Students who are interested in borrowing Subsidized and/or Unsubsidized Federal Direct
Loans must submit a Direct Loan application form as well as a recent Counselor Approved
Education Plan. If you do not have an Education Plan, please contact the General Counseling
and Transfer Services Counseling Department to schedule an appointment to discuss
and develop an Education Plan with a Counselor. Once a plan is completed and approved
with a Counselor through the Stellic program, please upload that plan in Corsair E-docs.
Disbursement Dates Fall 2026
September 16, 2026 - Parent Plus Loans Disbursement
Week of October 19, 2026 - Direct Loans Disbursement**
**Attention Students: If you are expecting to receive Direct Loans for the fall 2026 term, our software
vendor informed us that recently there will be a delay on a system enhancement needed
to accurately disburse the correct amount on the Federal loans. Because of this delay,
the new expected disbursement date will occur in the week of October 19th. Again, please note that this is a tentative date, and we expect to receive firm confirmation
in the coming days from the vendor on the system enhancement.
While this news is unexpected and not what we wanted to communicate, we want to ensure
that your loans are processed accurately and you are given the correct amount that
you applied for. Due to the new federal guidelines that were enacted July 1, 2026,
as part of the One Big Beautiful Bill Act, changes that impacted the loan amounts
for students, presented unexpected challenges for the Student Information System company.
We are committed to working timely and efficiently with our software vendor to ensure
the system is configured properly to award the loans accurately.
Changes to 2026-2027 Federal Student Loans
Congress passed the One Big Beautiful Bill Act (OBBBA) in July 2025, which introduced
several changes to federal student loans beginning July 1, 2026. Students who have
already borrowed federal loans for their current academic program may be considered
a "continuing borrower" and therefore grandfathered in if enrolled in the same academic
program through June 30, 2026. The information below is intended to help you understand
how these changes may apply to you.
Current Borrowers
These changes do not affect the current academic year. Additionally, students and
parents who have borrowed under the Federal Direct Loan Program before July 1, 2026 may continue to access loans under the expiring limits for up to three additional years, of for the remaining time needed to complete your current degree. This is calculated
by the minimum length of your program, less the amount of time you have completed,
whichever is sooner.
Upcoming Changes to Federal Student Loan Limits
The following are now borrowing limits under the Federal Direct Loan Program, effective July 1, 2026:
Undergraduate programs: Student borrowing remains unchanged, but Parent PLUS Loans will be capped at $20,000 per year and $65,000 for the degree.
Direct Subsidized & Unsubsidized Loans
Direct Subsidized and Unsubsidizied Loans (sometimes referred to as Stafford Loans)
are federal student loans provided by the U.S. Department of Education to help eligible
students cover the costs of higher education. Federal direct loans do not require
a credit check.
Below is a guide to help you understand the differences between these loans and your
borrowing limits.
New Direct Loan Proration Requirements Beginning 2026-2027
Beginning with the 2026-2027 award year, undergraduate Direct Loan eligibility will
be reduced for students enrolled less than full-time. Loan amounts will be determined
based on federal annual loan limits and the student's enrollment level at the time
of award. Students must be enrolled in eligible coursework applicable toward their
program of study to qualify for Direct Loan funds.
Example: A first-year student (Grade Level 1) has an annual Direct Loan limit of $3,500 and
enrolls in 9 eligible units each semester. Since full-time enrollment is 12 units,
the student is enrolled at 75% of full-time enrollment (9 units is equivalent to three-quarter
time or 75%).
The student's loan eligibility is prorated based on the enrollment level, $3,500 x
75% = $2,625 maximum annual loan eligibility.
The prorated loan amount is divided between the two semesters approximately as follows:
Fall Semester = $1,313 & Spring Semester = $1,312.
In this example, the student's maximum annual Direct Loan eligibility is reduced from
$3,500 to $2,625 because the student is enrolled less than full-time.
Degree-Applicable Units
Enrollment Status
Percentage of Annual Loan Limit
12 or more units
Full Time
100%
9-11 units
Three-Quarter Time
75%
6-8 units
Half Time
50%
Fewer than 6 units
Less Than Half Time
Not Eligible
Subsidized vs. Unsubsidized: What's the Difference?
While both loans share basic eligibility requirements - you must be a U.S. citizen
or eligible non-citizen, enrolled at least half-time, maintain Satisfactory Academic
Progress, and not be in default on a federal loan - there are key differences in who
qualifies and how interest is handled.
Direct Subsidized Loans
Who is eligible: Undergraduate students only.
Financial Need: Awarded based on federally defined financial need.
Interest Accrual: The U.S. Department of Education pays the interest on your loan while you are in school
at least half-time, during your six-month grace period after you leave school, and
during eligible periods of deferment.
Direct Unsubsidized Loans
Who is eligible: Undergraduate, graduate, and professional students
Financial Need: Not based on financial need.
Interest Accrual: You are responsible for paying the interest during all periods. Interest begins accruing as soon as the loan is disbursed. You can choose
to pay the interest monthly while in school, or let it accrue and be capitalized (added
to your principal balance) when you enter repayment.
Current Interest Rates & Fees
Interest is calculated as a percentage of your unpaid principal balance. Federal student
loans also include an origination fee, which is a percentage of the loan amount deducted
from each disbursement before the funds are sent to the school.
Interest Rates (For loans disbursed after July 1, 2026):
Subsidized (Undergraduate): 6.52%
Unsubsidized (Undergraduate): 6.52%
Origination Fees: 1.057% for all Direct Subsidized and Unsubsidized loans disbursed before October 1,
2026.
