Loans for Students
Direct Loans for Students
As a result of the Health Care and Education Reconciliation Act, beginning July 1, 2010, federal student loans will no longer be made by private lenders under the Federal Family Education Loan (FFEL) Program. Instead, all new federal student loans will come directly from the U.S. Department of Education under the Direct Loan Program.
There are two types of Direct Loans: subsidized, for which the government pays the interest while the student is enrolled in at least 6.0 units, and unsubsidized, for which the student is responsible for paying all the interest on the loan, during college and after. A student can receive both types of Direct Loans at the same time.
To receive Direct Loan funds, you must be enrolled at least half time (6.0 units)! Please note! The start date of your classes will affect when you will receive your student loan. Please refer to your registration or the Schedule of Classes to determine the start date of your classes.
For Direct Subsidized loans made from July 1, 2011 through June 30, 2012, the interest rate is 3.4%. Direct Unsubsidized loans have a fixed interest rate of 6.8%.
After graduating, leaving school, or enrolling less than half time, a student will have a six month "grace period" before the first loan payment is due. All student loans must be paid back with interest. Typically a student will have 10 years to repay the loan.
How do I apply for a student loan?
#1) Complete a Free Application for Federal Student Aid (FAFSA) at www.fafsa.gov
#2) Return all documents requested by the SBCC Financial Aid Office to complete your FAFSA application.
#3) Go to https://studentloans.gov to complete Direct Loan Entrance Counseling and the Direct Loan Master Promissory Note. Go to Manage My Direct Loan and click the Sign In button. You will need your social security number, the first two characters of your last name, your date of birth and your FAFSA PIN number. Once you are signed, go to Complete Entrance Counseling. NOTE: If you completed Direct Loan Entrance Counseling in 2010-11 for a loan at SBCC, you do not need to complete the entrance counseling again.
Once you are at the end of Step 4 of the Entrance Counseling, and are at the Congratulations! screen, you will see the link You can submit a Master Promissory Note.
#4) Click on the link You can submit a Master Promissory Note. You will need reference information for two people with different U.S. addresses who have known you for at least 3 years. The first reference should be a parent or legal guardian. NOTE: If you have completed a Direct Loan Master Promissory Note (MPN) within the last 10 years, you can confirm your MPN status by clicking on the link Completed MPNs at the left hand side of the screen.
#5) Log on to your SBCC Pipeline account. Click on Financial Aid at the right hand side of the home page. At the Financial Aid page, click on Award, then Award for Aid Year. At the Award for Aid Year page, click on the Award Overview tab. Click on the Direct Loan Application link. The Direct Loan Application is a fillable PDF which is completed online. There are three forms to be completed online as follows: The Student Budget Worksheet, the Student Loan Borrower Worksheet and the Student Loan Request Form.
#6) Complete the Student Budget Worksheet, the Student Loan Borrower Worksheet and the Student Loan Request Form, print the 2 worksheets and the Student Loan Request Form, then bring the 2 worksheets and Student Loan Request Form to the Financial Aid office for loan intake with a Financial Aid Advisor.
What if I'm an online student?
Complete Steps 1 through 5 under "How do I apply for a student loan?" then email the completed Student Budget Worksheet, Student Loan Borrower Worksheet, and Student Loan Request Form to directloan@sbcc.edu
How much can I borrow?
SBCC is a two-year institution. Therefore, students are only eligible to apply for a first-year (less than 30 units completed at SBCC) or second-year (30 units or more completed at SBCC) student loan. Note: Transcripts from other institutions WILL NOT be considered to determine grade level for loan eligibility. SBCC transcripts will be used solely to determine grade level eligibility.
Annual Stafford Loan Limits are as follows:
| Base Amount | Additional Unsubsidized | Additional Unsubsidized | |
| (All Students) | Dependent* Students | Independent* Students | |
| Dependent Students whose parents cannot borrow PLUS | |||
| 1st Year | $3500 | $2000 | $6000 |
| 2nd Year | $4500 | $2000 | $6000 |
* As defined by the Department of Education for financial aid purposes.
Are there fees for my Direct Loan?
For all Direct Subsidized Loans and Direct Unsubsidized Loans for which the earliest disbursement date is on or after July 1, 2010, the origination fee is 1.0 percent.
Up-Front Interest Rebate:
For all Direct Subsidized Loans and Direct Unsubsidized Loans for which the earliest disbursement date is on or after July 1, 2010, the up-front interest rebate is 0.5 percent.
The Department of Education offers this rebate to encourage timely repayment of Direct Loans. A borrower retains the rebate by making the first twelve monthly payments on time. If all twelve payments are not made on time, the borrower will be required to pay the amount of the rebate.
When will I receive my loan money?
Student loans are paid in two equal disbursements during the selected loan period. For academic year loans, the 1st disbursement is paid in fall and the 2nd disbursement is paid at the beginning of the spring semester. For one-semester loans, the loan is paid in two equal disbursements during the semester.
In accordance with federal regulations, no loan money may be released sooner than ten days prior to the beginning of a semester, unless you are a first time Stafford loan borrower with the Department of Education. If you are a first-time Stafford loan borrower, the 1st disbursement will be 30 days from the beginning of the semester.
How do I receive my loan money?
The loan money is delivered to the student through Santa Barbara City College. Students have two choices of how they receive their money – either as a check mailed to the address noted on their Pipeline account or by direct deposit to their savings or checking account. To sign up for direct deposit, go to your financial aid Pipeline account and click on the link Direct Deposit.
Please note - checks CANNOT be picked up!
Is there a deadline to apply for a student loan?
Yes. Loan applications will be accepted throughout the school year. Call the Financial Aid Office at 805.730.5157 or check Deadlines at www.sbcc.edu/financialaid for specific deadline dates.
FEDERAL STUDENT AID OMBUDSMAN
If you have a problem or question about your student loan, the Federal Student Aid (FSA) Ombudsman of the Department of Education helps resolve disputes and solve other problems with federal student loans. For more information about the FSA Ombudsman, go to www.ombudsman.ed.gov or call 877.557.2575.
If you have additional questions, please contact our office by emailing your financial aid advisor or calling the financial aid office at 805.730.5157.
