Loans

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. Subsidized loans are low-interest loans for financially needy undergraduate students. Interest does not accrue while the student is in school and during certain periods. You must have financial need to receive Direct Subsidized Loans.

Direct Unsubsidized Loans are low-interest loans for undergraduate and graduate students. Students are responsible for the interest for the life of the loan, including when they are in school. Financial need is not a requirement to obtain a Direct Unsubsidized Loan.

Direct Loans are low-interest loans for students and parents to help pay for the cost of a student’s education after high school. The lender is the U.S. Department of Education. Direct PLUS Loans are unsubsidized loans for the parents of dependent students and for graduate/professional students. PLUS Loans help pay for education expenses up to the cost of attendance minus all other financial assistance. Interest is charged during all periods.

Parent Eligibility Requirements

You must be the student’s biological or adoptive parent or the student’s stepparent, if the biological or adoptive parent has remarried at the time of application. Your child must be a dependent student who is enrolled at least half-time at a school that participates in the Direct Loan Program. For financial aid purposes, a student is considered “dependent” if he or she is under 24, unmarried, and has no legal dependents at the time the Free Application for Federal Student Aid is submitted. (Exceptions are made for veterans, wards of court, and other special circumstances.) If a student is considered dependent, then the income and the assets of the parent have to be reported on the FAFSA.

Additional Requirements

Parent PLUS Loan borrowers cannot have an adverse credit history (a credit check will be done). In addition, parents and their dependent child must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and must meet other general eligibility requirements for the Federal Student Aid programs. You can find more information about these requirements in Types of Financial Aid: Loans, Grants, and Work-Study Programs.

Applying for a PLUS Loan and the Master Promissory Note (MPN)

To take out a PLUS Loan for the first time, you must complete a PLUS Application and master promissory note (MPN). The MPN is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the Department. It also explains the terms and conditions of your loan(s). 

You must complete the MPN electronically, you can do so online at StudentAid.gov. If you are borrowing Direct PLUS Loans for more than one student, you’ll need to complete a separate MPN for each one. To complete an MPN online, you will be required to use your Department of Education-issued FSA ID (not your child’s). If you do not have a FSA ID, you may request one from the StudentAid.gov.

In most cases, once you’ve submitted the MPN and it’s been accepted, you won’t have to fill out a new MPN for future loans you receive to pay for the educational expenses of the same student. You can borrow additional Direct Loans on a single MPN for up to 10 years.

You’ll receive a disclosure statement that gives you specific information about any loan that the school plans to disburse under your MPN, including the loan amount and loan fees, and the expected loan disbursement dates and amounts.

Credit Check & Endorser Alternative

A credit check will be performed during the application process. If you have an adverse credit history, you may still receive a Direct PLUS Loan by obtaining an endorser who does not have an adverse credit history or documenting to the U.S. Department of Education’s satisfaction extenuating circumstances relating to your adverse credit history. If you are a parent borrower, the endorser cannot be the child on whose behalf you are borrowing.

Loan Limits, Interest Rate, and Loan Charges

There are no set limits for Direct PLUS Loans, but you may not borrow more than the cost of your child’s education minus any other financial aid received, such as a Direct Subsidized or Unsubsidized Loan. The school will determine the actual amount you may borrow.

The interest rate for Direct PLUS Loans is fixed. Interest is charged on Direct PLUS Loans during all periods, beginning on the date of your loan’s first disbursement. To find out more information on interest rates for Direct PLUS Loans, contact your loan servicer.

In addition to interest, you pay a loan origination fee that is a percentage of the principal amount of each Direct PLUS Loan that you receive. This fee helps reduce the cost of making these low-interest loans. We deduct the fee before you receive any loan money, so the loan amount you actually receive will be less than the amount you have to repay.

Dependent students whose parents have applied for but were unable to get a PLUS Loan are eligible to receive additional Direct Unsubsidized Loan funds.

How a Loan is Disbursed

Generally, your loan will cover a full academic year and your child’s school will make at least two disbursements to you, for example, at the beginning of each semester or at the beginning and midpoint of your academic year.

In most cases your child’s school will disburse your loan money by crediting it to your child’s school account to pay tuition, fees, housing, meals, and other authorized charges. If the loan disbursement amount exceeds your child’s school charges, the school will pay you the remaining balance of the disbursement directly by check or other means. In some cases, with your permission, the school may disburse some of the PLUS Loan money directly to the student. Your child’s school will notify you in writing each time they disburse part of your loan money and will provide information about how to cancel all or part of your disbursement if you find you no longer need the money. You will also receive a notice from us confirming the disbursement. You should read and keep all correspondence received concerning your loan.

How to Repay the Loan

The repayment period for a Direct PLUS Loan begins 60 days after you have received the last installment of the loan for that school year. This means that you generally must begin repayment while your child is still in school. However, you may be able to defer making payments while your child is enrolled.

