Dabney S. Lancaster Community College Entrance Counseling Guide

1. Dabney S. LancasterCommunity College Entrance Counseling Guide For Direct Loan Borrowers www.direct.ed.gov

2. Definition of Terms • Accrue-The accumulation of interest on an unpaid loan over time. • Capitalization- The process of adding interest that has been accrued to the principal amount of the loan. • Disbursement-The process of crediting your loan to your account to pay off any school charges. The remaining balance (if any) will be sent to you as a refund check (state check). • Deferment- The postponement of a payment of a loan, during which interest does not accrue (subsidized loan only).

3. Definition of Terms…Continued • Forbearance-The ability to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans). • Grace Period-A six month period that begins the day after you graduate from your program or drop below 6 credits. It is similar to deferment. • Lender- The financial institution which provides loans (Dept. of Ed). • Servicer- A company that handles the billing and other services on your federal student loan. • Refund- The remaining balance after school charges have been applied. (Tuition, Books, etc.)

4. Types of Loans DSLCC offers 3 types of loans: • Subsidized • Unsubsidized • Direct Plus Loans Page 1

5. Subsidized Loan • Based on financial need • Must be enrolled and actively attending 6 crhrs or more (half time) • Interest will not accrue, and you do not have to make payments if enrolled at least half time. • No credit check required • 6-month grace period after you drop below half time (no payment/interest does not accrue) • Interest Rate of 3.86%* * http://studentaid.gov Page 1

6. Unsubsidized Loan • Not based on financial need • Must be enrolled and actively attending 6 crhrs or more (half time) • Interest accrues at all times • No payments are required while enrolled half time • No credit check required • 6-month grace period after you drop below half time (no payment/interest does accrue) • Interest Rate of 3.86%* * http://studentaid.gov Page 1

7. Direct Plus Loans • For parents of dependent students • Must be enrolled and actively attending 6 crhrs or more (half time) • Credit check required; if you have bad credit or no credit history, you can obtain a co-signer • Interest accrues at all times • Repayment begins 60 days after the final loan is disbursed, but you may defer repayment while enrolled in at least 6 credit hours • Interest Rate of 7.9% • Apply for subsidized or unsubsidized loan first Page 1

8. Borrow Wisely • Never borrow more than you can afford to repay • Apply for as many scholarships as possible (Money that does not have to be paid back.) • Maximize your income and minimize your expenses • Decline loans if you do not need them Page 2

9. You Must Repay Your Loans • You must repay the full amount of your loans with interest even if: • You do not complete your program of study. • You cannot find employment. • If you do not pay the interest as it is charged on either type of loan, direct loans will capitalize on the unpaid principal amount of your loan. This can substantially increase the total amount you repay over the life of your loan. Page 3

10. Use of Your Loan Money • You may use your loan money only to pay for authorized educational expenses at the school that certified your loan eligibility. • Authorized educational expenses include: • Tuition • Books • Supplies • Transportation • Computer Expenses • Loan Fees • If you have any extra money left over after paying for educational expenses, deposit the money into a savings account or make interest payments. Page 3

11. Master Promissory Note (MPN) • The MPN is a legal document you sign promising to repay your loan(s) and all accrued interest. • The MPN is found online at https://studentloans.gov • The MPN needs to be completed each aid year. • Completed MPNs are available online for up to 10 years. • There is one MPN for Subsidized Loans and Unsubsidized Loans and a separate MPN for Direct PLUS Loans. Page 4

12. How Your Loans Will be Disbursed • You are able to receive half of your loan eligibility in the fall and the other half in the spring. (If you don’t use all of your loan eligibility, you can use it in the summer semester. It works the same as the Pell Grant.) • Once the loan is disbursed, it pays for tuition, books etc., first. Then, if there is any money left over, it will be sent to you in the form of a refund check. • If you get a refund for a subsidized loan AND a refund for an unsubsidized loan, they may be sent as separate checks. • You will receive an award letter and email when your loan is disbursed. Page 4-5

13. Annual Loan Limits Page 5

14. Subsidized Direct Loan Limits • Limits Direct Subsidized Loan eligibility for first-time borrowers* effective July 1, 2013. • First-time borrowers* are no longer eligible for Direct Subsidized Loans once the borrower has received sub loans for a period of 150% of the length of the program of study • Maximum Eligibility Period examples: 1-yr cert. = 1.5 yrs of sub loan eligibility 2-yr degree = 3 yrs of sub loan eligibility 4-yr degree = 6 yrs of sub loan eligibility *also includes borrowers who have paid off previous loans

15. Subsidized Direct Loan Limits…(continued) Loss of Interest Subsidy ▪ The student who is subject to the 150% limit can lose interest subsidy on all outstanding subsidized loans if: • There is no remaining eligibility period; • The student did not complete the program; and • The student continues enrollment. ▪ A loan which loses its subsidy is still a subsidized loan. ▪ A student may at some later point regain sub eligibility (e.g. by enrolling in a longer program), but a lost subsidy on a prior loan can never be regained.

