Please be informed that upon borrowing students loans, the loan information will be submitted to the National Student Loan Data System (NSLDS), and will be accessible by guaranty agencies, lenders, and schools determined to be authorized users of the data system.
Time Limitation on Direct Subsidized Loan Eligibility for First-Time Borrowers on or after July 1, 2013. For more details, see flyer.
Texas Southmost College loans are processed through the William D. Ford Federal Direct Loan Program, also known as Direct Loans. These low-interest loans are for undergraduate and graduate students and must be repaid. Loans are available to students and/or parents to help pay for educational expenses. They must be repaid after the student graduates, drops below half-time status.
- Federal Direct Subsidized Loans – The Direct Subsidized Loan is a need-based loan. A student must have financial need (based on the FAFSA results) in order to qualify. The federal government will pay the interest on the loan while the student is in school at least half-time and during any deferment period. The student begins repayment (of principle and interest) when they stop attending school on at least a half-time basis. Students have a six month grace period before they begin to repay their loans.<!–
Eligibility:
o Must have financial need (based on the FAFSA results)
o Must be enrolled at least half-time – 6 credit hours
o Must maintain Satisfactory Academic Progress (SAP)
o May not exceed annual or lifetime loan limit–>
- Federal Direct Unsubsidized Loans – The Unsubsidized Direct Loan is NOT a need-based loan. A student does NOT have to demonstrate financial need to qualify. Interest begins to accrue on the loan once the first disbursement is made. Students can either pay the interest while attending school, or have the interest added to the balance of their loan. The student begins repayment when they stop attending school on at least a half-time basis. Students have a six month grace period and then begin repaying the loan.
Eligibility- Must have financial need (based on the FAFSA results) *only applies so Subsidized Loans
- Must be enrolled at least half-time – 6 credit hours
- Must maintain Satisfactory Academic Progress (SAP)
- May not exceed annual or lifetime loan limit
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- Must complete the FAFSA
- Must be enrolled at least half-time – 6 credit hours
- Must maintain Satisfactory Academic Progress (SAP)
- May not exceed annual or lifetime loan limits
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- Federal Direct Parent Loans (PLUS) – The Direct Parent Loan is for parents of dependent, undergraduate students. Interest begins to accrue on the loan once the first disbursement is made. Parents will have a sixty day grace period after the second disbursement is issued. The parent begins repayment of the loan after the grace period ends, and while the student is still attending college. Parents have deferment options that will allow a parent to delay repayment while the student is in school at least halftime.
Eligibility- Dependent student must complete the FAFSA
- Dependent student must be enrolled at least half-time – 6 credit hours
- Dependent student must maintain Satisfactory Academic Progress (SAP)
- Parent must pass a credit check
- If the parent is denied the PLUS Loan due to credit, the dependent student may apply for additional unsubsidized loan funds
- Parent cannot borrow more than the Cost of Attendance (less all other financial aid)
The type of loan you are offered is based on the results of your FAFSA. Students are encouraged to accept all free monies first, before accepting any form of student loans. Borrowing loans should be a student’s last option of funding.
NOTE: Students who are non-degree seeking do not qualify for Direct Loan funds.
Loan Interest Rates
Direct Loans have low-interest rates which are fixed for the life of the loan. The following rates are for loans borrowed after July 1, 2022, and before July 1, 2023. Interest rates are subject to change every July 1st. For updated interest rates, visit studentaid.gov.
- Subsidized Loan – 3.73%
- Unsubsidized Loan – 3.73%
- Parent Loan (PLUS) – 6.28%
Loan Fees
All Federal Direct Loans are assessed a loan fee by the federal government to help reduce the cost of making these low-interest loans. Loan fees are subject to change every October 1st. For updated loan fee rates, visit studentaid.gov. The fees are as follows:
- Subsidized and Unsubsidized Loans – 1.057%
- Parent PLUS Loans – 4.228%
Direct Loan Limits
The amount a student can borrow during an academic year is based on several different factors including grade level, dependency status and federal loan limits. The following chart lists the maximum yearly loan limits for Subsidized and Unsubsidized loans:
Yearly Loan Limits
Dependent Undergraduate Students:
Base Loan Sub/Unsub Additional Unsubsidized Amount Total First Year $3,500 $2,000 $5,500 Second Year $4,500 $2,000 $6,500 Independent Undergraduate Students (and dependent students whose parents cannot borrow a Parent Loan):
Base Loan Sub/Unsub Additional Unsubsidized Amount Total First Year $3,500 $6,000 $9,500 Second Year $4,500 $6,000 $10,500
The Department of Education also sets aggregate, or total, loan limits that students cannot go over. Students cannot borrow more than the following lifetime limits for Subsidized and Unsubsidized loans:
Types of Student Maximum Amounts (subsidized and unsubsidized) Dependent Students $31,000 – no more than $23,000 of this amount may be subsidized ($8,000 must be unsubsidized) Independent Students (and dependent students whose parents cannot borrow PLUS) $57,500 – no more than $23,000 of this amount may be subsidized ($34,500 must be unsubsidized)
Disbursement of Loan Funds
Before the institution can disburse the loan funds, students must accept their loan award (s) on TSC online. Student who are first-time borrowers must also complete the online <https://studentloans.gov/myDirectLoan/index.action>Entrance Counseling session and the <https://studentloans.gov/myDirectLoan/index.action>Master Promissory Note. Loan funds will then be posted to the student’s TSC account at least ten days before classes begin. Students may use their loan funds to pay for their tuition and fee costs. Any remaining balance (after tuition and fees have been paid) will be issued to the student. Students can receive their balance with BankMobile Disbursements, a technology solution, powered by BMTX, Inc. sent by the Financial Office.
