Direct Loans

Federal student loans provide eligible students with an avenue of covering their educational costs while they're enrolled. The Department of Education acts as a lender for students. Unlike grants, loans must be repaid and follow a rigorous application process in order to make sure that students understand the implications of receiving a student loan. Qualifications for a Federal Direct Loan entails the following:

  • Students must be enrolled at least half-time
  • Students must show a financial need after other grants and student resources have been exhausted
  • Students must be enrolled in a program that leads to a degree or certificate

Watch Financial Aid TV About Direct Loans

 

Types of Federal Direct Loans:

  • Subsidized Direct Loans are available to undergraduate students only. The interest on subsidized loans are paid for by the United States Department of Education as long as the student is in school half-time, during the 6-month grace period after the student leaves school, and during deferment.
  • Unsubsidized Direct Loans are available to both undergraduate and graduate students. Borrowers are not required to show financial need to receive an unsubsidized loan as long as total aid does not exceed the cost of attendance. Unlike subsidized loans, interest will accrue on the borrowed principal balance while the student is in school and is not paid for by the Department of Education. Unless borrowers qualify for a deferment, loan repayment begins six months after they cease to achieve at least half-time enrollment in a postsecondary institution.

Both loans will require an extensive application process and will need approval from the US Department of Education.

 

 
Direct Loans Information
Current Federal Interest Rates

The interest rate for a federal student loan varies depending on

  • the loan type and
  • the first disbursement date of the loan (for most types of federal student loans).

The table below provides interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2023, and before July 1, 2024.

Perkins Loans (regardless of the first disbursement date) have a fixed interest rate of 5%.

Interest Rates for Direct Loans First Disbursed on or After July 1, 2024, and Before July 1, 2025

Loan Type

Borrower Type

Fixed Interest Rate

Direct Subsidized Loans and Direct Unsubsidized Loans

Undergraduate

6.53%

Direct Unsubsidized Loans

Graduate or Professional

8.08%

Direct PLUS Loans

Parents and Graduate or Professional Students

9.08%

All interest rates shown in the chart above are fixed rates. A fixed rate will not change for the life of the loan.

If your loan was disbursed before July 1, 2024, you likely have a different interest rate.

View interest rates for loans disbursed earlier.

What is interest?

Interest is additional money that you pay to a lender as a cost of borrowing money. Interest is calculated as a percentage of the unpaid principal amount that you borrowed.

Direct Loans are “daily interest” loans. On daily interest loans, interest accrues (adds up) every day.

If your loans are subsidized, you are not responsible for paying the interest that accrues while you’re in school. If your loans are unsubsidized, you’re responsible for all the interest that accrues, even while you’re in school. Learn about the differences between subsidized and unsubsidized loans.

How Interest Is Calculated

A daily interest formula determines the amount of interest that accrues (adds up) on your loan each day. This formula consists of multiplying your loan balance by the number of days since you made your last payment and multiplying that result by the interest rate factor.

Simple daily interest formula:

Interest Amount = (Outstanding Principal Balance x Interest Rate Factor) x Number of Days Since Last Payment

What is the interest rate factor?

The interest rate factor is used to calculate the amount of interest that accrues on your loan. You can find your interest rate factor by dividing your loan's interest rate by the number of days in the year.

How Interest Adds Up

It’s your responsibility to pay any interest that accrues (adds up) on your loan(s). And, in some cases, unpaid interest can capitalize (be added to your principal balance).

On a traditional repayment plan (Standard, Graduated, or Extended), your monthly loan payment covers all the interest that accrues between monthly payments. So no additional unpaid interest will accrue while you're making payments on one of these plans.

But unpaid interest can add up in some situations, such as if you’re on an income-driven repayment (IDR) plan or if you’re not making payments.

When does unpaid interest accrue (add up)?

On Income-Driven Repayment (IDR) Plans

Unpaid interest may accrue if you’re repaying your loans under an IDR plan. Under an IDR plan, your monthly loan payment can sometimes be less than the amount of interest that accrues between your payments. In this case, your payment won’t cover all of your interest, so an amount of unpaid interest will add up each month. This unpaid interest will still be your responsibility to pay until your loan is forgiven (or paid in full).

During Forbearance

You don’t have to make monthly payments during periods of forbearance. But interest continues to accrue during periods of forbearance.

