What is a Federal Direct Student Loan?

Federal Direct Student Loans are a long-term financial obligation. Getting a loan means, you are responsible for repaying the money you borrowed including interest, costs and fees.

Read on for more valuable information regarding students loan programs and Woodland Community College Direct Loan application and disbursement process.

Who is eligible to take out federal student loans?

There are basic Federal Student Aid eligibility criteria and loan program-specific eligibility criteria:

Federal Student Aid Eligibility Criteria
  • demonstrate financial need:
  • be a U.S. citizen or an eligible noncitizen;
  • have a valid Social Security number (with the exception of students from the Republic of the Marshall Islands, Federated States of Micronesia, or the Republic of Palau);
  • be enrolled or accepted for enrollment as a regular student in an eligible degree or certificate program;
  • maintain satisfactory academic progress (SAP);
  • sign the certification statement on the Free Application for Federal Student Aid (FAFSA®) form stating that:
    • you are not in default on a federal student loan,
    • you do not owe money on a federal student grant; and
    • you will use federal student aid only for educational purposes; and
  • show you’re qualified to obtain a college education by
    • having a high school diploma or a recognized equivalent such as a General Educational Development (GED) certificate;
    • completing a high school education in a homeschool setting approved under state law; or
    • enrolling in an eligible career pathway program and meeting one of the “ability-to-benefit” alternatives.
Loan Program-specific Eligibility Criteria

What should I consider when taking out federal student loans?

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. Get the scoop: Watch this video about responsible borrowing.

How to Apply?

To apply for a Direct Loan, you must first complete a Free Application for Federal Student Aid (FAFSA®) form. Woodland Community College will use the information from your FAFSA to determine how much student aid you are eligible to receive.

Woodland Community College does not automatically include Federal Direct Loans in financial aid offers. Students who wish to borrow must submit a Direct Loan Request. Each request is individually reviewed using federal regulations and institutional policies. See below for application process.

Conditions for Direct Loan Eligibility
  • Complete FAFSA must be processed, and your financial aid file must be complete before your loan eligibility can be reviewed.
  • Enroll in an eligible academic program (associate degree or eligible certificate of achievement).
  • Enrolled in and actively attend at least six (6) program-applicable units toward an eligible associate degree or certificate program.
  • Not be in default on any type of student loan.
  • Not owe a repayment on a federal student grant.
  • Meet Satisfactory Academic Progress (SAP) requirements each applicable semester.

Students who do not currently meet eligibility requirements may become eligible after resolving outstanding requirements. The Financial Aid Office is available to discuss your options.

Steps to Requesting a Direct Loan at Woodland Community College
    1. Contact the Financial Aid Office to request a Direct Loan.
      • Students who meet the minimum Direct Loan eligibility criteria will be provided a Direct Loan Application packet via Self Service Financial Aid, Required Documents. Eligible students must complete all student loan application requirements.
      • Students who do not meet the minimum Direct Loan eligibility criteria will receive communication regarding this determination and will not be provided an application packet.
    2. Submit the Direct Loan Application Packet.
      • Direct Loan Application Packet is submitted online using the Student Forms platform accessible through Self Service Financial Aid, Required Documents. To avoid delays in processing your loan request, ensure all items are complete and uploaded appropriately. When uploading identification, be sure to include the entire front and back of the document, where applicable.
      • Reach out to the Financial Aid Office for questions regarding the application process.
    3. Direct Loan Award Update.
      • If your Direct Loan application is approved, the Financial Aid Office will certify and originate your Federal Direct Loan(s) per your eligibility and communicate the changes to your financial aid award package. Updated financial aid awards are accessible through Self Service Financial Aid, MyAwards.
      • If your Direct Loan application is rejected, you will receive email communication regarding changes required to your application materials. It’s important to follow up on email communication to ensure your loan request is processed timely and within applicable timeframes.
      • If your Direct Loan application is denied, you will receive email communication regarding this determination, and your loan application packet will no longer be accessible online.
      • Reach out to the Financial Aid Office for questions regarding application determinations and communications received.

Semester deadlines for Direct Loan requests are available in the Financial Aid Office or by email, WCCFinancialAid@yccd.edu.

Per HEA SEC.479(A(c),34CFR 685.301(a)(8), on a case-by-case basis, Woodland Community College Financial Aid Office may refuse to originate a loan for an individual borrower, or may originate a loan for an amount less than the borrower’s maximum eligibility. Woodland Community College reviews each student’s loan request individually. The Financial Aid Office will notify the student in writing when loan is originated and accepted by U.S. Department of Education. In the event the originated loan amount is reduced or the financial aid office refused to originate a loan, the impacted student will be notified in writing immediately.

The Financial Aid Office will review on a case-by-case basis a student’s: current loan debt, satisfactory academic progress, evaluation of time to complete, ability to repay accumulated loan debt based on an analysis of the student’s program of study and median annual earning potential after 2 years of employment in the field. The Financial Aid Office reserves the right to refuse to originate any Federal Direct Loans when a student indicates that educational loan funds will be used for purposes other than educational expenses, indication is made that the student does not intend to repay the loan, and when fraud has been detected.

