Direct Loan Program
To be eligible to participate in the student loan program the student must be enrolled at minimum as a half-time student in an eligible program and must be in good standing with the Department (not in default or over-payment).
There are two types of student loans: subsidized and unsubsidized.
Subsidized
This loan is determined by the student’s remaining need (after scholarships/grants). The interest on this loan does not accrue while the student is enrolled as at least a half time status. This loan also has a six-month grace period for repayment after graduation, withdrawing or dropping below a half time status. The amount of the loan is determined by the student’s grade level and remaining need. The loan in combination with other scholarships/grants/loans cannot exceed the schools COA.
A first-time borrower (defined by the Department of Education) as of July 1, 2013 will be subject to the new limits on subsidized loans. A student in a 4-year undergraduate program may receive subsidized loans for the equivalent of six academic years (150%). Once the student reaches the 150% or the lifetime limit amount the remaining loans will be unsubsidized.
There are special rules for transfer students, students taking preparatory classes and teacher licensure.
Students who transfer programs or schools do not “reset” his/her eligibility. Loans borrowed for the student’s previous program count against the student’s current limit.
Preparatory coursework for undergraduate studies does not increase a borrower’s subsidized loan eligibility. Preparatory coursework for graduate studies is equal to the maximum eligibility for the undergraduate program for which the borrower most recently received a subsidized loan.
New borrower’s enrolled in a teacher certification program will have maximum subsidized loan eligibility equal to 150% of the length of the program. The borrower’s prior enrollment and subsidized borrowing does not affect the maximum eligibility.
Unsubsidized
This loan is not determined by the student’s financial need. The interest on this loan does accrue when disbursed. The student will have the option to pay the interest while enrolled or can let it accrue and it will be added to the principal balance at repayment. This loan also has a six-month grace period for repayment after graduation, withdrawing or dropping below a half time status. The amount of the loan is determined by the student’s grade level, dependency status and remaining packaging need. The loan in combination with other scholarships/grants/loans cannot exceed the schools COA.
Entrance Counseling:
All first-time borrowers must complete Entrance counseling prior to receiving loan funds. Please visit the website at www.studentaid.gov to complete this process prior to completing your MPN (Master Promissory Note). If you have completed Entrance Counseling for another college, please contact the financial aid office.
MPN (Master Promissory Note):
Student borrowers must complete a MPN (Master Promissory Note) before any funds can be disbursed. You can complete this process by visiting: www.studentaid.gov. The student’s MPN is good for 10 years if it is used as a multi-year note. If you have completed an MPN for another school, please contact the financial aid office.
PLUS loans:
Parent borrowers must complete Entrance Counseling, application and an MPN (Master Promissory Note) by going to: www.studentaid.gov. If parents are denied the PLUS loan the student can receive additional eligibility in the unsubsidized loan program based on grade level. This process must be completed each year by the parents for that academic year or if they are requesting an additional loan during the current academic year.
The Financial Aid Office certifies the loans for all students by exporting origination/disbursement files to COD for processing.
The Financial Aid Office is responsible for the disbursement process. Once a loan has been disbursed, the Business Office receives the aid and applies it to the student ledger. If any additional aid is left a stipend is issued to the student.
150% Subsidized Loan Limit:
On May 16, 2013, the Department of Education published interim final regulations in the Federal Register implementing the Moving Ahead for Progress in the 21st Century Act (MAP-21) (Public Law 112-141) that added a new provision to the Direct Loan statutory requirements that limits a first-time borrower’s eligibility for Direct Subsidized Loans to a period not to exceed 150 percent of the length of the borrower’s educational program (“the 150% limit”). Under certain conditions, the provision also causes first-time borrowers who have exceeded the 150 percent limit to lose the interest subsidy on their Direct Subsidized Loans. |
Notification of Loan Disbursements to Students
Policy
Saint Mary of the Woods College (SMWC) uses passive confirmation in awarding Title IV funds to students, with the exception of the TEACH Grant and Direct Loans in which affirmative confirmation is used. As such, consistent with 34 CFR § 668.165(a), SMWC issues a notice to students within 30 days of crediting a Federal Direct Loan and Federal TEACH grant to the student’s account, advising the student of the disbursement and providing the student with 14 days from the date of the disbursement notice to cancel the applicable disbursement. If the student does not cancel within the applicable period, the student will have accepted the Federal Direct Loan or Federal TEACH grant.
The regulation 34 CFR § 685.304(b) requires that all student borrowers be counseled on their rights and responsibilities regarding their Federal loans upon “separation” from school. This counseling requirement applies to all student borrowers of Federal Direct Loans, Federal Perkins Loans, and Federal Teach Grants who:
Drop below half-time status (defined as 6 credit hours for Undergraduate programs and 4 credit hours for Graduate programs)
Withdraw
Graduate
Do not return from a leave of absence
Do not return for the following enrollment period
Exit counseling will be conducted within 30 days after the borrower separates from SMWC