During Deferment for Unsubsidized Loans

You don’t have to make monthly payments during periods of deferment. But if you have an unsubsidized loan, interest continues to accrue during periods of deferment.

During School and Grace Periods for Unsubsidized Loans

You’re not required to make monthly payments while you’re in school at least half-time or during your grace period. But if you have an unsubsidized loan, interest continues to accrue while you're in school and during the grace period.

What happens when interest capitalizes?

When your unpaid interest capitalizes, it increases the outstanding principal amount due on your loan. Then your interest is recalculated based on that higher principal balance, increasing the overall cost of your loan. And depending on your repayment plan, capitalization may also cause your monthly payment amount to increase.

When does unpaid interest capitalize?

Unpaid interest on Direct Loans and Federal Family Education Loan (FFEL) Program loans managed by the U.S. Department of Education (ED) capitalizes

  • after a deferment on an unsubsidized loan; or
  • if you are repaying your loans under the income-based repayment (IBR) plan and no longer qualify to make payments based on income or leave the IBR plan.

Unpaid interest on FFEL Program loans not managed by ED may capitalize

  • after a deferment on an unsubsidized loan;
  • after a forbearance on any type of loan;
  • after the grace period on an unsubsidized loan; or
  • if you are repaying your loans under the income-based repayment (IBR) plan and no longer qualify to make payments based on income or leave the IBR plan.

Example of What Happens When Interest Capitalizes

Say you have a $10,000 Direct Unsubsidized Loan with a 6.8% interest rate. On this loan, the amount of interest that accrues (adds up) each day is $1.86 (find out how interest is calculated).

In this example, you’re in a deferment for six months. During the deferment, you do not pay off the interest as it accrues. In this case, the loan will accrue $340 of unpaid interest. At the end of the deferment, the accrued interest of $340 will capitalize (be added to your principal balance).

You’ll then be charged interest on the higher principal balance of $10,340. Based on this increased principal balance, the amount of interest that accrues each day will also increase (to $1.93 per day). This will result in you paying more over the course of repaying your loan balance.

Who Sets Federal Interest Rates

Interest rates on federal student loans are set by federal law, not the U.S. Department of Education.

Paying Down Your Principal Balance

No payment you make will go toward any of your loan principal until you’ve paid all your unpaid interest.

Follow these steps to see how much of your payment will go toward your principal balance.

  1. Use the interest calculation formula explained above to determine how much interest has accrued (added up) since your last payment.
  2. Subtract the amount of accrued interest from your monthly payment and any other outstanding interest.
  3. See the number that’s left. This number is how much of your payment will be applied to your outstanding principal balance. This amount may continue to be $0 until all outstanding interest has been paid.

Example of Paying Interest and Principal

Say you have a $10,000 Direct Unsubsidized Loan with a 6.8% interest rate. The amount of interest that accrues (adds up) per day is $1.86.

Let’s assume you’re repaying your loan under the Standard Repayment Plan. In this repayment plan, your monthly payment would be $115.

It has been 30 days since your last payment, and there was no other interest outstanding when you made your last payment. In this case, $55.80 in interest will have accrued.

Subtracting this amount from $115 results in a total of $59.20. So $59.20 would be applied to your outstanding principal balance of $10,000.

Under any income-driven repayment plan, your monthly payment amount may sometimes be less than the amount of interest that accrues on your loans. This is called negative amortization.

Learn what happens to your unpaid interest.

Contact your loan servicer if you have more questions about how your payment is applied to your principal balance.

Fees for Federal Student Loans

Most federal student loans have loan fees. These fees are a percentage of the total loan amount.

A loan fee comes out of the amount of money that is disbursed (paid out) to you while you’re in school. This means the money you receive will be less than the amount you actually borrow.

You’re responsible for repaying the entire amount you borrowed and not just the amount you received.

The chart below shows the loan fees for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after Oct. 1, 2019.

Loan Fees for Direct Subsidized Loans and Direct Unsubsidized Loans

First Disbursement Date

Loan Fee

On or after 10/1/20 and before 10/1/25

1.057%

On or after 10/1/19 and before 10/1/20

1.059%

Loan Fees for Direct PLUS Loans

First Disbursement Date

Loan Fee

On or after 10/1/20 and before 10/1/25

4.228%

On or after 10/1/19 and before 10/1/20

4.236%

Loans first disbursed prior to Oct. 1, 2019, have different loan fees.

