Federal Student Loans | gotoLTC

Federal Student Loans

Federal Direct Loans are offered by the U.S. Department of Education through the Federal Direct Student Loan Program (FDLP). These loans are available to college students to supplement personal and family resources, scholarships, grants, and work-study. You will be notified by the Financial Aid Office of the amount and loan type(s) you are eligible to receive.

  1. Subsidized loans are need-based loans; unsubsidized loans are non-need based loans.  A student’s cost of attendance also affects the type of student loan a student is eligible for.  See how your aid was determined.
  2. Direct Subsidized Loans and Direct Unsubsidized Loans with a first disbursement date on or after July 1, 2020, and before July 1, 2021, have a loan origination fee of 1.057%.This origination fee is deducted from the student loan amount prior to disbursement on the LTC Student Account. The interest rate is fixed at 2.75%.
  3. First time borrowers as of July 1, 2013 taking out federal Direct subsidized loans are subject to the 150% Subsidized Loan Limit. This limit sets a length for which students are able to borrow up to 150% of their published program length.  Exceeding the limit results in a loss of further subsidized loan eligibility as well as a loss in subsidized loan interest subsidy. Please visit the following webpage for more information and helpful resources to help you better understand the 150% Direct Subsidized Loan Limit. View Subsidy information.
  4. All borrowers’ loan information will be submitted to the National Student Loan Data System (NSLDS) and the data will be accessible by guaranty agencies, lenders, and institutions determined to be authorized users of the data system. You can access your NSLDS information at https://nslds.ed.gov/nslds_SA/
  5. Students must remain enrolled and be participating in a minimum of 6 credits per term to keep the student loan in deferment.  Deferment means you are not required to make payments on your student loans.
  6. Taking out a student loan incurs interest.  Subsidized loans have the interest forgiven while attending school halftime (6 credits) or more per term.  Unsubsidized loans do not have that interest forgiven.  Interest on the unsubsidized loans that is not paid while attending school halftime will result in having the interest compounded with the principal of the loan. See the current loan interest rates.
  7. There is a limit to the amounts and types of student loans available per school year.  There is also an aggregate (cumulative) limit to the amounts and types of loans per student.  See chart below.
  8. Student loans are required to be repaid.  Before borrowing, invest some time in educating yourself on what repayment of these student loans will be like after school.  Also consider reviewing “Repaying Student Loans”.
Year Dependent Students (except students whose parents are unable to obtain PLUS Loans) Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans)
First-Year Undergraduate Annual Loan Limits   $5,500—No more than $3,500 of this amount may be in subsidized loans $9,500—No more than $3,500 of this amount may be in subsidized loans
Second-Year Undergraduate Annual Loan Limits   $6,500—No more than $4,500 of this amount may be in subsidized loans

