Types of Student Loans

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Learning about college loans can be overwhelming. Free Application for Federal Student Aid (FAFSA) in itself is a lot to take in! Don't worry: we are here to help you through the process. Here are the basics: what they are, what options you have, and how to apply.

What are Federal Student Loans?

Direct Stafford Loans, from the William D. Ford Federal Direct Loan (DL) Program, are low-interest loans for eligible students to help cover the cost of higher education. This program allows students to borrow loan funds directly from the federal government.

Interest rates vary, depending on the type of loan and the date of disbursement, which is the day that the money is loaned to the student. Learn more about interest rates.

Types of Loans

Here are the most common types of loans provided by the William D. Ford Direct Loan Program.

NOTE: San Jac does not originate Grad PLUS Loans.

Subsidized Direct Student Loans are low interest, long-term loans funded by the federal government for students who demonstrate financial need. You are not charged interest before repayment begins or during authorized deferment periods. The government “subsidizes” the interest while you’re enrolled at least half-time, which is six credit hours.

There are specific regulations from the Dept. of Education that may affect your subsidized loan eligibility. This regulation applies to subsidized (not unsubsidized or PLUS) loans disbursed to first-time borrowers on or after July 1, 2013. First-time borrowers are defined uniquely for the new 150% rule: You have no outstanding balance of principal or interest on a loan OR if you have previously received loans, they are paid in full. If you are a first-time borrower under this law, you are only eligible for the subsidized loan for a period of 150% of the published program. Learn more about subsidized direct student loans or review your entrance counseling.

Unsubsidized Direct Student Loans are available to students who need additional assistance, and you don’t have to demonstrate financial need to get one. These loans charge interest immediately until they’re paid off.
Parent Loans to Undergraduate Students (PLUS) is a credit-based loan that is available to parents, not to exceed the cost of attendance, minus any other financial aid awarded to the students. These loans are only available to parents of dependent students. 

Steps to Apply for a Loan

Before you begin, here’s one important thing to know: You must be enrolled and attend at least half-time (6 semester credit hours) for your loan to authorize or disburse.
  1. Complete the FAFSA

    Complete the Free Application for Federal Student Aid (FAFSA). You must complete a new FAFSA for each school year. The school year begins with the fall semester and ends with the summer semester. San Jac’s FAFSA school code is 003609.

  2. Submit Loan Paperwork

    The type of paperwork depends on the type of loan. If you request a Direct Subsidized or Unsubsidized Loan for the fall or spring term in the 2023-24 school year, please submit the 2023-24 Fall-Spring Direct Loan Request Form. If you request a PLUS loan, select “Request a PLUS Loan” at https://studentaid.gov/plus-app/, then “Parent PLUS” loan type.

  3. Complete Entrance Counseling

    Entrance counseling is mandatory for first-time borrowers, and it’s helpful! You’ll learn important details about the loan you’re about to receive.

  4. Complete Master Promissory Note

    Before loan funds can be disbursed, sign the Master Promissory Note (MPN) on https://studentaid.gov/mpn/. (Select “Complete Master Promissory Note” and choose subsidized/unsubsidized option.)

    We encourage you to download or print your MPN for your records.

Essential Loan Info

The most important thing to remember is this: Unlike scholarships and grants, loans must be repaid.

Loan funds are authorized to your account to pay tuition, fees, and bookstore charges. The balance of loan funds (after tuition, fees, and books are paid) begin releasing 30 calendar days after classes start and are paid in three or more installments, called disbursements. All students are encouraged to review details about their individual disbursement schedule in your financial aid student account. 

For your loan to authorize or disburse, you need to be enrolled and attend six credit hours or more. Your loan will not disburse until you reach six credit hours.

Due to federal regulations, first-time borrowers are not disbursed loan funds until 30 days after the start of the term. First-time borrowers are defined as students who are in their first year (have completed 29 hours or less, including transfer work) and who have not previously received a loan award at San Jac or another school.


The summer term counts as a separate period for financial aid and requires a separate loan application. Remember, just like loans for fall and spring, you have to take at least six credit hours to be eligible. So if you’re taking three hours for the first part of the summer and another three hours for the second part, eligibility kicks in when you take the second part.

If you received the maximum loans during the Fall and Spring terms, additional loans are not available unless you advanced a grade level.


These are the annual maximum amounts you may borrow:

  • $5,500 for a first-year, dependent student
  • $6,500 for a second-year, dependent student
  • $9,500 for a first-year, independent student
  • $10,500 for a second-year, independent student

In addition to annual borrowing limits, loans also have aggregate limits:

  • Dependent students: $31,000 total of subsidized and unsubsidized limit. No more than $23,000 of this amount may be subsidized.
  • Independent students: $57,500 total of subsidized and unsubsidized limit. No more than $23,000 of this amount may be subsidized.

Your financial need and program of study determines how much of this you’re eligible for. Because loans are a type of aid that must be repaid, we recommend only borrowing what you need. If your parents are denied a PLUS loan, you can exceed these maximums by up to $4,000 through an Unsubsidized Stafford Loan; however, you must do so by submitting an additional loan request.

First-year Students (Up to 29 completed hours – transfer hours included):

Two Terms (Fall and Spring):

  • Dependent student (Subsidized and Unsubsidized): $3,500 + $2,000
  • Independent student (Subsidized and Unsubsidized): $3,500 + $6,000

One Term (Fall, Spring, or Summer):

  • Dependent student (Subsidized and Unsubsidized): $1,750 + $1,000
  • Independent student (Subsidized and Unsubsidized): $1,750 + $3,000

Second-Year Students (30 or more hours completed – transfer hours included):

Two Terms (Fall and Spring):

  • Dependent student (Subsidized and Unsubsidized): $4,500 + $2,000
  • Independent student (Subsidized and Unsubsidized): $4,500 + $6,000

One Term (Fall, Spring, or Summer):

  • Dependent student (Subsidized and Unsubsidized): $2,250 + $1,000
  • Independent student (Subsidized and Unsubsidized): $2,250 + $3,000


You (or your parent, in the case of a PLUS loan) have the right to cancel all or part of a Stafford loan. All you do is submit a signed written request to the Financial Aid Office. 



Loan information can be confusing – we understand. If you have questions, we’re here to help. Contact us during business hours at 281- 998-6150
information@sjcd.edu, or meet with Financial Aid. 

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