Federal Direct Loans
S.C. Teacher Loan (SCTL)
Student Loan Code of Conduct (PDF)
Federal Direct Loans
Beginning in the fall 2010 semester, SCC participates in the William D. Ford Direct Loan (DL) Program. Students receive funding for their federal student loans directly from the U.S. Department of Education instead of from a private bank or other lending institution as they have done through the Federal Family Education Loan Program (FFELP). You must complete a FAFSA, a Direct Student Loan Request and a Direct Loan Master Promissory Note (MPN). All students borrowing for the first time at SCC are required to complete entrance loan counseling. Upon graduation or ceasing to be enrolled at least half-time, you must complete exit loan counseling.
Loan requests processed at SCC are carefully considered to assure low default rates among loan borrowers. While we understand that loans are sometimes necessary, we encourage you to exhaust every possible means of assistance before requesting a loan, to borrow the absolute minimum amount you need and to have a reasonable expectation of how much you will earn after graduation. The average indebtedness of SCC students is $8,750. Using the standard repayment plan, this indebtedness would require a monthly payment of $101 for 10 years.
A Subsidized Direct Loan is awarded on the basis of financial need. No interest payments are required before repayment begins or during an authorized period of deferment. The federal government “subsidizes” the loan during these periods by paying the interest for the student.
An Unsubsidized Direct Loan is not awarded on the basis of financial need. The student will be charged interest from the time the loan is disbursed until it is paid in full. If interest is allowed to accumulate, it will be capitalized which means the interest will be added to the principal amount. Then interest will be charged based on this higher amount.
Capitalization will increase the amount that must be repaid. If the student chooses to pay the interest as it accumulates, loan payments will be less.
What you need to know
- SCC switched to the Direct Loan Program because the U.S. Congress passed major student aid reform requiring it. No new FFELP loans can be disbursed after July 1, 2010.
- No other student aid programs, such as Federal Pell Grant, are affected.
- The primary difference between Direct Loans and FFELP is the source of funding. While FFELP loans were funded through a variety of banks and private lending institutions, DL funds are borrowed directly from the federal government. Additionally with DL, borrowers have a single contact, the Direct Loan Servicing Center, for everything related to the repayment of the loan.
- Interest rates for Federal Subsidized and Unsubsidized Loans are the same in both programs. Direct Loans have a gross fee of 1.5% and a rebate of 1% which nets to 0.5% charged upfront for 2010-2011. The upfront rebate reduces the fee you pay at origination. If you don’t make your first 12 monthly payments on-time, the rebate amount will be added to your principal balance.
- You must sign a Direct Loan Master Promissory Note (MPN) because you will be borrowing from a new lender – the U.S. Department of Education. You must have your FAFSA PIN available to use on the website (sign your MPN).
- If you have previously completed entrance loan counseling for a Federal Stafford Loan received at SCC, you will not be required to complete it again for the Direct Loan Program. Only new borrowers at SCC are required to complete entrance counseling (download detailed instructions for DL entrance counseling - PDF).
- Any loan(s) you borrowed from another lender either at SCC or at another institution will be maintained by the lender/servicer with which you signed your original MPN. Your Direct Loan will be serviced by the U.S. Department of Education. You will receive correspondence and payment information from both the Department of Education and your prior lender/servicer.
- You may review all your loans at the student access website for the National Student Loan Data System.
S.C. Teacher Loan (SCTL)
The S.C. Teacher Loan program was established to entice talented and qualified teachers into the teaching profession and is administered through S.C. Student Loan. For additional information, you may visit their website at www.scstudentloan.org.
You must complete the FAFSA and be considered for all types of aid, including grants and Lottery Tuition Assistance, and be enrolled in an AA or AS program with education electives.
By June 1, you must have a completed financial aid file and a complete SCTL application. After June 1, SCTL applications will be accepted if funding is available.