$10,500—No more than $4,500 of this amount may be in subsidized loans

Subsidized and Unsubsidized Aggregate Loan Limit $31,000—No more than $23,000 of this amount may be in subsidized loans. $57,000 for undergraduates—No more than $23,000 of this amount may be in subsidized loans.
  1. Students must complete a FAFSA at www.fafsa.gov for the correct school year.  LTC includes summer term as a header, meaning it is the beginning of the school year for financial aid purposes.
  2. After completing the FAFSA, students may need to complete additional financial aid items.  These additional items will vary from student to student.  Students can see the required financial aid items in their Tasks tile of their MyLTC.
  3. Students that complete their financial aid requirements will have their financial aid award package completed.  A financial aid award notification is then emailed to the student with directions on how to accept the student loan.  Here’s how.  Failure to accept the student loan will result in the student not receiving a student loan.
  4. Students wanting their student loan will need to accept their loans by logging into MyLTC and clicking Student Center.  These directions will be emailed with the student’s financial aid award notification.
  5. Students are not required to accept the full amount of the loans offered with the financial aid award package.  Students may accept a partial amount or decline the amount in full.
  6. All first-time borrowers will be required to complete entrance loan counseling.  The purpose of the Loan Entrance Counseling session is to inform students of the rights and obligations as Direct Loan borrowers.  Complete entrance loan counseling now.  The FSA ID used to sign the FAFSA will need to be used to complete the entrance loan counseling.  View the Entrance Counseling Guide for direct Loan Borrowers.
  7. All first-time borrowers will also be required to complete the Master Promissory Note (MPN).  The MPN is a legally-binding contract between the U.S. Department of Education and a borrower.  The MPN contains the terms and conditions of the loan, including how and when the loan must be repaid.  Complete the MPN now.  The FSA ID used to sign the FAFSA will need to be used to complete the MPN.
  8. Financial aid is term-specific, meaning financial aid is specific to that semester and is disbursed during that semester’s disbursement period.
  9. Grants, scholarships, and loans administered by the financial aid office are first applied directly to your student account to pay charges for tuition, fees, books, and other charges. If you have financial aid that exceeds your student account charges, a refund or release of funds is given to you.
  10. There are 2 ways to receive a financial aid refund:
    1. A paper check is mailed to you at your address.  Be sure to keep your address current at LTC!
    2. A direct deposit into a checking or savings account.  Here’s how to set up your direct deposit refund.
  11. Sometimes delays occur in receiving a financial aid disbursement.  Here’s how to prevent them:
    1. Respond to all requests for additional information
    2. Enroll in coursed by the census date for courses that are required for your curriculum.
    3. Be fully accepted into an aid-eligible program
    4. Complete all applicable loan requirements, such as the MPN and entrance loan counseling.
    5. Participate in the courses in which you are enrolled
    6. Keep your banking information accurate if opting for direct deposit
    7. Keep your mailing address and phone number up-to-date on your Student Center in MyLTC
    8. Check your LTC email often
  12. Consider paying the interest of your unsubsidized loan.  It will reduce your future balance by the interest and by principal, resulting in lower loan payments!
  13. There are no penalties for prepaying your loans before the grace period is over.
  14. Withdrawing or lack of participation in classes may result in financial aid being recalculated and/or cancelled.  Read more.
  15. Students can only receive financial aid from one school per term.  If a student is attending more than one school per term AND/OR transfers within a school year, contact all financial aid offices of all schools to inform them of your attendance.
  16. Students have rights and responsibilities to keep their financial aid eligibility.  View them here.
  1. Students can select a Repayment Plan to determine the amount of monthly income that will be put toward student loan debt.  Students can work with their loan servicer to provide a loan repayment schedule that includes:
    1. When the first payment is due
    2. The number and frequency of payments
    3. The amount of each payment
  2. Get an estimate of what you will owe with this loan calculator.
  3. Students can view existing balances and further loan eligibility here.
  4. Those having temporary issues making student loan payments may be eligible for a deferment.  Learn more.
  5. Forbearance is another option for those having temporary issues during repayment and are not eligible for deferment.  Find out more.
  6. When you receive your first bill for your student loan, you will have the option to pay via automated payments.  This easy-to-use feature will also save you 0.25% on your interest rate during any period you are repaying with automated payments.
  7. It is very important to keep in contact with your loan servicer, especially if you are experiencing issues with repayment or are moving.  Learn who your loan servicer is.
  8. Failure to make payments, be in deferment, or be in forbearance results in default.  Some of the consequences of default include:
    1. Immediate repayment of the entire unpaid student loan amount
    2. A lawsuit
    3. Federal & state refund and other payments be intercepted
    4. Wages being garnished
    5. Payment of reasonable collection fees and costs, including attorney and court costs
    6. Denial of a professional license
    7. A loss of eligibility for other federal student aid and assistance under most federal benefit programs
    8. A loss of loan deferment eligibility
    9. Being reported to the national consumer reporting agencies (credit bureaus).
  9. Those having troubles with student loan debt may get assistance with Debt Resolution Services.
  10. If you have multiple student loans, you may have the option to consolidate them. Consolidation allows you to combine multiple student loans into one monthly payment.  There are pro’s and con’s to consolidation.  Learn more.
  11. A student loan may be discharged due to total and permanent disability.  To qualify, you must meet certain requirements during a 3 year conditional discharge period. View the Borrower’s Rights and Responsibilities Statement from your student loan for details.
  12. Student loan recipients who graduate, drop below half time enrollment status, or withdraw from classes, are required to complete Loan Exit Counseling.  Complete exit loan counseling now.
  13. After graduating, withdrawing from school, or dropping below half-time enrollment status there is a six month grace period before the first payment is due on both subsidized and unsubsidized loans.
  14. Students will make payments to the loan servicer and is based upon the type of loan received, how much money was borrowed, the interest rate on the loan, and the repayment plan chosen.
  15. Student loan recipients who graduate, drop below half-time enrollment status, or withdraw from classes, are required to complete Exit Loan Counseling.  Learn more.
  16. Failure to be enrolled and participating in a minimum of 6 credits per term will cause repayment or a grace period to ensue.