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Financial Aid
FEDERAL DIRECT SUBSIDIZED LOAN
Direct Subsidized Loan Q & A
Who is eligible for a Federal Direct Subsidized Loan?
How much can I borrow?
Are there any other limitations on the amount I may borrow?
When should I apply for a Direct Loan?
How do I apply for a Direct Loan?
What happens after I have submitted my loan request to the Financial aid Office?
Do I have to sign a new Master Promissory Note each year?
When do I get my money?
Do I get my money all at once?
Can I cancel all or part of my loan after it has been
disbursed to me?
What is the interest rate charged on this loan?
Am I charged interest while going to school?
Is there a charge for this loan?
When do I pay back my loan?
How do I pay back my loan?
Who manages my loan account?
Where do I send my loan payments?
What if I have trouble making my direct loan payments?
What happens if I don't make my loan payments on time?
What can I do if I am notified I am in default?
Can I ever get out of repaying my loan?

Who is eligible for a Federal Direct Subsidized Loan?
You must meet the all the eligibility requirements for federal financial aid as described in the section on PELL.

You must also demonstrate financial need for the loan. Financial need is demonstrated when your EFC, plus the loan amount, plus any other financial aid you are receiving adds up to less than your cost of attendance. If you have questions about what it means to demonstrate financial need, please review the section of Financial Aid 101 on determining eligibility.

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How much can I borrow in Direct Subsidized Loans?

Academic Level Dependent & Independent Students
1st year - fewer than 28 credits earned up to $3,500 per year
2nd year - 28 or more credits earned up to $4,500 per year
undergraduate aggregate maximum no more than $23,000

Note: If you are not eligible to borrow the full amount you request in Direct Subsidized Loan funds, or you believe you need additional loan funds, you may be able to request some or all the balance as a Direct Unsubsidized Loan. Unsubsidized loan limits were recently increased. If you are a dependent student, your parents may be able to take out a Direct PLUS Loan for you.

Using your federal PIN, you may access your previous borrowing history from the National Student Loan Data System (NSLDS) and monitor how close you may be approaching your undergraduate aggregate maximum.

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Are there any other limitations on the amount I may borrow?
Yes. You may not borrow more than the cost of attendance at BMCC minus the EFC minus any other financial aid you receive. Before processing your loan request, the Financial Aid Office will calculate the amount of loan assistance you are eligible for.

If your period of enrollment is less than a full academic year, the amount of loan assistance you are entitled to may be less than the maximum amounts listed above. Furthermore, the Federal Government may restrict how frequently you may request or receive the maximum loan amount. Finally, the Office of Financial Aid may refuse to process your loan request or may otherwise reduce the amount of your loan, if it provides you with a written explanation for its decision.

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When should I apply for a loan?
A student loan is a serious legal and financial obligation. You should apply for a loan only after careful consideration of all other options for financing your education. Think of borrowing as a commitment to pursuing and completing your education successfully. If you find you have to interrupt your studies, you could face having to repay your loan without the education you went into debt to obtain. We recommend you follow this practical advice: Live like a student while you are in school so you don't have to live like a student after you graduate.

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How do I apply for a Federal Direct Loan?
Apply for a Federal Direct Loan by following these steps.

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What happens after I've submitted my loan request to the Financial Aid Office?
Your request will be processed after the Direct Loan staff has determined that:
a. you have filed a FAFSA for the current academic year;
b. the information you provided on your FAFSA is correct;
c. you have registered for at least 6 credits or the equivalent.

The Bursar will be notified about your request-in-progress within 3 to 5 business days. When settling your bill, you must mention that you have submitted a direct loan request.

First time borrowers must sign an Electronic Master Promissory Note (e-MPN) online using the Dept of Education PIN (the one you used to sign your FAFSA). The e-MPN is a legal document that lists the terms and conditions under which you are borrowing and agreeing to pay back the money.

If you don't sign the e-MPN, a paper MPN will be mailed to you about two weeks after your loan request is processed. Sign and return the paper MPN in the envelope provided. Be aware that utilizing the paper method may delay receipt of your loan funds.

All borrowers also receive a Loan Disclosure Statement. The loan disclosure statement contains information about the type of loan, the approved loan amount and anticipated dates of disbursement.

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Do I have to sign a new Master Promissory Note each year?
If you have signed a Master Promissory Note for a Federal Direct Loan you borrowed previously, you will not be required to sign a new MPN in most instances. The note already on file will be used for subsequent year loan borrowing under the Federal Direct Loan program.

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When do I get my money?
Every attempt is made to have the actual loan disbursement dates coincide with the anticipated disbursement dates on your Loan Disclosure Statement. However, this is not always possible. Your actual loan disbursement date depends on when your MPN is returned and acknowledged by the processor and when this information links up with a scheduled CUNY financial aid payment cycle.

 

Please note that no payments will be scheduled until at least 30 days of the term has passed.

Your disbursement will be either in the form of a check or as a direct deposit. If you have elected the direct deposit option for receiving financial aid disbursements, your disbursement will be credited to your direct deposit account on the scheduled disbursement date. You will notified by mail when your funds are available.