Types of Direct Loans

The U.S. Department of Education’s federal student loan program is the William D. Ford Federal Direct Loan (Direct Loan) Program. Under this program, the U.S. Department of Education is your lender. There are two types of Direct Loans available:

  • 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 or career school. The U.S. Department of Education pays the interest on a Direct Subsidized Loan while you’re in school at least half-time, for the first six months after you leave school (referred to as a grace period), and during a period of deferment (a postponement of loan payments).
  • Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students; there is no requirement to demonstrate financial need. The student borrower is responsible for paying the interest on a Direct Unsubsidized Loan during all periods.

Borrowing Limits

Annual and aggregate loan limits are established by federal law and depend on your grade level, dependency status, remaining eligibility, and current federal regulations.

The published loan limits are subject to federal law and may change. More information available on StudentAid.gov.

Interest Rates and Fees

If you receive a federal student loan, you will be required to repay that loan with interest. Make sure you understand how interest is calculated and the fees associated with your loan. Both of these factors will impact the amount you will be required to repay.

Interest

Federal Direct Loan interest rates are established annually by federal law. Current interest rates are available at: https://studentaid.gov/understand-aid/types/loans/interest-rates

Got other questions about interest?

Fees

All Direct Subsidized Loans and Direct Unsubsidized Loans have a loan fee. The loan fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement. The percentage for all Direct Subsidized and Unsubsidized loans first disbursed on or after Oct. 1, 2020, is 1.057%. Loans first disbursed before that date had different loan fees.

Disbursement Timing

Federal regulations require loans be disbursed in a minimum of two payments per loan period —

  • Academic-year loans (fall and spring semesters)- divided into two payments over the academic year:
    • 1st disbursement after loan origination in fall semester, and
    • 2nd disbursement at the beginning of spring semester.
  • Single-semester loans (fall or spring) – divided into two payments over the semester:
    • Exact disbursement dates depend on timing of origination –
      • 1st disbursement after loan origination, and
      • 2nd disbursement approximate midpoint between 1st disbursement and end of semester.

Please Note the following details regarding loan disbursements:

  • Students must maintain at least half-time enrollment (6 units) to receive loan disbursement.
  • Loans not available during summer term.
  • First time student borrowers with no prior Federal Direct Loan are required by law to complete 30 days of their program of study before receiving their first loan disbursement.
Direct Loan Disbursement Schedules

Direct Loan disbursements for each semester are provided on the term payment scheduled published on the WCC FA main web page.

Borrower’s Right To Cancel

Before a student’s your loan money is disbursed, you may cancel all or part of your loan at any time by notifying the WCC Financial Aid Office in writing. After your loan is disbursed, you may cancel all or part of the loan within certain time frames. The promissory note and additional information received during the application process will explain the procedures and time frames for canceling your loan.

Repayment Options

After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you are required to begin repayment. During this period, you’ll receive repayment information from your loan servicer, and you’ll be notified of your first payment due date. Payments are usually due monthly. Learn more about repaying your loan.

Although you may select or be assigned a repayment plan when you first begin repaying your student loan, you can change repayment plans at any time—for free.

You can contact your loan servicer if you want to discuss repayment plan options or change your repayment plan. You can get information about all of the federal student loans you have received and find the loan servicer for your loans by logging in to your Federal Student Aid Dashboard. The student’s FSA ID and Password are required to access the dashboard.

Repayment Plans

Federal repayment options are changing with recent legislative updates under the One Big Beautiful Bill Act (OBBB). You should review current repayment plans available through your federal loan servicer and StudentAid.gov.

Avoid Student Loan Delinquency and Default

If you’ve missed a payment or are having trouble making payments, immediately contact and discuss options with the organization that handles billing and other services for your loan to avoid defaulting on your loan.

Contact your loan servicer if you are unable to make payments.

Delinquency

The first day after you miss a student loan payment, your loan becomes past due, or delinquent. Your loan account remains delinquent until you repay the past due amount or make other arrangements, such as deferment or forbearance, or changing repayment plans.

If you are delinquent on your student loan payment for 90 days or more, your loan servicer will report the delinquency to the three major national credit bureaus. If you continue to be delinquent, your loan can risk going into default. Don’t ignore your student loan payments—defaulting on your loan can have serious consequences.

Default

If your loan continues to be delinquent, the loan may go into default. The point when a loan is considered to be in default varies depending on the type of loan you received.

For a loan made under the Direct Loan Program, you’re considered to be in default if you don’t make your scheduled student loan payments for at least 270 days.

If you defaulted on any of your federal student loans, contact the organization that notified you of the default as soon as possible so you can explain your situation fully and discuss your options. If you make repayment arrangements soon enough after your loan has gone into default, you may be able to resolve the default quickly.

Consequences of defaulting can not only impact your ability to borrow but can impact your finances as well. Consequences include the following:

  • The entire unpaid balance of your loan and any interest you owe becomes immediately due (this is called “acceleration”).
  • You can no longer receive deferment or forbearance, and you lose eligibility for other benefits, such as the ability to choose a repayment plan.
  • You lose eligibility for additional federal student aid.
  • The default is reported to credit bureaus, damaging your credit rating and affecting your ability to buy a car or house or to get a credit card.
  • It may take years to reestablish a good credit record.
  • You may not be able to purchase or sell assets such as real estate.
  • Your tax refunds and federal benefit payments may be withheld and applied toward repayment of your defaulted loan (this is called “Treasury offset”).
  • Your wages may be garnished. This means your employer may be required to withhold a portion of your pay and send it to your loan holder to repay your defaulted loan.
  • Your loan holder can take you to court.
  • You may be charged court costs, collection fees, attorney’s fees, and other costs associated with the collection process.