16. Loan Limit Qualifications • The actual loan amount you are eligible to receive is determined by various factors: • Cost of attendance • Academic Level • Expected Family Contribution (EFC) • Your remaining eligibility under the annual and aggregate loan limits Page 6

17. Aggregate Loan Limits Page 6

18. Loan Fees • We charge a loan fee (also called an origination fee) on all loans. • The loan fee is a percentage of the amount you receive and is subtracted from each loan disbursement. (Usually a small amount) • The specific loan fee that you are charged will be included in a disclosure statement after the first disbursement of your loan. Page 8

19. Half-Time Enrollment • You must be enrolled and actively attending 6 credit hours (half time) or more to receive a Direct Loan. • This applies to summer loans too. • If you drop below half-time enrollment: • The six-month grace period will begin. • Talk to the servicer if you go into repayment. • You do not have to enroll part-time in the summer in order to defer loan repayment if you plan to come back and enroll at least part-time in the fall. Page 9

20. Changes You Must Report • It is your responsibility to contact your Direct Loan servicer if you: • Stop attending school or drop below half-time enrollment • Graduate • Fail to enroll at least half-time for the loan period certified by your school • Transfer to another school • Change your name, address, or phone number Page 10

21. Repayment • You must repay the full amount of each Direct Loan you receive, plus interest. • Your Direct Loan servicer will notify you of the date your first payment is due and send you statements telling you how much interest has accrued on your loans and your options for paying that interest. • The repayment period for each Direct PLUS Loan that you receive begins 60 days after the final loan disbursement is made. There is no grace period for Direct PLUS Loans. However, repayment may be deferred if you, the parent, or the student is enrolled at least half time. • You must make payments on your loan even if you do not receive a bill or repayment notice. • You may prepay all or any part of the unpaid balance on your loans at any time. Page 11

22. Standard Repayment Plan • Fixed monthly payments • Loan must be paid in full within 10 years from the date the loans entered repayment (not including periods of deferment or forbearance) • Payments must be at least $50 a month and will be more, if necessary, to repay the loans in the required time period • Contact your loan servicer for options about changing your repayment plan Page 11

23. InterestRateReduction for Automatic Withdrawal of Payments • Your bank will automatically deduct your monthly payment from your checking/savings account and send it to your loan servicer. • If you opt in for Automatic Withdrawals, it ensures that your payments will be made on time and you will receive an interest rate reduction of 0.25%. • Your Direct Loan servicer will include information about the Automatic Withdrawal option in your first bill. Page 15

24. Up-Front Interest Rebate • You may receive an up-front interest rebate on your loan. • The rebate is equal to a percentage of the loan amount that you borrow. • In order to receive the rebate, you must make all of your first 12 required monthly payments on time. Page 15

25. Trouble Making Payments • Contact your Direct Loan Servicer ASAP to discuss options, such as: • Changing repayment plans • Deferment • Forbearance Page 15-16

26. Trouble Making Payments…(continued) • If your monthly payment is not received: • Your loan becomes delinquent • Late fees may be added • Delinquency will be reported to one or more national consumer agencies (credit bureaus) • If you stop making payments and don’t get a deferment or forbearance, your loan will go into default, which has serious consequences. Page 15-16

27. Consequences If You Default • Default occurs when you are 270 days past due (delinquent) in making a payment on your loan(s). The consequences of default can be severe. • The entire unpaid balance of your loan and accrued interest becomes due and payable immediately. • You lose eligibility for deferment. • You lose eligibility for additional federal student financial aid. • Your account is assigned to a collection agency. • The default will be reported as delinquent to credit bureaus, ultimately damaging your credit rating. Page 16

28. Consequences If You Default…(Continued) • The federal government can take all or part of your federal tax refund. • Late fees, additional interest, court costs, collection fees, attorney’s fees, and other costs incurred in collecting your loan will increase your loan debt. • Your employer (at the request of the federal government) can garnish part of your wages and send them to the federal government. • The federal government can take legal action against you. Page 16

29. Consolidation • Applies to multiple federal education loans • Simplifies repayment (one monthly payment) • Check out the advantages and disadvantages • To learn more, visit http://loanconsolidation.ed.gov Page 17

30. Conditions for Cancelling All or Part of Your Loan • Teacher Loan Forgiveness • Teach in a low-income school district • Public Service Loan Forgiveness • Employed in certain public service jobs • School-related discharges In certain cases, you may be able to have all or part of your loan cancelled because: • Your school closed before you completed your program. • Identity theft • You withdrew from school but the school didn’t pay a refund that it owed Page 17-18

31. Conditions for Cancelling All or Part of Your Loan…Continued • Disability, bankruptcy, or death-related discharges • Totally and permanently disabled • Bankruptcy (if repaying the loan causes undue hardship) • Documentation of your death Page 17-18

32. National Student Loan Data System • You can find information about all of your Direct Loans by accessing the Department’s National Student Loan Data System at www.nslds.ed.gov or by calling 1-800-999-8219. • You will need your Federal Student Aid PIN to access NSLDS. Page 18

33. Keep Your Loan Papers • Keep copies of all your loan papers in a safe place. • Copies of your MPN are available at for up to 10 years https://studentloans.govif you complete the note electronically. Page 19

34. Borrower’s Rights and Responsibilities • If you have questions about the borrower’s rights and responsibilities or the terms and conditions of your loan(s), you may contact Applicant Services. • U.S. Department of Education Attn: COD Applicant Services P.O. Box 9002 Niagara Falls, NY 14302 1-800-557-7394 Email: codsupport@acs-inc.com Page 19