Federal Direct Loan Programs
The U.S. Department of Education’s federal student loan program is the William D. Ford Direct Loan (Direct Loans) that is funded by the federal government to help pay for students education. A federal student loan is borrowed money the must be repaid with interest, therefore we encourage students to borrow wisely. Student must have a completed FAFSA application in place and must be enrolled in at least six credits.
Types of Federal Direct Loans:
Direct Subsidized Loans
Loans are made to eligible undergraduate students who demonstrate financial need to help cover costs of higher education at a college or career school.
Overview:
•For students with financial need.
•You must be enrolled in at least six credits.
•No interest is charged while you are in school at least half time, during your grace period, and during deferment periods.
•You do not have to make payments while you are attending school at least half time and during your grace period.
•You will receive a six month grace period after you drop below half time, leave school or graduate.
Direct Unsubsidized Loans
Loans are made to eligible undergraduate, graduate, and professional student, but eligibility is not based on financial need.
Overview:
•Not based on financial need.
•You must be enrolled in at least six credits.
•Interest is charged during all periods.
•You do not have to make payments while you are attending school at least half time and during your grace period, but interest will continue to be charged.
•You will receive a six month grace period after you drop below half time, leave school or graduate.
Your school determines determines the loan type(s), if any, and the actual loan amount you are eligible to receive each academic year. However, there are limits on the amount in subsidized and unsubsidized loans that you may be eligible to receive each academic year (annual loan limits). For more information on how much you can borrow visit Federal Student Aid Loans
Loan information will be submitted to the National Student Loan Data System (NSLDS), and will be accessible by guaranty agencies, lenders, and schools determined to be authorized users of the data system.
Application Process
Students may borrow up to the amounts listed on the Federal Direct Loan Request Form but cannot exceed their Cost of Attendance (COA). Not only will students be required to complete a Loan Request form they will also be required to complete a Master Promissory Note (MPN) and Entrance Counseling.
Overview:
Step 1: Complete Entrance Counseling
As a student loan borrower, you must complete the Entrance Counseling requirement online. This requirement ensures you understand the terms and conditions of your loan and your rights and responsibilities. You’ll learn what a loan is, how interest works, your options for repayment, and how to avoid delinquency and default.
When you’re finished, a record of your completion will be sent to our school and you will then receive your loan money. Keep in mind that you cannot save and leave an incomplete session; you must complete entrance counseling in one sitting.
Step 2: Complete Master Promissory Note (MPN)
The Master Promissory Note (MPN) online is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s). To sign the MPN electronically, you will need to use your FSAID username and password.
Step 3: Complete the Federal Direct Loan Request Form
Complete and return it to the Financial Aid Office at Central Arizona College prior to the deadline date listed on form. You can monitor the progress via your student portal.
All loans will have multiple disbursements, normally 2 per semester. See your loan disclosure statement for dates. A fee will be deducted equally from each disbursement of your loan. It is important to follow the steps listed on the Federal Direct Loan Request Form. Failure to follow steps in the right order may delay processing of the loan. If you have any questions, please contact our office.
Direct PLUS Loans:
Direct Plus Loans are unsubsidized loans for parents of dependent students and for graduate/professional students. Commonly known as Parent Plus Loan. The U.S. Department of Education makes Direct Plus Loans eligible to parents through the schools participating in the Direct Loan Program.
Overview:
•Unsubsidized loans for parents of dependent undergraduate students and for graduate or professional students.
•Student must be enrolled at least half time.
•Student must meet the general eligibility requirements for federal student aid.
•Parent can borrow up to the school’s cost of attendance, less all other financial assistance you receive.
•Interest is charged during all periods.
•Direct PLUS Loans do not have a grace period. The repayment begins as soon as the loan is fully disbursed, but you may defer repayment while you are enrolled at least half time and for an additional six months after you drop below half time.
•To qualify for a Direct PLUS Loan, you must not have an adverse credit history. A credit check will be conducted.
•If you have an adverse credit history, you may still qualify for a Direct PLUS Loan if you obtain an endorser who does not have an adverse credit history, or if you document to our satisfaction that there are extenuating circumstances related to your adverse credit history. (An endorser is someone who agrees to repay a Direct PLUS Loan if you do not repay the loan.
•Parents of dependent students who want to borrow should contact the Financial Aid Office to apply for a PLUS loan.
Application Process
Step 1. Complete the CAC Federal Direct Plus Loan Request Form
Step 2: Log onto Federal Student Aid using FSA ID user name and password to complete the Direct Plus Loan application for Parents.
Step 3: If credit is approved, complete the Direct Plus Loan Master Promissory Note (MPN) through Federal Student Aid. If credit is declined, the student may complete the box at the bottom of the CAC Direct Plus Loan Request form.
Step 4: Complete the PLUS credit counseling session through Federal Student Aid. (not required if credit is denied)
Whether the plus loan is approved or denied, the CAC Federal Direct Plus Loan Request form must be submitted to our office.
Official Cohort Default Rate Information
The U.S. Department of Education (the Department) releases cohort default rates, which indicate the percentage of a school’s borrowers who commence repayment on Direct Loan Program loans within a federal fiscal year (October 1–September 30) and default before the conclusion of the subsequent second fiscal year.
| Central Arizona College’s Rates |
| Year |
% of CAC Students Taking Loans |
CAC Default Rate |
National Default Rate |
| 2019-2020 |
4.6% |
0% |
7.3% |
| 2018-2019 |
4.3% |
0.8% |
2.3% |
| 2017-2018 |
5.2% |
12.2% |
0.0% |
*In order to annually keep all students informed of both the CAC and National Cohort Default Rates (CDR), the Director of Financial Aid or their designee will update the chart above within 10 business days of the information being made available by the US Department of Education.
