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Types of Loans

Types of Loans

Under the Federal Direct Loan Program students will work with the Financial Aid Office to obtain a Federal Direct Loan from the U.S. Department of Education.  

Please note: Student loans are considered a last option in terms of financial aid here at The City Colleges of Chicago.  Due to the fact that we are a low-cost institution, we try to encourage students to save their loan borrowing eligibility for when they transfer to a four-year institution.

 

The types of Federal Direct Loans include:

  • Direct Subsidized Loan: Student must demonstrate financial need, as determined by federal regulations. Interest will not be charged before you begin repaying your loan or during periods of authorized deferment. 

  • Direct Unsubsidized Loan: An unsubsidized loan is not awarded on the basis of financial need. The borrower will be charged interest from the time the loan is issued until it is repaid in full.

  • Direct Parent PLUS (Parent Loan for Undergraduate Student) Loan: An unsubsidized loan is for the parent(s) of dependent students. PLUS loans help pay for the educational expenses up to the cost of attendance minus all other financial assistance. Interest is charged during all periods.  

 

Each of the above mentioned Direct Loans (with the exception of the PLUS Loan) are eligible for deferred payment while the student is enrolled at least half-time. Students must be enrolled at least half-time to be eligible to receive a Direct Loan. 

In addition, there are annual limits to the amount a student can borrow.  These limits are defined by the borrower's student level, as well as whether they are a dependent or independent student.  There are also lifetime borrowing limits for federal loans. Please see the charts below for these limits.

Please note, first time borrowers who receive their first loan disbursement after July 1, 2013 will be limited to subsidized borrowing at 150% of the length of their academic program.​

Annual Borrowing Limits for Dependent Undergraduate Students:
Academic Level​ ​Maximum Federal Direct Stafford Loan Amount ​Additional Unsubsidized Amount ​Maximum Annual Amount for Direct Stafford Loan (Subsidized and Unsubsidized Combined)
​Freshman
$3,500 ​ $2,000 ​ $5,500
Sophomore​ ​ $4,500 ​ $2,000 ​ $6,500
Junior/Senior​ ​ $5,500 ​ $2,000 ​ $7,500

Annual Borrowing Limits for Independent Undergraduate Students:

Academic Level​ ​Maximum Federal Direct Stafford Loan Amount ​Additional Unsubsidized Amount ​Maximum Annual Amount for Direct Stafford Loan (Subsidized and Unsubsidized Combined)

​Freshman

$3,500 $6,000 $9,500
Sophomore​ $4,500 $6,000 $10,500
Junior/Senior​ $5,500 $6,000 $12,500
 
Lifetime Borrowing Limits for Undergraduates:
​Dependent Students ​$31,000--No more than $23,000 of this amount may be in subsidized loans
​Independent Students $57,500--No more than $23,000 of this amount may be in subsidized loans
   

Loan Request Process   

Federal Direct Subsidized and Unsubsidized Loan Process

Students are required to log in, complete and sign the Master Promissory Note (MPN) and complete Entrance Counseling at studentloans.gov. The student can complete this step now, even as they are finalizing the remainder of their financial aid process. Direct Loan(s) cannot pay any charges until the process is complete, which includes a visit to the Financial Aid Office to finalize the Direct Loan process. Students must visit the Financial Aid Office to initiate and finalize the Direct Loan Process.

Federal Direct Parent PLUS Loan Process

The Department of Education (DOE) is the sole lender available for the Federal PLUS Loan program. Parents should go to studentloans.gov to start the process. The parent borrower’s information and PIN should be used to log in.  Then, complete a new Master Promissory Note (MPN) for the Direct PLUS Loan, which will automatically start the credit check process. If the credit check is not approved, additional information will be provided so the parent can contact the Direct Loan Servicing Center to receive more specific information about the decision. Students and/or parents must visit the Financial Aid Office to finalize the Direct Loan process. Students must visit the Financial Aid Office to initiate and finalize the Direct Loan Process.

Exit Counseling  

Students are required to complete loan exit counseling upon graduating or dropping below six credit hours. Exit counseling must be completed at studentloans.gov.

The loan counseling will review a lot of information concerning the borrower's loans, including:

  • the terms and conditions of the loan

  • an example or actual monthly payments

  • available repayment plans

  • deferment and forbearance options

  • loan forgiveness and cancellation provisions

  • the ability to accelerate repayment without a prepayment penalty

  • the pros and cons of consolidation, such as the impact on minimum monthly payments, loan terms and loan benefits (e.g., the loss of the grace period and forgiveness options)

  • the consequences of default, including ruined credit, litigation, referral to collection agency, wage garnishment, offset of income tax refunds, the deduction of collection charges of up to 25% from payments, nonrenewal of professional licenses, and the loss of deferment and forbearance options

  • availability of tax benefits, such as the student loan interest deduction