How Much Can I Borrow? (Annual Loan Limits)
The amount you can borrow each academic year depends on your grade level and whether
you are considered a dependent or independent student.
Dependent Undergraduates
1st Year: $5,500 total (Max $3,500 Subsidized + $2,000 Unsubsidized)
2nd Year: $6,500 total (Max $4,500 Subsidized + $2,000 Unsubsidized)
Federal student loans are available to most students regardless of income and provide
a range of repayment options including income-based repayment plans and loan forgiveness
benefits, which other education loans are not required to provide.
Alternative education loans (also known as private loans) are an option for financing
your education. Federal, state and university policy requires that student borrowers
maximize federal loans before the alternative/private loan request is processed. Complete
a Free Application for Federal Student Aid (FAFSA) in order to determine student loan eligibility.
StudentAid.gov provides a federal and alternative/private loan comparison. Here are
some things to consider:
Alternative loan eligibility requirements vary from lender to lender.
Alternative loan lenders can offer variable interest rates that can increase or decrease
over time, depending on market conditions.
Students may also be required to meet citizenship requirements or provide a co-signer
who meets citizenship requirements.
The interest rate on a private loan may depend on the borrower’s and/or co-signer’s
credit rating.
Other eligibility requirements may apply depending on the lender.
Review the interest rate and processing fees prior to borrowing.
Santa Monica College is not involved in the alternative loan credit decision. All
credit decision questions should be directed to the loan lender. Financial aid eligibility
applies to all certifications of loan amounts.
School Certification Process
Financial aid staff will post an alternative loan place holder on Corsair Connect after a loan has been certified. You may contact the lender to confirm funds have
been sent to Santa Monica College.
Online Direct Loan Entrance & Exit Counseling and Master Promissory Note (MPN)
All Direct Loan borrowers are required to complete Entrance Counseling, Exit Counseling,
and a Master Promissory Note (MPN) through the Federal Student Aid website at www.studentaid.gov.
Entrance Counseling will take approximately 20-30 minutes.
Master Promissory Note will take approximately 10-20 minutes.
Exit Counseling will take approximately 20-30 minutes.
Loan Frequently Asked Questions
Complete and submit the Free Application for Federal Student Aid (FAFSA) to the federal
processor.
The 2026-27 Direct Loan Application is available. The application can be found on
Corsair E-Docs Corsair E-Docs
After SMC receives the information regarding your federal aid application, you will
be sent an electronic tracking letter requesting certain documents.
Your loan request documents go to a committee for assessment. Students awarded a Direct
Loan will be notified with a guidance for completing an Entrance Loan Workshop and
a Master Promissory Note through their Corsair Connect financial aid portal.
Loans will only be available to apply for in the Fall and Spring semesters.
Loans will not be available to apply for in the Winter and Summer semesters at SMC.
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.
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.
Repayment begins 6 months after graduating, withdrawing, or dropping to less than
half-time enrollment status.
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.
During entrance counseling, you will learn about the following:
What a Direct Loan is and how the loan process works
Managing your education expenses
Other financial resources to consider to help pay for your education
Your rights and responsibilities as a borrower.
All students taking out Direct Subsidized or Direct Unsubsidized Loans will be required
to take the online Entrance Exam each year you are approved for a loan at Santa Monica
College.
The Master Promissory Note (MPN) is a legal document in which you promise to repay
your loan(s) and any accrued interest and fees to the U.S. Department of Education.
It also explains the terms and conditions of your loan(s); for instance, it will include
information on how interest is calculated and what deferment and cancellation provisions
are available to you.
It’s important to understand what you’re signing.
You must repay your loan even if you don’t complete your education.
You must repay your loan even if you can’t get a job after you leave school.
You must repay your loan even if you didn’t like the education you received.
Before—or at the time of—the first disbursement (payment to you or on your behalf)
of your loan(s), you'll receive a disclosure statement that gives you information
about any loan that the school plans to disburse under your MPN, including the loan
amount, fees, and the expected disbursement dates and amounts.
You must sign your MPN before you receive your loan funds.
You will be directed to go to www.studentaid.gov to sign the online MPN. To complete an MPN online, you will need your Federal Student
Aid PIN. If you are a parent completing a Direct PLUS Loan MPN online, you must use
your own PIN and not your child's PIN.
The entire MPN process must be completed in a single session, so be sure you have
enough time before you start. Each MPN takes approximately 30 minutes to complete.
Borrowers review the terms of the loan, borrower rights and responsibilities, and
the consequences of default and provides useful tips and information to help you manage
your loans.
All students who have taken out Direct Subsidized Loans or Direct Unsubsidized Loans
graduates or otherwise ceases enrollment, Direct Loan Exit Counseling is required.
The One Big Beautiful Bill Act (OBBBA), passed by Congress in July 2025, introduces
changes effective July 1, 2026, without affecting borrowing for the 2025-26 academic
year. Highlights include:
Undergraduate and Parent Plus Loans: As of July 1, 2026, Parent Plus Loans are capped
at $20,000 per student per year, with a $65,000 lifetime limit. Undergraduate annual
loan limits will not change, but count toward a new lifetime limit.
Undergraduate Programs will all be subject to a prorated loan model for awards. Previously,
if you were enrolled at least half-time, you could often access your full annual loan
limit. Starting July 1, 2026, annual federal loan eligibility will scale directly
with credit load.
Yes, even though you received a disbursement before July 1, 2026 for your current
program, and you fall under the Legacy Provision, you are subject to this rule.
Under OBBBA, the overall lifetime borrowing limit for federal student loans, excluding
Parent PLUS loans, is $257,500. This applies to students starting a new program on
or after July 1, 2026.