Using the Loan for Education Expenses

You may use the loan money you receive only to pay for your child’s education expenses at the school. Education expenses include school charges such as tuition, housing, meals, fees, and indirect expenses such as books, supplies, equipment, dependent child care expenses, transportation, and rental or purchase of a personal computer.

First Step – Complete the Free Application for Federal Student Aid (FAFSA). Please note, you must complete a new FAFSA for each academic year. The academic year begins with the fall semester and ends with the summer semester at Galveston College.

2024-2025: This application is for the 2024-2025 academic year (Fall 2024, Spring & Summer 2025)

2025-2026: This application is for the 2025-2026 academic year (Fall 2025, Spring & Summer 2026)

Second Step – If you are requesting a Direct Subsidized or Unsubsidized Loan for the fall, spring or summer terms, please submit the Loan Request and Adjustment Form.

If you are requesting a PLUS loan, please log on to StudentAid.gov and select “Apply for a PLUS Loan” under the “Apply for Aid” tab. Once your parent has received the confirmation please forward the email to [email protected].

Third Step – Complete the Entrance Counseling by logging on to StudentAid.gov and selecting “Complete Entrance Counseling” (Please choose undergraduate counseling type) under the “Complete Aid Process” tab.

Fourth Step – Submit the Loan Request and Adjustment Form and confirmation of your complete Loan Entrance Counseling to [email protected]. The forms, counseling confirmations, and status update request must come from your Galveston College Whitecaps email.

Fifth Step – Once your loan has been awarded, sign the Master Promissory Note (MPN) by logging on to StudentAid.gov and selecting “I'm an Undergraduate Student Log In To Start". You are encouraged to download or print a copy of your MPN for your records. We recommend waiting until your loan award has been made before completing your MPN online.

 **If you are having difficulty completing your MPN and Entrance Counseling, please call the government’s student helpline at 1-800-433-3243.

Student Eligibility Requirements

 

The loan disbursements will be issued as follows depending on the loan request:

 

Summer loans are the same as fall or spring, you must be enrolled at least six (6) credit hours in an active eligible degree or certificate program to be disbursed loan funds.

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

Borrowers that must complete Exit Counseling 

Responsible Borrowing

Before you take out a loan, it’s important to understand that a loan is a legal obligation that makes you responsible for repaying the amount you borrow with interest. Even though you don’t have to begin repaying your federal student loans right away, you shouldn’t wait to understand your responsibilities as a borrower.

Current Interest Rates

The interest rates for Direct Subsidized Loans and Direct Unsubsidized Loans are shown in the chart below.

The interest rates shown above are fixed rates for the life of the loan.

 Yearly and Lifetime Borrowing Limits

Student Loan Entrance Counseling

Register for the in-person meeting on your chosen date and time from the section below. You must register in advance no later than one hour prior to the session start time. Borrowers at Galveston College MUST attend an in-person loan counseling session in addition to the online student loan entrance counseling at StudentAid.gov once an academic year. If you do not attend one of these mandatory sessions, your student loan will not be processed and will not disburse. This means that your loan funds will not be available.

Sessions generally last 45 minutes to 1 hour. Please be sure to arrive on time as students arriving late will not be admitted.

Please have your FSA ID and Password. THERE WILL ONLY BE ROOM FOR 30 STUDENTS PER SESSION! Please be sure to arrive on time as no one will be admitted late.

New dates are added monthly to accommodate new applicants for the upcoming semester. If you have any questions or do not understand this requirement, please contact:

Galveston College
Financial Aid Office
4015 Avenue Q
Galveston, TX 
(409) 944-1235
Email: [email protected]

My Federal Student Aid

Borrowers can log in at StudentAid.gov to view their federal student loan information, including loan balances, interest rates, and loan servicer contact information.

Loan Simulator

Borrowers can use the simulator tool at StudentAid.gov to compare different monthly payment options based on their loan debt, income, and family size.

Student Loan Repayment

By visiting StudentAid.gov borrowers can learn how to make payments on their loans; find the right repayment plan; figure out what to do if they can’t afford their payments; and see what circumstances might result in a loan being forgiven, canceled, or discharged.

Starting October 1, 2024, your student loan repayment period begins, and we want to ensure that you have all the information you need to manage your loans effectively. 

Here are some important details about federal student loan repayment: 

1. Loan Servicer: Your loan servicer is the entity responsible for managing your federal student loans. You can find out who your loan servicer is by logging into the Federal Student Aid website at StudentAid.gov using your FSA ID and password. 

2. Repayment Plans: Federal student loans offer various repayment plans to accommodate different financial situations. You can choose from options such as the Standard Repayment Plan, Income-Driven Repayment Plans, and Graduated Repayment Plans. Each plan has its own terms and eligibility requirements. We recommend reviewing your options to determine which one is best suited for your circumstances.

