Financial Aid

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Loans for Students

Direct Loans for Students 

As a result of the Health Care and Education Reconciliation Act, beginning July 1, 2010, federal student loans will no longer be made by private lenders under the Federal Family Education Loan (FFEL) Program. Instead, all new federal student loans will come directly from the U.S. Department of Education under the Direct Loan Program.

IMPORTANT UPDATE REGARDING RECENT CHANGES IN DIRECT SUBSIDIZED LOAN ELIGIBILITY

On July 6, 2012 the President signed into law the Moving Ahead for Progress in the 21st Century Act (MAP 21).  This law places a limit on Direct Subsidized loan eligibility for new borrowers on or after July 1, 2013.  A first-time borrower is no longer eligible for Direct Subsidized loans once the borrower has received Direct Subsidized loans for a period of 150% of the length of the borrower's educational program.  The borrower also becomes responsible for accruing interest during all periods as of the date the borrower exceeds the 150 percent limit. For detail information on 150% Loan Limit visit Time Limitation on Direct Subsidized Loan Eligibility For First Time Borrowers

A first-time borrower is a borrower who has no outstanding balance of principal or interest on a Direct Loan or FFEL loan on July 1, 2013.  Borrowers who had a loan balance which has been paid in full prior to receiving loans after July 1, 2013 becomes a first-time borrower.

Types of Direct Loans

There are two types of Direct Loans: subsidized, for which the government pays the interest while the student is enrolled in at least 6.0 units, and unsubsidized, for which the student is responsible for paying all the interest on the loan, during college and after. A student can receive both types of Direct Loans at the same time.

For Direct Subsidized and Unsubsidized loans where the first disbursement is after July 1, 2014 and before July 1, 2015 the fixed interest rate is 4.66 percent. 

How do I request a Direct Loan?

#1) Complete a Free Application for Federal Student Aid (FAFSA) at www.fafsa.gov

#2) Return all documents requested by the SBCC Financial Aid Office to complete your FAFSA application.

#3) Go to https://studentloans.gov to complete Direct Loan Entrance Counseling and the Direct Loan Master Promissory Note.  Go to Manage My Direct Loan and click the Sign In button.  You will need your social security number, the first two characters of your last name, your date of birth and your FAFSA PIN number.  Once you are signed, click on Complete Counseling.  Under Choose Loan Counseling Type click the Start button for Entrance Counseling.

NOTE: If you have previously completed Direct Loan Entrance Counseling, you do not need to complete the entrance counseling again.

Once you finish entrance counseling and click the Submit Counseling button, you will be at the Entrance Counseling Summary screen.  Scoll down to the Next Steps section and click Complete a Master Promissory Note.

You will need reference information for two people with different U.S. addresses who have known you at least 3 years.  The first reference should be a parent or legal guardian.  NOTE:  If you have completed a Direct Loan Master Promissory Note (MPN) within the last 10 years, you can confirm your MPN status by clicking on the link Completed MPNs at the left hand side of the screen.

#4) Log on to your SBCC Pipeline account.  Click on Financial Aid at the right hand side of the home page.  At the Financial Aid page, click on Award, then Award for Aid Year.  At the Award for Aid Year page, click on the Award Overview tab.  Click on the Direct Loan Request link.  The Direct Loan Request is a fillable PDF which is completed online.  There are three forms to be completed online as follows:  The Student Budget Worksheet, the Student Loan Borrower Worksheet and the Student Loan Request Form.

#5)  Complete the Student Budget Worksheet, the Student Loan Borrower Worksheet and the Student Loan Request Form, print the 2 worksheets and the Student Loan Request Form, then bring the 2 worksheets and Student Loan Request Form to the Financial Aid office for loan intake with a Financial Aid Advisor.  You will need to present a picture ID for loan intake.

What if I'm an online student?

Complete Steps 1 through 5 under "How do I request a Direct Loan?" then email the completed Student Budget Worksheet, Student Loan Borrower Worksheet, Student Loan Request Form and picture ID to directloan@sbcc.edu  Please note that the financial aid office may contact you for additional phone counseling and/or video chat in order to process your Direct Loan request.

How much can I borrow?

SBCC is a two-year institution. Therefore, students are only eligible to apply for a first-year (less than 30 units completed at SBCC) or second-year (30 units or more completed at SBCC) student loan. Note: Transcripts from other institutions WILL NOT be considered to determine grade level for loan eligibility. SBCC transcripts will be used solely to determine grade level eligibility.

Annual Stafford Loan Limits are as follows:

  Base Amount Additional Unsubsidized Additional Unsubsidized
  (All Students) Dependent* Students Independent* Students
      Dependent Students whose parents cannot borrow PLUS
1st Year $3500 $2000 $6000
2nd Year $4500 $2000 $6000

* As defined by the Department of Education for financial aid purposes.

Are there fees for my Direct Loan?

For all Direct Subsidized Loans and Direct Unsubsidized Loans for which the earliest disbursement date is on or after December 1, 2013 and before October 1, 2014, the origination fee is 1.072 percent.

When will I receive my loan money?

Student loans are paid in two equal disbursements during the selected loan period.  For academic year loans, the 1st disbursement is paid in fall and the 2nd disbursement is paid at the beginning of the spring semester.  For one-semester loans, the loan is paid in two equal disbursements during the semester. 

In accordance with federal regulations, no loan money may be released sooner than ten days prior to the beginning of a semester, unless you are a first time Direct Loan borrower with the Department of Education.  If you are a first-time Direct Loan borrower, the 1st disbursement will be 30 days after the beginning of the semester.

IMPORTANT!  To receive Direct Loan funds, you must be enrolled at least half time (6.0 units)! Please note! The start date of your classes will affect when you will receive your student loan. Please refer to your registration or the Schedule of Classes to determine the start date of your classes.

How do I receive my loan money?

The Direct Loan is delivered to the student through Santa Barbara City College. Students have two choices of how they receive their disbursement – either as a check mailed to the address in their Pipeline account or by direct deposit to a checking or savings account. To sign up for direct deposit,log into your financial aid Pipeline account and click on the link Direct Deposit.

Please note - checks CANNOT be picked up!

Is there a deadline to apply for a Direct Loan?

Yes.  Check Deadlines for specific dates.

When do I pay my Direct Loan back?

After graduating, leaving school, or enrolling less than half time, a student will have a six month "grace period" before the first loan payment is due. All Direct Loans must be paid back with interest. Typically a student will have 10 years to repay their Direct Loan.

FEDERAL STUDENT AID OMBUDSMAN

If you have a problem or question about your student loan, the Federal Student Aid (FSA) Ombudsman of the Department of Education helps resolve disputes and solve other problems with federal student loans.  For more information about the FSA Ombudsman, go to www.ombudsman.ed.gov or call 877.557.2575.  The mailing address is U.S. Department of Education, FSA Ombudsman Group, 830 1st Street, N.E. Mail Stop 5144, Washington, D.C. 20202-5144.  Fax number 202.275.0549. 

 If you have additional questions, please contact our office by emailing your financial aid advisor or by calling the financial aid office at 805.730.5157.

 


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