If a student applies for a loan after school has already begun, loan funds will be posted to the student’s account within ten business days of completing the three steps mentioned above. A refund will then be issued to the student by the Finance Office either by direct deposit or paper check.
First Time Freshmen Disbursement
First Time Freshmen who are borrowing loans for the first time will have the first disbursement made until the 30th class date. For First Time Freshmen students enrolling for 1 semester only, the second disbursement will be made in the middle of the semester.
Loan Repayment
Students are required to repay their loans, even if they do not complete their education, cannot find a job after graduation, leave school or feel dissatisfied with the education they received. The responsibility of repaying student loans cannot be avoided. However, there are many helpful features during the repayment process that can help reduce or postpone payments for a period of time.
Repayment Plans
There are several different repayment plans to help manage loan payments. Students can choose a payment plan that is right for them at that particular time. Some of the repayment plans include:
- Standard Repayment Plan – A student pays a minimum monthly amount (no less than $50) for 120 payments, or ten years. The monthly amount depends on how much money is borrowed.
- Your monthly payment under the standard plan may be higher than it would be under the other plans because your loans will be paid off in the shortest amount of time.
- Graduated Repayment Plan – A student pays a smaller monthly amount in the beginning of the repayment cycle and gradually increases the monthly payment over a ten year period.
- Income Based Repayment – The required monthly payment is capped at an amount that is supposed to be affordable based on family income, family size and total federal loan debt. Students will pay on this plan for up to 25 years.
- Income Contingent Repayment – Each year, the student’s monthly payments will be calculated using their (and their spouses, if married) adjusted gross income, family size and total amount of Direct Loans owed. Student will pay on this plan for up to 25 years.
- Consolidation Repayment Plan – Students combine all eligible loans into a new loan. Students can take up to 30 years to pay a consolidation loan which lowers their monthly payments. However, students will pay more interest on the loan because the repayment term is longer.
Loan Forgiveness
If a student becomes totally and/or permanently disabled, their loan funds will be forgiven. Certain documentation must be filed to receive this forgiveness option. Also, if a student passes away, their loans will be forgiven. A copy of their death certificate is needed and must be submitted to the loan holder. There are other loan forgiveness programs available to students. Some forgiveness programs will completely pay off the student’s debt while others will forgive a portion of the debt. Some of the notable programs are:
- Teacher Loan Forgiveness – Student must teach for five consecutive, complete years at an eligible school. Student can receive from $5,000 to $17,500 in loan forgiveness depending on the area of teaching.
- Public Service Loan Forgiveness – Student must make 120 monthly payments while serving in a public service position and continue to be employed in a public service position at the time of forgiveness.
- Child Care Loan Forgiveness – Student working full-time in a child care center that services low-income communities is eligible for loan forgiveness based on the number of years employed at the eligible child care center.
Deferment
A deferment is a period of time in which the student postpones (or stops) making monthly loan payments. Interest on the subsidized loans will be paid by the federal government during the deferment periods. There are several types of deferments available:
- In School – Student enrolled at least half-time in an eligible program. Students have a lifetime of in-school deferments.
- Unemployment – Student must be registered with the local unemployment office. Students have three years of unemployment deferments.
- Military Service – Student is called to active duty during a war or other military operation or national emergency.
- Post-Active Duty – Student who is enrolled and then called to active duty is eligible for 13 months deferment after their active duty service.
- Economic Hardship – Student’s income is at or below the poverty level. Students have three years of economic hardship deferments.
Forbearance, Delinquency, and Default
A forbearance is a period of time in which the student may postpone or reduce their monthly loan payments. If a student is not eligible for a deferment, loan forbearance is an option. Interest on the loan will continue to accrue during any forbearance period and will NOT be paid by the federal government. Students must contact the holder of their loan to request a forbearance. A student has three years of forbearance options.
A student is considered to be delinquent on their students loans if they are 30 days past due. Once a student is 30 days past due, the holder of the loan will report the delinquency status to all major credit bureaus. The student will be contacted by their holders to offer help in resolving the delinquent status. Deferment and forbearance options will be discussed at this time.
When a student has failed to make payments as agreed under the master promissory note, the student is considered to be in default if they have not made a payment on their loan for 270 days. Once a student defaults, numerous consequences occur such as:
- National Credit Bureaus will be contacted and the students credit score is negatively affected
- The loan will be due in full within 10 days
- The borrower will be sued for the balance of the loan
- The borrower will be responsible for any collection costs, court costs and attorney fees
- Income tax refunds will be applied to the defaulted loan
- Wages will be garnished
- Professional license will not be renewed
- The borrower will be ineligible for deferments
- The borrower is no longer eligible for financial aid funds
- The loan debt is still owed in full
Exit Loan Counseling
Exit loan counseling is a federal requirement. Students must complete exit counseling before leaving school for any of the following reasons:
- Graduation
- Dropping below half-time status
- Completely withdrawing
- Non-enrollment
- Transferring to another school
Student records will remain in a hold status until the exit requirement is completed. Students can complete exit counseling online by clicking on the following link: Student Loan Exit Counseling
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