Direct Loans

The Direct Loan Program offers two types of low-interest, fixed-rate loans for student borrowers: subsidized loans and unsubsidized loans. Both have a fixed interest rate, adjusted annually, with a cap of 8.25 percent. These loans are available for students regardless of their credit history.

With a subsidized Direct Loan, the government makes the interest payments on your loan at certain times, such as while you’re in school or in deferment. To qualify for a subsidized loan, you must demonstrate financial need on your Free Application for Federal Student Aid (FAFSA). Financial need is determined by taking into account your family’s income, assets, and size. The results reveal how much you and/or your family must contribute toward your education costs and your need for financial aid. There is a cap on the award amounts based on your dependency status, year in school, and Cost of Attendance.

With an Unsubsidized Direct Loan, you’re always responsible for interest payments, even while you are in school. You can either make interest payments or postpone them. If you postpone interest payments, the lender will add the accrued interest to your principal balance. This is known as capitalization. Capitalization increases the total amount you will repay, so it benefits you to make interest payments to keep the balance down. Financial need is not required to qualify for an Unsubsidized Direct Loan, but there is a cap on the award amount based on  your dependency status, year in school, and Cost of Attendance.

You must be making satisfactory progress towards completion of your degree – just like with other financial aid funding.

For additional information please visit the Federal Student Aid website or contact the Financial Aid office.

The federal government limits the maximum amount you can borrow annually and as an undergraduate. The BBCC Financial Aid Office determines how much of the maximum you are eligible to borrow each year based on your cost of attendance and other aid received.

Keep in mind that you may be repaying your Direct Loan for as long as 10 years—more under loan consolidation options. The more you borrow, the higher your monthly payments will be. Don’t borrow more than you need. The size of your monthly payments may make the difference between manageable and unmanageable debt in your future.

If a student is in the first year of undergraduate study and is a first-time Direct Loan borrower, Big Bend Community College may not disburse the first installment of the Direct Loan until 30 calendar days after the student’s program of study begins.

If there is more than one quarter in the loan period, the loan must be disbursed evenly throughout the academic year. For example, requesting a $2000 loan for Fall and Winter: you’ll receive $1000 during Fall quarter, and the other $1000 during Winter.

When a Direct Loan is made for one quarter, the loan must be disbursed in two installments. The second installment may not be disbursed until the student has successfully completed half of the instructional time in the quarter.

If you have a student loan issue to resolve, first contact your Financial Aid Office, servicer or guarantor. If these organizations are unable to help you, contact the Department of Education’s Federal Student Aid (FSA) Ombudsman at 877.557.2575. The Ombudsman is a neutral, independent office that works with student borrowers to help resolve student loan problems.