 

Previous Years’ Interest Rates

For most loans, the interest rate depends on the year it was first disbursed.

Perkins Loans (regardless of the first disbursement date) have a fixed interest rate of 5%.

Interest Rates for Loans Disbursed July 1, 2006–July 1, 2023

The following table provides interest rates for Direct Loans and Federal Family Education Loan (FFEL) Program loans* first disbursed on or after July 1, 2006, and before July 1, 2023.

Fixed Interest Rates for Direct Subsidized Loans and Subsidized Federal Stafford Loans* - Undergraduate Borrowers

First Disbursement Date

Fixed Interest Rate

7/1/23–6/30/24

5.50%

7/1/22–6/30/23

4.99%

7/1/21–6/30/22

3.73%

7/1/20–6/30/21

2.75%

7/1/19–6/30/20

4.53%

7/1/18–6/30/19

5.05%

7/1/17–6/30/18

4.45%

7/1/16–6/30/17

3.76%

7/1/15–6/30/16

4.29%

7/1/14–6/30/15

4.66%

7/1/13–6/30/14

3.86%

7/1/11–6/30/13

3.4%

7/1/10–6/30/11

4.5%

7/1/09–6/30/10

5.6%

7/1/08–6/30/09

6.0%

7/1/06–6/30/08

6.8%

Fixed Interest Rates for Direct Subsidized Loans and Subsidized Federal Stafford Loans* - Graduate or Professional Borrowers**

First Disbursement Date

Fixed Interest Rate

7/1/06–6/30/12

6.8%

Fixed Interest Rates for Direct Unsubsidized Loans and Unsubsidized Federal Stafford Loans* - Undergraduate Borrowers

First Disbursement Date

Fixed Interest Rate

7/1/23–6/30/24

5.50%

7/1/22–6/30/23

4.99%

7/1/21–6/30/22

3.73%

7/1/20–6/30/21

2.75%

7/1/19–6/30/20

4.53%

7/1/18–6/30/19

5.05%

7/1/17–6/30/18

4.45%

7/1/16–6/30/17

3.76%

7/1/15–6/30/16

4.29%

7/1/14–6/30/15

4.66%

7/1/13–6/30/14

3.86%

7/1/06–6/30/13

6.8%

Fixed Interest Rates for Direct Unsubsidized Loans and Unsubsidized Federal Stafford Loans* - Graduate or Professional Borrowers

First Disbursement Date

Fixed Interest Rate

7/1/23–6/30/24

7.05%

7/1/22–6/30/23

6.54%

7/1/21–6/30/22

5.28%

7/1/20–6/30/21

4.30%

7/1/19–6/30/20

6.08%

7/1/18–6/30/19

6.6%

7/1/17–6/30/18

6%

7/1/16–6/30/17

5.31%

7/1/15–6/30/16

5.84%

7/1/14–6/30/15

6.21%

7/1/13–6/30/14

5.41%

7/1/06–6/30/13

6.8%

Fixed Interest Rates for Direct PLUS Loans - Parents and Graduate or Professional Borrowers

First Disbursement Date

Fixed Interest Rate

7/1/23–6/30/24

8.05%

7/1/22–6/30/23

7.54%

7/1/21–6/30/22

6.28%

7/1/20–6/30/21

5.30%

7/1/19–6/30/20

7.08%

7/1/18–6/30/19

7.6%

7/1/17–6/30/18

7%

7/1/16–6/30/17

6.31%

7/1/15–6/30/16

6.84%

7/1/14–6/30/15

7.21%

7/1/13–6/30/14

6.41%

7/1/06–6/30/13

7.9%

Fixed Interest Rates for Federal PLUS Loans* - Parents and Graduate or Professional Borrowers

First Disbursement Date

Fixed Interest Rate

7/1/06–6/30/10

8.5%

*These loans were made under the Federal Family Education Loan (FFEL) Program. No new FFEL Program loans have been made since July 1, 2010.

