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Direct Loan Program - Financial Aid Office

A loan is money borrowed that must be paid back with interest. If your grant and/or scholarship awards are not enough to cover your school expenses, a low-interest federal loan is an option.

A Caution About Student Loans

It takes time for a loan application to be processed by the College and the government. Delivery of loan checks will be 30 days from the beginning of the loan period for new borrowers to ensure their continued enrollment at the time the check is disbursed. Student loan checks are released to the students after enrollment has been verified; twice per semester.

You should not plan to use the loan money to pay registration fees, early fee payments or to buy your textbooks as these funds will arrive after classes begin, but you may be able to utilize an Emergency Short Term Loan for those purposes.

Ohlone College will participate in the William D. Ford Federal Direct Loan (Direct Loan) Program beginning Fall 2010.  Students who previously received loans through the Federal Family Education Loan (FFEL) Program (which was also known as the Stafford Loan) will now borrow through the Direct Loan Program. 

The Direct Loan Program offers the same types of loans as the FFEL Program and Direct Loans generally have the same terms and conditions as FFEL Program loans, but instead of a bank lending the money, the U.S. Department of Education (the Department) lends the money directly to students through Ohlone College. 

There are also some differences in the names of the loans.  The FFEL Program’s Federal Stafford Loans (subsidized and unsubsidized) are called Direct Subsidized Loans and Direct Unsubsidized Loans in the Direct Loan Program.

The Direct Loan Program helps students from both low- and middle-income families. The fixed interest rate on the loan changes every July 1st, but is capped at 8.25%.  

The federal government pays the interest on a subsidized loan while the student is enrolled at least half-time in an eligible educational institution with a 2.0 or higher GPA, as well as during the six-month grace period after completion of enrollment.  An unsubsidized loan is not need based and interest accrues while the student is in school.

The amount a student can borrow depends upon the need determined on the FAFSA, your dependency status, and the number of units you have completed.  Your need will be determined by subtracting other sources of student aid and the expected family contribution from the college costs. The maximum subsidized amount based on eligibility for a dependent student is $3,500 a year as a freshman (less than 30 units) and $4,500 a year as a sophomore (30 or more units).  Subsidized or unsubsidized amounts will be determined based on unmet need.  Independent students may be eligible for an additional $4,000 in unsubsidized monies.

You must be enrolled in at least six (6) semester units (half-time status), and demonstrate satisfactory academic progress (2.0 or higher cumulative and current GPA) at the time of loan application. Repayment begins six (6) months after you cease being a half-time student, withdraw or graduate from college.

Dependent Student Direct Loan Amounts
Grade Level Base Subsidized and Unsubsidized Additional Unsubsidized Maximum Subsidized and Unsubsidized
First Year (less than 30 units) $3,500 $2,000 $5,500
Second Year (30 or more units) $4,500 $2,000 $6,500

Independent Student Direct Loan Amounts
Grade Level Base Subsidized and Unsubsidized Additional Unsubsidized Maximum Subsidized and Unsubsidized
First Year (less than 30 units) $3,500 $6,000 $9,500
Second Year (30 or more units) $4,500 $6,000 $10,500

How to Apply for a Direct Loan

To be considered for the Direct Loan, you must complete the 2010-2011 FAFSA and corresponding Ohlone College financial aid file.  You must also be enrolled in a minimum of 6 units and meeting satisfactory academic progress requirements.  The student will then need to complete loan counseling, a loan request form, and the Master Promissory Note (MPN).

New Direct Loan Students

If this is your first loan, or first Direct Loan while at Ohlone College, you must attend an on-site Loan Workshop (schedule of loan workshop dates and locations).  At the workshop, you can complete and sign a new (online) Direct Loan Master Promissory Note (MPN) and other loan-related documents. 

To complete the MPN, you will need to provide your Social Security Number, date of birth, and driver’s license number as well as two personal references (full name, address and telephone numbers).  You will use for FAFSA PIN to electronically sign the MPN.

Once all steps are complete, including completing the financial aid file, loan processing time is approximately two-to-three weeks. For first-time loan students, the loan check is disbursed after the first 30 days of the loan period to ensure continued enrollment. Loan checks will be disbursed twice during the semester, similar to the Pell disbursements. Students will be notified by mail when the loan check is available for pick up at the Cashier’s Office.

Returning Stafford Loan Students

  • For the loan you previously borrowed under the FFELP, you signed a Master Promissory Note (MPN) with your lender promising to repay the loan funds you borrowed from them. That note remains in effect and will govern the repayment of your FFELP loans.

  • You must repeat this process by signing another, very similar note under the Direct Loan Program to take out new loans.  At the Direct Loan Entrance Counseling workshop, you can complete and sign a new (online) Direct Loan MPN and other loan-related documents. 

  • To complete the MPN, you will need to provide your Social Security number, date of birth and driver’s license number as well as two personal references (full name, address and telephone numbers).  You will use for FAFSA PIN to electronically sign the MPN.

As a result of having new loans under the Direct Loan Program and previous loans under the FFELP, you may owe payments to two or more different entities. You may check your loan balances and loan holders/servicers by creating a login on the National Student Loan Data System, at www.nslds.ed.gov, using the same PIN that you used for the FAFSA and the MPN.

Once all steps are complete, including completing the financial aid file, loan processing time is approximately two-to-three weeks.  Loan checks will be disbursed twice during the semester, similar to the Pell disbursements.  Students will be notified by mail when the loan check is available for pick up at the Cashier’s Office.

More information about the Direct Loan Program can be found at the Department of Education Student Loan website.