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Types of Federal Financial Aid

Pell Grants

Pell Grants are available to eligible undergraduate students enrolled in an eligible program. A Federal Pell Grant, unlike a loan, does not have to be repaid. Federal Pell Grants usually are awarded only to undergraduate students who have not earned a bachelor’s or a professional degree. You are not eligible to receive a Federal Pell Grant if you are incarcerated in a federal or state penal institution or are subject to an involuntary civil commitment upon completion of a period of incarceration for a forcible or non-forcible sexual offense.

Supplemental Educational Opportunity Grant (SEOG)

SEOG is a federal grant that is awarded to undergraduate students with exceptional financial need and does not have to be repaid. Priority is given to students who are Pell Grant recipients with the lowest Expected Family Contributions (EFCs).

Federal Direct Loan Program

Direct Loans, from the William D. Ford Federal Direct Loan Program, are low-interest loans for eligible students to help cover the cost of higher education at a four-year college or university, community college, trade, career or technical school. Eligible students borrow directly from the U.S. Department of Education at participating schools.

There are several benefits in using the Direct Loan Program:

  • A Direct Loan is a guaranteed source of funding for student loans.
  • The option of an income-contingent repayment plan or an income-based repayment plan when you enter repayment. This means you will have the option of ensuring that your loan repayment amount will always be affordable based on what your income will allow.
  • Students in the Direct Loan program who enter into public service jobs can have any remaining balance on their loans forgiven after ten years of public service work. (While this option does not exist in the FFEL program, students who borrowed in that program can consolidate their loans into the DL program in order to take advantage of this forgiveness program.)
  • Most lenders offer benefits during repayment after a student makes payments from 2 to 4 years. Very few students end up receiving those benefits. In DL, students earn benefits after only 1 year.
  • Should a student make payments late under DL, the late fees charged are less than the late fees charged in the FFEL Program.

For more information visit: https://studentaid.ed.gov/sa/types/loans

Federal Direct Loans

  • Direct Subsidized Loans are available to undergraduate students with financial need. The school determines the amount you can borrow, and the amount may not exceed your financial need. 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 Loan is not based on the student’s financial need, but students must also meet specific eligibility requirements. Interest is charged throughout the life of the loan. The borrower may choose to pay the interest charged on the loan or allow the interest to be capitalized (added to the loan principal).
  • Direct PLUS Loan is a federal loan that graduate or professional degree students and parents of dependent undergraduate students can use to help pay education expenses. The U.S. Department of Education makes Direct PLUS Loans to eligible borrowers through schools participating in the Direct Loan Program.

Direct Loan Resource Center

In order to receive federal student loans, you must complete certain requirements. The Department of Education has created a website (www.studentloans.gov) to manage borrower requirements and provide valuable information regarding federal student loans. The three items listed below are required from all borrowers.

  • Entrance Interview 
    To ensure that you understand your rights and responsibilities as a student loan borrower, the Federal Government requires you to participate in loan counseling before receiving a Direct Loan, if you have not previously received a Direct Loan, Federal Family Education Loan or Supplemental Loans to Students (SLS) Loan.
  • Sign Master Promissory Note (MPN)
    The Master Promissory Note, commonly referred to as MPN, is a document that must be signed in order to receive a federal student loan.  The signed MPN binds you to the federal government as a promise to repay the student loan you intend to take out to help cover your educational expenses. The MPN provides valuable information about the rights and responsibilities you have as a borrower.
  • Exit Interview
    Prior to graduating or leaving school, Direct Loan borrowers must complete exit counseling. The Direct Loan Exit Counseling will explain your rights and responsibilities as a Direct Loan Borrower. Your Federal FSA ID is required in order to complete the Exit Interview because your personal loan information will be provided.

Current Interest Rates

Congress has passed the Bipartisan Student Loan Certainty Act of 2013, which ties federal student loan interest rates to financial markets. Under this Act, interest rates will be determined each June for new loans being made for the upcoming award year, which runs from July 1 to the following June 30. Each loan will have a fixed interest rate for the life of the loan.

The following table provides the interest rates for new Direct Loans made on or after July 1, 2017, and before July 1, 2018. These rates will apply to all new Direct Loans made during this time, even loans already disbursed before the passage of the Act.

Loan

Interest Rate

Direct Subsidized and Unsubsidized Loans (Undergraduate Students)

4.45%

Direct Unsubsidized Loans (Graduate or Professional Students)

6.00%

Direct PLUS Loans (Parents and Graduate or Professional Students)

7.00%

Federal Student Loan Fees

Most federal student loans have loan fees that are a percentage of the total loan amount. The loan fee is deducted proportionately from each loan disbursement you receive. 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, Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after Oct. 1, 2016.

Loan Type

First Disbursement Date

Loan Fee

 Direct Subsidized Loans and Direct Unsubsidized Loans

On or after 10/1/16 and before 10/1/17

1.069%

On or after 10/1/17 and before 10/1/18

1.066%

Direct PLUS Loans

On or after 10/1/16 and before 10/1/17

4.276%

On or after 10/1/17 and before 10/1/18

4.264%

Loans first disbursed prior to Oct. 1, 2016, have different loan fees.

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