3. Saving on a Valuable Education (SAVE) Plan—formerly the REPAYE Plan: Any Direct Loan borrower with an eligible loan type may choose this plan. Your monthly payments will be 10 percent of discretionary income, recalculated annually based on your updated income and family size, even if they haven't changed. For married borrowers, your spouse's income or loan debt is considered only if you file a joint tax return. 

4. Loan Forgiveness Programs: Depending on your career and loan type, you may be eligible for loan forgiveness programs such as Public Service Loan Forgiveness (PSLF) or Teacher Loan Forgiveness. These programs can help reduce your loan burden over time. Be sure to research the requirements and application process for any forgiveness programs you might qualify for.

5. Income Recertification: If you're on an income-driven repayment plan, it's essential to recertify your income and family size annually. Failure to do so can result in changes to your monthly payments, potentially leading to an increase in your payment amount.

6. Loan Consolidation: Loan consolidation allows you to combine multiple federal loans into a single loan with a fixed interest rate. This can make it easier to manage your loans if you have multiple federal loan servicers. However, keep in mind that consolidation may impact certain benefits, such as forgiveness programs, so it's essential to weigh the pros and cons before proceeding. 

Remember that open communication with your loan servicer is key to a successful repayment journey. If you encounter financial difficulties or have questions about your repayment options, don't hesitate to reach out to your loan servicer for assistance.

We understand that repaying student loans can be a significant financial commitment, but with careful planning and a clear understanding of your options, you can effectively manage your federal student loans.

Inceptia Great Advice for Repayment - Inceptia has created this special edition of Great Advice for Repayment to address this pressing, current need to prepare for resuming student loan repayment. They wanted to give you concise, yet thorough guide to what you can expect and how to prepare. With great information straight from the U.S. Department of Education, and our friends at NerdWallet, they collected the best advice to address the questions we hear borrowers ask most often, and put it all together for you in this guide.

Federal Student Aid - Repaying Your Loans 

If you have any further questions or need assistance, please visit StudentAid.gov or contact your loan servicer directly. We are here to support you in your pursuit of financial stability and success. 

A cohort default rate is the percentage of a school’s borrowers who enter repayment on Federal student loans during a federal fiscal year (October 1 to September 30) and default within the cohort default period. The United States Department of Education (ED) releases official cohort default rates once per year.

The Department of Education calculates the school’s cohort default rate by dividing the number of borrowers from the school entering repayment in a cohort year and default within a 3-year period divided by the number of borrowers from the school entering repayment in the cohort year.

Important Note: Some schools have a small number of borrowers entering repayment. Other schools have only a small portion of the student body taking out student loans. In such cases, the cohort default rate should be interpreted with caution as these rates may not be reflective of the entire school population.

** For more information go to Federal Student Aid for Official Cohort Default Rates for Schools.

Consequences of Default

Consequences of default for students can be severe. Outstanding interest on the loan is capitalized and collection fees may be added, often resulting in a balance that is higher than the amount initially borrowed. Defaulted loans are reported to credit bureaus, causing borrowers to sustain long-term damage to their credit rating. A defaulter may also face difficulty in securing a mortgages or car loan, may have their wages garnished, and their federal income tax refunds and other federal benefits seized. Until the default is resolved (i.e. through rehabilitation or garnishment), collection efforts continue, and the defaulter will be ineligible for additional federal student aid.

Fresh Start: Get Your Student Loans Back on Track

Are you struggling with defaulted federal student loans? The U.S. Department of Education (ED) has a one-time program called "Fresh Start" that's here to help. Let's break it down:

What is Fresh Start? Fresh Start is a special program that offers help to students with defaulted federal student loans. It's like a second chance to make things right.

What Does Fresh Start Do for You? Fresh Start automatically does some good things for you, like allowing you to access federal student aid, which includes loans and grants. But to get the full benefits, you need to take action.

How to Use Fresh Start:
1.    Contact Your Loan Holder: Find out if your loans are held by the U.S. Department of Education (ED) or a guaranty agency. If it's ED, find contact information here. If it's a guaranty agency, find contact information here.

2.    Don't Know Your Loan Holder? No worries! You can call 1-800-621-3115 (TTY 1-877-825-9923) to find out who holds your loans.

What Happens When You Use Fresh Start?

• Your defaulted loans will be moved from the Default Resolution Group or a guaranty agency to a loan servicer.
• Your loans will be put back into "in repayment" status, making it easier for you to start repaying them.
• The record of your loan default will be taken off your credit report, which can help improve your credit history.

Choosing a Repayment Plan: Once you're out of default, you get to pick a payment plan. Most students who use Fresh Start (about 80%) choose an income-driven repayment (IDR) plan. It's a plan that adjusts your payments based on your income, making it more affordable.

Learn More: For more details and information about Fresh Start, you can visit the Federal Student Aid Website.