Student Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.
What is a Subsidized Loan?
Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school. Here’s a quick overview of Direct Subsidized Loans:
- Direct Subsidized Loans are available to undergraduate students with financial need.
- Your school determines the amount you can borrow, and the amount may not exceed your financial need.
- The U.S. Department of Education pays the interest on a Direct Subsidized Loan
- While you’re in school at least half-time
- For the first six months after you leave school (referred to as a grace period)
- During a period of deferment (a postponement of loan payments).
What is an Unsubsidized Loan?
Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but in this case, the student does not have to demonstrate financial need to be eligible for the loan. Here’s a quick overview of Direct Unsubsidized Loans:
- Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need.
- Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.
- You are responsible for paying the interest on a Direct Unsubsidized Loan during all periods.
- If you choose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, your interest will accrue and be capitalized (that is, your interest will be added to the principal amount of your loan).
New and returning student borrowers (who are new to Phoenix College) are required to eSign a Federal Direct Loan Master Promissory Note and complete in-person Federal Direct Loan Entrance Counseling. You will have to do this only once while in attendance at PC. Just because a student completes an MPN does not guarantee receipt of loan funds. Students must also meet all other eligibility criteria and be awarded.
Parents applying for a Federal Direct Parent PLUS Loan will need to complete a Direct PLUS Loan application and submit PC's Direct PLUS Loan Request form to the financial aid office. Just because a parent completes an MPN does not guarantee receipt of loan funds. Students and Parents must also meet all other eligibility criteria and be awarded.
If you are a first-time borrower on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans. This time limit does not apply to Direct Unsubsidized Loans or Direct PLUS Loans. If this limit applies to you, you may not receive Direct Subsidized Loans for more than 150 percent of the published length of your program. This is called your “maximum eligibility period.” Your maximum eligibility period is based on the published length of your current program. You can usually find the published length of any program of study in your school’s catalog.
For example, if you are enrolled in a four-year bachelor’s degree program, the maximum period for which you can receive Direct Subsidized Loans is six years (150 percent of 4 years = 6 years). If you are enrolled in a two-year associate degree program, the maximum period for which you can receive Direct Subsidized Loans is three years (150 percent of 2 years = 3 years).
Because your maximum eligibility period is based on the length of your current program of study, your maximum eligibility period can change if you change to a program that has a different length. Also, if you receive Direct Subsidized Loans for one program and then change to another program, the Direct Subsidized Loans you received for the earlier program will generally count toward your new maximum eligibility period.
Certain types of enrollment may cause you to become responsible for the interest that accrues on your Direct Subsidized Loans when the U.S. Department of Education usually would have paid the interest. These enrollment patterns are described below.
I become responsible for paying the interest that accrues on my Direct Subsidized Loans, when:
- I am no longer eligible for Direct Subsidized Loans and I stay enrolled in my current program
- I am no longer eligible for Direct Subsidized Loans, did not graduate from my prior program, and am enrolled in an undergraduate program that is the same length or shorter than my prior program
- I transferred into the shorter program and lost eligibility for Direct Subsidized Loans because I have received Direct Subsidized Loans for a period that equals or exceeds my new, lower maximum eligibility period, which is based on the length of the new program