**As of July 1, 2012, graduate or professional students are no longer eligible to receive subsidized loans.

Federal Direct Loan Procedures and Requirements
Student Procedure

How to Apply for a Federal Direct Loan

  1. Complete a Free Application for Federal Student Aid (FAFSA).
  2. If requested, submit all required documents to complete your Financial Aid file with Delta College. Check your MyDelta Student Portal under the Tasks tile for additional paperwork you may need to submit.
  3. Receive your Financial Aid eligibility notice in your student email account. You will also be notified whether or not you may apply for a Federal Direct Loan. 
  4. To apply for a loan during primary terms (Fall and Spring), submit a loan request by
Eligibility Requirements

Eligibility Requirements

  • Students must be in good academic standing, as spelled out under Delta's Financial Aid Satisfactory Academic Progress Guidelines.
  • Students must not be in default for any other federal students loans.
  • New borrowers must complete the Entrance Loan Counseling and a Master Promissory Note.
  • An Exit Counseling session must be completed when enrollment drops to below half-time enrollment or enrollment has been terminated.
Loan Proration for Graduating Borrowers

Per federal regulation Delta College is required to prorate a dependent or independent undergraduate student's annual Direct Loan limits, when they are enrolled in one semester and will graduate in the same academic year. This will mostly affect students that will graduate from their program of study at the end of the fall term.

Proration Formula:

Loan Proration Formula

Credit Hours Enrolled

Credit Hours in an Academic Year (24)

x Annual Direct Loan Limit

Examples for Students Enrolled Full-Time

Example of dependent student proration calculation:

12 credits enrolled

24 academic year credits

x 5500 subsidized loan

= $2750

12 credits enrolled

24 academic year credits

x 2000 unsubsidized loan

= $1000

Example of independent student proration calculation:

12 credits enrolled

24 academic year credits

x 5500 subsidized loan

= $2750

12 credits enrolled

24 academic year credits

x 7000 unsubsidized loan

= $3500

Examples for Students Enrolled Three-Quarter Time

Example of dependent student proration calculation:

9 credits enrolled

24 academic year credits

x 5500 subsidized loan

= $2062

9 credits enrolled

24 academic year credits

x 2000 unsubsidized loan

= $750

Example of independent student proration calculation:

9 credits enrolled

24 academic year credits

x 5500 subsidized loan

= $2062

9 credits enrolled

24 academic year credits

x 7000 unsubsidized loan

= $2625

Examples for Students Enrolled Half-Time

Example of dependent student proration calculation:

6 credits enrolled

24 academic year credits

x 5500 subsidized loan

= $1375

6 credits enrolled

24 academic year credits

x 2000 unsubsidized loan

= $500

Example of independent student proration calculation:

6 credits enrolled

24 academic year credits

x 5500 subsidized loan

= $1375

6 credits enrolled

24 academic year credits

x7000 unsubsidized loan

= $1750
Loan Application: Dates of Availability and Disbursement Info

Loan Application - Dates of Availability and Disbursement Info

Fall 2024
Applications Available to Eligible Students August 16, 2024
1st Disbursement  September 20, 2024
2nd Disbursement October 18, 2024
Spring 2025
Applications Available to Eligible Students January 10, 2025
1st Disbursement  February 14, 2025
2nd Disbursement March 14, 2025

 

Deadlines for Loan Application Submission

Fall 2024
All Applicants November 15, 2024 at 5 p.m. (PST)
Spring 2025
All Applicants April 18, 2025 at 5 p.m. (PST)

 

For disbursement information, please read the Loan Disbursement Policy & Regulations below.

Loan Disbursement Policy and Regulations

Disbursement Information

According to our policy and regulations, loan funds will be disbursed as follows:

  • Loans are disbursed in two payments per semester. No exceptions.
  • If the student is awarded for a full year, the award total will be allocated 50% in the Fall and 50% in the Spring. Each semester will have two payments, fewer loans, and origination fees.
  • If the student is awarded for only one semester, students will receive their award in two payments during the semester, less loan and origination fees.
  • All loans are subjected to loan and origination fees enacted by the Federal Department of Education.

All applicants for student loans must complete a Master Promissory Note (MPN) and Entrance Loan Counseling, as prescribed by the Eligibility Requirements spelled out above.

Federal Regulations for New First-Time Borrowers

If a student is enrolled in the first year of an undergraduate program of study and has not previously received a Direct Subsidized Loan, a Direct Unsubsidized Loan, a Subsidized or Unsubsidized Federal Stafford Loan, or a Federal Supplemental Loan for Students, a school may not disburse the proceeds of a Direct Subsidized or Direct Unsubsidized Loan until 30 days after the first day of the student's program of study. [34 CFR 685.303(b)(5)]

New first-time loan borrowers will receive their first disbursements 30 days after the first day of school.