Before crediting any loan funds toward your tuition or releasing any funds to you, the college will verify that you enrolled on at least a half-time basis.

The Bursar's Office will calculate unpaid tuition and fee balances at the time your loan is disbursed. Deductions from your loan proceeds will be credited to your unpaid charges before you receive the balance of your funds.

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Do I get my money all at once?
No. You will receive your loan money in at least two installments, neither of which will be more than one-half of the loan total. For loans covering the full academic year, the second disbursement will be approximately 30 days after the start of the spring semester. For loans covering one semester only, the second disbursement will occur about midway through the semester.

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Can I cancel all or part of my loan(s) after it has been disbursed?
You have up to 14 days after the date you are notified the Bursar has credited loan funds toward your unpaid charges to ask the Financial Aid Office to cancel all or part of the loan return it to the U.S. Department of Education. Notify us if you want to cancel your loan by submitting an online Direct Loan Cancellation Request to indicate that you want to cancel your loan.

You may cancel all or part of your loan by returning the funds yourself to the U.S. Department of Education within 120 days of the loan disbursement date. Contact the Direct Loan Servicing Center for guidance on how and where to return your loan money.

You do not have to pay interest or the loan fee on the part of your loan(s) that you return within these timeframes.

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What is the interest rate charged on this loan?
It varies. The interest rate for your loan is adjusted each year on July 1 and is calculated according to a federal formula. However, it will never exceed 8.25%. You will be notified as the interest changes throughout the life of the loan.

You may check current education loan interest rates at: www.finaid.org/loans/scripts/interest.cgi.

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Am I charged interest while going to school?
No. This loan is called a "subsidized loan" because the Federal Government supports or subsidizes the interest payments while you are in school and during any grace or deferment periods. You do not pay interest on a subsidized loan until your loan enters repayment.

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Is there a charge for this loan?
Yes. You'll pay an origination fee of 3% and a federal default fee of 1%. These will be deducted proportionately from each disbursement. Some of this fee will go to the Federal Government to help offset the administrative costs of the loan.

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When do I pay back my loan?
You have a six month grace period after you graduate, leave school, or drop below half-time before you begin repaying your loan. During the grace period, you do not have to make payments on the principal and you are not charged any interest. You can, of course, prepay any portion of your loan at any time without penalty.

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How do I pay back my loan?
The Federal Direct Loan Program offers a choice of four different repayment plans that differ in a number of ways to meet the needs of individual borrowers. You may choose any one of the four plans and, in most cases, can change from one plan to another during your repayment period. There is no limit to the number of times you may switch from one plan to another. Each plan has certain features and conditions that you must carefully consider before deciding which plan to use. You will be able to receive information about these plans as well as other repayment options (such as loan consolidation) at your exit interview.

The Standard Repayment Plan requires you to pay a fixed amount each month. Under this plan you will make no more than 120 monthly payments (10 years). For small loan amounts, the number of monthly payments will be fewer than 120. Each monthly payment will be at least $50.00 but may be more, if necessary, to repay the loan within 10 years. If you do not select one of the other three payment plans, you will automatically be assigned the Standard Repayment Plan. Use this Loan Calculator to estimate what your monthly payments under the Standard Repayment Plan will be.

The Income Sensitive Repayment Plan bases your monthly payment on a percentage of your annual income. As your income rises or falls, so do your payments. If your monthly repayment is calculated to be $15.00 or less, no payment will be required. You may take up to 25 years to repay your loan. After 25 years, any remaining loan balance will be forgiven -- although you will have to pay income tax on any amount forgiven. (Not available to PLUS loan borrowers.) Use this Loan Calculator to estimate what your monthly payments under the Income Sensitive Repayment Plan will be.

The Extended Repayment Plan allows you to extend your loan repayment over a period of 12 to 30 years, depending on the amount of your original loan. The minimum monthly payment is $50.00 but may be more, if necessary, to repay the loan within the maximum number of repayment months. With this plan, your monthly payment may be lower than it would be under the Standard Repayment Plan, but you will pay more interest because your repayment period is longer. Use this Loan Calculator to estimate what your monthly payments under the Extended Repayment Plan will be.

The Graduated Repayment Plan allows you to begin repaying your loan with lower monthly amounts. Your payments then increase every two years over a time ranging from 12 to 30 years, depending on the amount of the original loan. The amount you pay each month will vary from 50% to 150% of what you would be paying on the same loan using the Standard Repayment Plan. You will repay a higher total amount of interest than you would under the Standard Repayment Plan because the repayment period is longer. Use this Loan Calculator to estimate what your monthly payments under the Graduated Repayment Plan will be.

If you can demonstrate that the above four repayment plans cannot accommodate your particular economic circumstances, the US Department of Education may provide you with an alternate repayment plan. You may want to read the U.S. Dept of Education's Repaying Your Student Loans for more detailed information about repayment options.

You may use the US Department of Education's Interactive Calculator to compare the estimated amount of your monthly payments under the various Direct Loan repayment plans by clicking here: Loan Repayment Chart Generator.

