Loan Repayment/Debt Management
Click here to view recent updates and regulations regarding Direct Loan Eligibility, effective July 1, 2013
Red Rocks Community College participates in the Federal Direct Student Loan program. We encourage students to make informed decisions when taking out a student loan. Only borrow the amount of funds you need to successfully complete your education. Students are legally obligated to repay a student loan once it is disbursed even if they do not complete their program. We encourage you to fully read and understand the terms and conditions of each loan type before accepting a loan. Federal student loans are available to students after completing a Free Application for Federal Student Aid (FAFSA).
The Federal Direct Student Loan program allows students to:
- borrow directly from the federal government and have a single contact - the National Student Loans Database System (NSLDS)- for everything related to the repayment of your loans, even if you receive Federal Direct Loans at different schools.
- have online access to your Federal Direct Loan account information 24 hours a day, 7 days a week at NSLDS on the Web at: www.nslds.ed.gov
- can choose from several repayment plans that are designed to meet the needs of almost any borrower, and you can switch repayment plans if your needs change.
Please note, if you are OFFERED a student loan at Red Rocks Community College, it does not mean you have received the loan. You must go through the appropriate steps to accept your loan before it will be processed. Click here on steps to apply for a direct student loan.
The Direct Loan Program offers the following types of loans:
Subsidized: for students with demonstrated financial need, as determined by federal regulations. No interest is charged while a student is in school at least half-time, and during deferment periods. Subsidized Stafford loans have a 6 month deferment period which begins once a student ceases continual enrollment in 6 or more credits. During a student's deferment period, payments on the loan principle are not required and interest will not accrue. Beginning October 1, 2014, the new loan origination fee will be 1.073 percent. Your servicer will contact you with regard to payment. However, you must be aware of when repayment starts and contact them if you do not receive your first bill.
Unsubsidized: not based on financial need; interest is charged during all periods, even during the time a student is in school and during deferment periods.
Direct PLUS: this is an unsubsidized loan for the parents of dependent 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. PLUS loans are typically cheaper than private student loans because PLUS loan borrowing terms are regulated by the U.S. Department of Education. If a PLUS loan application is denied, the student usually becomes eligible to borrow up to the unsubsidized loan eligibility. This additional Stafford loan cannot exceed the student's cost of attendance minus all other aid (including other loans).
Federal Direct Student Loan Limits
The maximum amount you can borrow each year in Direct Subsidized and Unsubsidized Loans depends on your grade level and on whether you are a dependent student or an independent student. The following table shows the maximum amount of money you may borrow each academic year in Direct Subsidized and Unsubsidized Loans:
$5,500 (maximum $3,500 in subsidized)
$9,500 (maximum $3,500 in subsidized)
$6,500 (maximum $4,500 in subsidized)
$10,500 (maximum $4,500 in subsidized)
The actual loan amount you are eligible to receive for an academic year is determined by your school and may be less than the maximum annual amounts shown in the chart above.
As of the 2013-2014 academic year, the average student loan indebtedness of graduated RRCC student borrowers was approximately $15,176. With the fixed interest rate of 4.66%. The monthly payment for this amount borrowed would be $159 under a 10-year standard repayment. A total of $19,050 would be paid in 120 payments, with $3874 of that being student loan interest.
- The RRCC Library has resources that help educate our students about student loans, such as Debt-Free U (2010) by Zac Bissonnette. In addition, the Financial Aid Office regularly submits financial aid-related articles to the RRCC Library. They may be checked out from the Library reserves area.
- Please visit the National Student Loan Data System (NSLDS) Web Site at www.nslds.ed.gov to view your loan history and identify your student loan servicer.
- To learn about repayment, click here. A student may also complete the loan exit counseling at any time—even if the student plans to receive more loans. To access the Exit Counseling Guide, visit http://direct.ed.gov/pubs/exitcounselguide.pdf.
- For additional assistance with your Direct Loans, you can manage your Direct Loans online by going to The Rock or by phone at 1-800-848-0979.
- The Student Loan Ombudsman’s Office is a resource for borrowers who are having difficulties resolving student loan problems. Borrowers should first attempt to resolve complaints by contacting the school, company, agency or office involved, but when all reasonable efforts to resolve the problem have been unsuccessful, you should contact the FSA Ombudsman at 1-877-557-2575 or https://studentaid.ed.gov/sa/repay-loans/disputes/prepare/contact-ombudsman
Interest vs. Principal
The interest on a loan is a fee charged periodically in exchange for the use of federal funds. It is paid in addition to repaying the amount borrowed. Interest is usually calculated as a percentage of the outstanding principal balance of the loan. The percentage rate may be fixed for the life of the loan, or it may be variable, depending on the terms of the loan. Except for consolidation loans, federal education loans issued from October 1992 to June 2006 used variable interest rates that are pegged to U.S. Treasury Bills. Since July 1, 2006, all federal education loans have involved fixed interest rates.