Student's Rights and Responsibilities

Students Rights

You have the right to ask a school

  • What it costs to attend and about the refund policies for students who drop out.
  • How the school determines whether students are maintaining satisfactory academic progress and what happens if they are not.
  • What financial assistance is available, including all federal, state and school financial aid programs.
  • What the deadline is for submitting each aid application and about the criteria used to select recipients.
  • How each student's financial need is determined, including how costs for tuition and fees, room and board, transportation, books and supplies, and personal and miscellaneous expenses are considered in your budget.
  • What resources-such as parental contribution, other financial aid, personal assets, etc.-are included in the need calculation, and how much of your financial need, determined by the school, has been met.
  • To explain the various programs in your student aid package. If you believe you have been treated unfairly, you may request reconsideration.
  • What portion of the financial aid must be repaid and what portion is grant aid.
  • What is the interest rate, the total amount to be repaid, repayment procedures, the length of time to repay the loan, and the date when repayment begins.
  • How to apply for additional aid if your financial circumstances change.
  • Within certain timeframes, you may cancel a loan or request a lower amount through your MyDelta portal before accepting your loan(s). Once your loan(s) have been accepted, you will need to work with your lender/servicer to return funds.

 

Students Responsibilities

It is your responsibility to

  • Review all information about a school's program before enrolling.
  • Pay special attention to your application for student financial aid, complete it accurately, and submit it on time to the right place. Errors can delay financial aid. Intentional misreporting of information on application forms for financial aid is a criminal offense subject to penalties. Aid awarded due to inaccurate information will have to be repaid.
  • Submit all paperwork by the deadline.
  • Submit all paperwork to the right place.
  • Respond promptly and return all additional documentation, verification, corrections, and/or new information requested by the financial aid office or the agency to which you submitted applications.
  • Read, understand, and keep copies of all forms that you sign.
  • Notify the lender within 10 days of changes in your name, permanent mailing address, and school status.
  • Repay the loan according to the repayment schedule. Payment is required even if you do not get a bill.
  • Do not wait for the lender to contact you; write and request a repayment schedule.
  • If you cannot make a payment or think no payment is due, contact your lender and request a deferment of repayment, forbearance, hardship extension, or in-school extension.
  • Understand the school's refund procedures.
Defaulting on Student Loans

Defaulting on student loans is a serious matter and should be addressed as soon as possible. DO NOT be afraid to contact your lender or collection company; they are there to assist you in finding the best way to pay off your student loan, regain your financial aid eligibility and straighten out your credit record. In order to regain eligibility for financial aid and get back on track with credit bureaus, some important options are available:

  • Pay the defaulted loan in full.
  • Borrowers can meet satisfactory repayment criteria, like making six consecutive satisfactory payments.
  • Some loan servicer(s) allow consolidation of defaulted loans, though some consolidation lenders will require students to make satisfactory repayments on their loans for a specific period of time before consolidation can be considered.
  • Rehabilitation of the defaulted loan, meaning students can agree with their loan servicers on an affordable repayment plan, which would allow repayments to occur for 12 consecutive months. Once the 12 payments are made, default information will be removed from the student's credit records.

For more help with student loan defaults as well as a listing of loan servicers and possible repayment options, students can utilize with their lenders, visit Delta's Default Management page. Also visit the Federal Student Aid website for more information on what it means to be delinquent on student loans, what the consequences are for going into default, and tips on how to get out of it.

Cohort Default Rate

San Joaquin Delta College’s Cohort Default Rate (CDR) is 0% and the National Default Rate is 2.3%.  Approximately 3% of our student population borrow student loans.

Important Note

Federal Direct Loans (also called Direct Stafford Loans) are funds which must be repaid to the United States Department of Education. Unlike private loans, student loans cannot be forgiven and places the borrower in debt until the balance of the loan is fully repaid. San Joaquin Delta College highly recommends that students only request a student loan as a last resort, as defaulting on a student loan can lead to serious consequences for the borrower in the future. If you have any questions or concerns, please feel free to reach out to the Delta College Financial Aid department.

For more information on federal loans, please visit the Federal Student Aid Direct Stafford Loan website or the FSA Student Loan web page.