Federal Direct Loan Updates
In August 2013, Congress passed and the President signed the Bipartisan Student Loan Certainty Act of 2013. This Act ties federal student loan interest rates to the financial markets. Under the Act, interest rates are determined each spring for new loans being made for the upcoming award year, which runs from July 1 to the following June 30. Each loan has a fixed interest rate for the life of the loan.
The following table provides the fixed interest rates for new Direct Loans first disburesed on or after July 1, 2015, and before July 1, 2016. The 2015-16 rates represent a decrease of 0.37 percedntage points from the 2014-15 interest rates on Direct Loans. These rates will apply to new Direct Subsidized Loans, Direct Unsubsidized Loans,
and Direct PLUS Loans made during this time.
||Interest Rate |
|Direct Subsidized Loans (Undergraduates)
|Direct Unsubsidized Loans (Undergraduates)
|Direct Unsubsidized Loans (Graduate or Professional Students)
|Direct :PLUS Loans (Parents and Graduate or Professional Students)
TOP TEN SMC STUDENT LOAN QUESTIONS
1. How do I apply for a Stafford Loan at SMC?
Complete and submit the Free Application for Federal Student Aid (FAFSA) to the federal processor.
* After SMC receives the information regarding your federal aid application, you will be sent an electronic
tracking letter requesting certain documents.
* While submitting all of the initial requested financial aid documents, download the Loan Documents (Stafford
Loan Application, Loan Reference Form and Loan Budget Worksheet) from this website.
* The completed Loan Documents can then be submitted along with an Educational Plan from an SMC Academic
Please Note: Your loan request documents go to a committee for assessment. Students awarded a Stafford Loan
will be notified with and guidance for completing an Entrance Loan Workshop and a Master Promissory Note through their Corsair Connect financial aid portal.
2. How long will it take to process a loan application?
Loan request are reviewed on a case-by-case basis. Once the Loan Committee has made a determination,
the actual processing of the loan takes 3 to 4 weeks before SMC receives a check.
3. How much can I borrow for attendance at SMC?
Basic Stafford Loan Levels are as follows:
||Degree Applicable Units Completed
|Students in Year 1: $3,500
||0 - 29
|Students in Year 2: $4,500
||30 - 59
SMC's Loan Debt Management Plan recommends a cumulative loan threshold of $15,000.
|Annual Additional Unsubsidized Stafford Loan limits are:|
|Dependent Students in Year 1 or Year 2
|Independent Students in Year 1 or Year 2
4. What happens if I transfer to another college during the same academic year?
You must cancel any pending loans at SMC and contact the new college to find out how to be awarded financial
aid there including loans.
5. What is the difference between subsidized and unsubsidized Stafford Loans?
For subsidized Stafford Loans, the Federal Government pays the interest while the borrower is in school,
during the 6 month grace period and deferment periods.
6. What is the interest rate on Federal Loans?
The interest rates are as follows:
|Loan First Disbursed
|7/1/2014 - 6/30/2015
7. When do I have to begin repaying a Stafford Loan?
Repayment begins 6 months after graduating, withdrawing, or dropping to less than half-time enrollment status.
8. I've heard information on the news about the Direct Loan Program. What is that?
Effective July 1, 2010 - All Stafford Loans will be processed by the DIRECT LOAN PROGRAM which is an agency
within the Federal Government. Loans will no longer be processed by banks or credit unions.
9. What are the consequences of not repaying a student loan?
* You will be reported to a credit bureau having a negative effect on your credit rating.
* You can be referred to a collection agency and have to pay collection costs.
* Your employer may garnish your wages.
* The Internal Revenue Service may withhold your state and federal income tax returns.
* The entire unpaid amount of your loan, including interest may become due and payable immediately.
* You will lose your rights to deferments.
* You will be ineligible to receive any additional federal or state financial aid.
10. Do I have to attend any "entrance" or "exit" loan workshops or meetings?
As part of SMC's Default Management Plan, loan recipients are required to participate in a Loan Entrance
Workshop each year that they request a student loan.
In addition, all student loan recipients are required to attend an Exit Interview each year that they are a
loan recipient while attending SMC.