Macomb Community College participates in the Federal Direct Stafford Loan Program. There are two types of loans under this program: subsidized and unsubsidized.
A subsidized Federal Direct Stafford Loan is a low-interest, fixed rate based on financial need. The student must complete the Free Application for Federal Student Aid (FAFSA) to apply for this loan. In addition, Macomb Community College has a Federal Direct Loan Request Form, which is also required as part of the application process. The loan requires repayment after the student leaves school or enrolls less than six credit hours.
The student is required to sign a promissory note and complete entrance counseling (first-time borrowers only). In addition, when the student drops below half-time (6 credit hours or more) or leaves school, exit counseling is required.
A subsidized loan means the student is not charged interest on the loan during the following periods:
During the periods indicated above, the student is eligible to file a deferment, which authorizes the student’s payments to be postponed. The federal government “subsidizes” the interest during the deferment period.
An unsubsidized Federal Direct Stafford Loan is not based on financial need. The student is charged interest from the time the loan is disbursed until it is paid in full.
If the student allows the interest to accumulate, it will be capitalized. This means interest will be added to the principal amount of the loan and additional interest will be based on the higher amount. This will increase the total repayment amount of the loan. The student who chooses to pay the interest as it accumulates will repay less on the loan.
The interest rate for both subsidized and unsubsidized loans is fixed at 6.0% (effective July 1, 2008). Student borrowers are also charged a net fee of .5% on the loan. These fees are deducted from each loan disbursement. This fee paid to the federal government to help offset the cost of the loan. Also, if the student does not make payments when required, he/she will be charged collection costs and late fees.
Loan Limits*
The following loan limits apply to the Federal Direct Stafford Loan:
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Minimum of $500 per academic year
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$3,500/year for first-year students who have completed less than 32 credit hours
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$4,500/year for students who have completed at least 32 credit hours including transfer credits, from another college
*Because Macomb Community College is concerned about student loan defaults and increased debt levels of student borrowers, the College has adopted lower limits and stricter loan eligibility requirements. Students should review the loan policy for these requirements.
Alternative Loans
There are some instances when a student may not qualify for a Federal Direct Stafford Loan. There are alternative loans available to students from private banks and credit unions. The financial aid office certifies the amount a student can borrow, based on the cost of attendance.
Students are cautioned to be suspicious of unsolicited loan offers. Student loan debt can accumulate quickly and result in a lifetime burden of high payments and credit denials for automobile purchases, credit cards, and home mortgages. To avoid these problems, read and understand the terms and conditions of all loans.
for names of participating lenders.