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Who manages my loan account?
The US Department of Education's Direct Loan Servicing Center will manage your loan accounts until your loans are paid in full. Its toll-free telephone number is 1-800-848-0979.

For general correspondence, the address is:

Borrower Services Department
Direct Loan Servicing Center
PO Box 5609
Greenville, TX 75403-5609

Using your PIN, you can obtain complete information about your Direct Loan account and even make online payments at Direct Loan Servicing Online.

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Where do I send my loan payments?
You repay the US Department of Education by sending your loan payments to:

US Department of Education
Direct Loan Payment Center
PO Box 530260
Atlanta, GA 30353-0260

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What if I have trouble making my direct loan payments?
The first thing to do is to contact the Direct Loan Servicing Center. They will discuss with you the various options that may make it easier for you to manage your monthly payment schedule. You may be able to have your monthly payments lowered by changing to a different payment plan.

Under some circumstances, such as returning to school, becoming unemployed, or suffering economic hardship, you may qualify for a deferment. If granted a deferment, you will be able to suspend regular loan payments for a certain time. If your loan was first disbursed after July 1, l993, and you are not in default, refer to the Student Loan Deferment and Cancellation Summary for a list of available deferments. Being granted a deferment is not automatic. You must submit your request for a deferment in writing and continue to make your regular loan payments until the deferment is granted.

If you don't qualify for a deferment, you may be able to request a forbearance. If granted forbearance, you may be permitted to reduce or delay your regular payments for a time. Being granted forbearance is not automatic. You must submit your request for forbearance in writing and continue to make your regular loan payments until forbearance is granted. If your loan debt burden equals or exceeds 20% of your gross income, you have a right to forbearance, renewable annually for up to three years.

Finally, if you have a number of educational loans and have difficulty making payments on all of them, you may qualify for a Federal Direct Consolidated Loan. Loan consolidation allows you to combine multiple loan debts into just one monthly payment.

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What happens if I don't make my loan payments on time?
If you don't make your loan payments on time and don't contact the Direct Loan Servicing Center about it, you will be considered delinquent in repaying the loan. If you fail to make payments for six months, the loan will go into default. If this happens, you can be asked by the federal government to repay the entire loan immediately. You can be sued to collect the amount of the original loan, plus interest, court costs and other penalties. You will be reported to national credit bureaus and have your credit rating adversely affected. Your income tax refunds may be withheld and up to 15% of your wages can be garnisheed to collect the debt. If you are receiving Social Security, the federal government may withhold a portion of your benefits to pay your loan debt. Finally, your school records will be impounded and you will be prohibited from receiving any federal student aid at any school you wish to attend until the default is resolved.

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What can I do if I am notified I am in default?
Contact the Direct Loan Servicing Center. They will inform you under what circumstances you may have the default status rescinded and will discuss with you the possibilities for regaining your eligibility for financial aid and rehabilitating your loan. If you have a FFELP loan, you should contact your lender or guaranty agency about similar options available for restoring financial aid eligibility and rehabilitating your loan.

You may regain eligibility for federal financial aid by making satisfactory payment arrangements on your defaulted loan with the loan servicer or guarantee agency handling your account. A satisfactory repayment arrangement is defined as making 6 consecutive voluntary monthly payments of an amount determined reasonable and affordable based on your financial circumstances.

If you make 9 consecutive, voluntary, and on-time monthly payments of a reasonable and affordable amount under an agreement with the loan servicer or guarantee agency, you will qualify for loan rehabilitation. Loan rehabilitation provides you with a "second chance" by removing your student loan from default status, restoring financial aid eligibility and reinstating deferment privileges.

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Can I ever get out of repaying my loan?
There are certain exceptional circumstances, such as the borrower's death or permanent disability, which can result in the discharge or cancellation of a student loan. A discharge releases the borrower from all obligation to repay. A complete list of discharge conditions can be found in the Student Loan Deferment and Cancellation Summary.

Remember that your loan cannot be discharged because you didn't complete your program of study, didn't like the school or couldn't find a job after graduation.

Repayment assistance may be available if you serve in the military. For more information about repayment assistance, consult your recruiting officer.

For more information about discharge or repayment assistance, contact the Direct Loan Servicing Center or the lender or guarantee agency that holds your loan.

The Federal Student Aid Ombudsman is a Department of Education office that helps students resolve disputes and solve other problems with federal student loans.

The US Department of Education's Direct Loan Web site provides much useful information on avoiding default. You can access this information at the following location: US Dept of Education's "Avoid Default" Page.

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Direct Loan Rights and ResponsibilitiesDirect Loan Rights & Responsibilities
School Codes
FAFSA
School Code
002691
TAP
School Code
1404
Loan Information
Federal Perkins Loan Federal Perkins Loan
Federal Direct Loan Federal Direct Loan
Subsidized Direct Loan Subsidized Direct Loan
Unsubsidized Direct Loan Unsubsidized Direct Loan
Consolidated Direct Loan Consolidated Direct Loan
Direct PLUS Loan Direct PLUS Loan
Borrower Responsibilities Borrower Responsibilities
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