The principal or loan balance is the amount of money borrowed or remaining unpaid on a loan. Interest is charged as a percentage of the principal. Origination fees are normally deducted from the amount before disbursement.
Direct Subsidized Loans for all students: 4.29%
Direct Unsubsidized Loans for all students: 5.84%
Direct Parent PLUS Loans: 6.84%
Loan Repayment /Default Information
Federal regulations require RRCC to conduct “exit loan counseling” once a student-loan borrower leaves college for any reason or drops below half-time enrollment (six credit hours). The student’s loan servicer (aka lender) must also be notified, and the six month “Grace Period” begins. Click here for information about repayment (pdf).
Borrower Grace Periods
After you graduate, leave school, or drop below the half-time enrollment, you have a period of time before you have to begin repayment. This “grace period” will be six months for Direct Federal Student Loans.
PLUS Borrowers—The repayment period for all PLUS loans begins on the date the loan is fully disbursed, and the first payment is due within 60 days of the final disbursement. However, a parent PLUS borrower who is also a student can defer repayment while the borrower is enrolled at least half-time, and, for PLUS loans first disbursed on or after July 1, 2008, for an additional six months after the borrower is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower during the deferment.
Make Your Payments on Time
Your loan servicer will provide information about repayment and will notify you of the date loan repayment begins. It is very important that you make your full loan payment on time either monthly (which is usually when you’ll pay) or according to your repayment schedule. If you don’t, you could end up in default, which has serious consequences. (See Default below.) Student loans are real loans—just as real as car loans or mortgages. You have to pay back your student loans.
Get Your Loan Information
The U.S. Department of Educations’ National Student Loan Data System (NSLDS) provides information on your federal loans, including loan types, disbursed amounts, outstanding principal and interest, and the total amount of all your loans. To access NSLDS, go to www.nslds.ed.gov.
If you are not sure who your loan servicer is, you can look it up on www.nslds.ed.gov or call the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243; TTY 1-800-730-8913). To see a list of Federal Student Aid services for the Direct Loan Program, to the Loan Servicer page.
You have a choice of several repayment plans that are designed to meet the different needs of individual borrowers. The amount you pay and the length of tie to repay your loans will vary, depending upon the repayment plan you choose. Contact your student loan servicer or go to studentloans.gov for more information about the various repayment plans and to calculate your estimated repayment amount under each of the different plans.
Loan Interest Rates
The following table provides current interest rates for Direct Loans.
Type of Direct Loan:
Fixed Interest rates:
Subsidized Direct Loan
Unsubsidized Direct Loan
Parent PLUS Direct Loan
Why Does the Amount of Interest I Pay Vary From Month to Month?
Interest accrues on a daily basis on your loans. Factors such as the number of days between your last payment, the interest rate, and the amount of your loan balance determine the amount of interest that accrues each month.
To find out your daily interest, use this formula:
(interest rate) x (current principal balance) ÷ (number of days in the year) = daily interest (source)
Given the example above: (.07) x ($50,000) ÷ (365) = $9.58 you are charged $9.58 per day in interest.
In some cases, you might be able to reduce the interest you are charged by enrolling in direct debit through your loan servicer website. Direct debit is the most convenient way to make your student loan payments—on time, every month. Direct debit is a free service. You may qualify for a 0.25% interest rate reduction when actively making payments on Direct Debit. Contact your student loan servicer for additional information.
Difficulty Making Payments
If you’re having trouble making payments on your loans, remember that if something causes you to not be able to afford your payments at all, it's important to contact the loan servicer right away. Especially with federal loans, there's almost always something your loan holder can do to provide relief and help you avoid late fees and credit hits.
- Changing repayment plans.
- Requesting a deferment—If you meet certain requirements, a deferment allows you to temporarily stop making payments on your loan.
- Requesting forbearance—In limited circumstances, if you don’t meet the eligibility requirements for a deferment but are temporarily unable to make your loan payments, forbearance would allow you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments.
- Consolidation—Allows you to combine your federal student loans into a single loan. Visit the Loan Consolidation page at studentloans.gov to see whether consolidation is right for you.
If you stop making payments and do not get a deferment or forbearance, your loan could go into default (See Default below), which has serious consequences.
If you default, it means you failed to make payments on your student loan according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. In other words, you failed to make your loan payments as scheduled. Your school, the financial institution that administered your loan, your loan guarantor, and the federal government all can take action to recover the money you owe.
Here are some consequences of default:
- A damaged credit rating
- Court action or litigation
- Garnishment of state and federal tax refunds and state lottery winnings
- Wage garnishment and attachment of property
- Loss of additional student aid eligibility
- Loss of deferment and monthly repayment options
- Assessment of collection costs
- Possible effect on professional licensing
- Inability to attain federal student financial aid at any institution
For more information, and to learn what actions to take if you default on your loan, contact the Department of Education’s Default Resolution Group at 1-800-621-3115.