal regulations, VC has the right to refuse to certify a loan or to certify for a reduced amount.
Interested students must accept or decrease their awarded student loan amount via the on-line acceptance feature that is available through My VC. Once accepted, students must complete entrance loan counseling and complete the Master Promissory Note (MPN) process that is available at www.studentloans.gov. Borrowers must complete entrance loan counseling and testing before receiving a loan each academic year. Exit loan counseling and testing is required before the student ceases at least half-time enrollment. Once the student completes entrance counseling, exit counseling and/or the MPN process, confirmation is sent to the Vernon College Financial Aid Office. For more information regarding the Direct Loan Program and/or VC student loan policies, please read the VC Direct Loan Information brochure.
Borrowers have a right to cancel all or a portion of the loan disbursement and have their proceeds returned to the federal government. VC will send notice to the borrower no earlier than 30 days before and no later than 30 days after the school credits the student’s account. The notice will include the method and date by which the borrower must notify the school that he or she wishes to cancel all or a portion of the loan or loan disbursement.
Vernon College does not participate in the Perkins Loan, Hinson-Hazlewood Loan Program, HEAL Loan Program, HELP Loan Program and the CAL Loan Program.
Federal Direct Parent Loan for Undergraduate Students (PLUS)
The Direct PLUS is a fixed interest rate loan created by the federal government to help creditworthy parents pay for their dependent student’s education beyond high school. Federal PLUS loans are not restricted to a student’s financial need and can help pay for educational expenses up to the cost of attendance minus all other financial assistance. Interest is charged during all periods. The US Department of Education will perform a standard credit check. If approved, the parent is responsible for paying the principal amount of the loan and all interest that accrues from the date of disbursement until the loan is paid in full. Repayment begins within 60 days after the loan is fully disbursed. However, the parent, upon his or her request, can defer payment on a PLUS loan if the student is enrolled at least half-time. The loan amount may not exceed the dependent student’s cost of attendance minus other financial aid awarded for the loan period. If the student’s parents are determined to have an adverse credit history, the student may still receive a Direct PLUS Loan if they obtain an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS Loan if the student/parent does not repay the loan. If a student’s parents cannot obtain a PLUS loan the student is allowed to borrow additional unsubsidized money. The student must be enrolled at least half-time to receive a PLUS Loan. To determine a student’s eligibility for a PLUS loan, the student must complete a Free Application for Federal Student Aid. In addition a complete financial aid file is required before a PLUS loan will be certified. Interested students must print a PLUS certification/authorization form and a PLUS Request form from www.vernoncollege.edu./FINAID/Forms.
Borrowers have a right to cancel all or a portion of the loan or loan disbursement and have their proceeds returned to the federal government. VC will send a notice to the borrower no earlier than 30 days before and no later than 30 days after the school credits the student’s account. The notice will include the method and date by which the borrower must notify the school that he or she wishes to cancel all or a portion of the loan or loan disbursement.
Numerous lenders offer other types of variable rate educational loans for creditworthy students. Alternative loans are provided without consideration of ﬁnancial need. These loans are not part of the federal government loan programs - they are credit-based and may require a cosigner. Alternative loans are generally more expensive than federal student loans and should only be used when all other options have been exhausted. A complete ﬁnancial aid ﬁle is required before Vernon College will certify an alternative loan application. Due to less favorable repayment options, Vernon College will not certify an alternative loan for any student that has Direct loan eligibility. Alternative loans will follow the same disbursement policies as Direct subsidized and unsubsidized loans.