Loans
Loans are financial aid funds that the student repays after she or he completes a program of study or stops going to school. Educational loans have a low interest rate and an extended repayment period, which makes them easier to repay than most non-educational loans. But because loans must be repaid from future earnings, Santa Monica College recommends that students use all other possible resources first and borrow only when it is absolutely necessary. Students who are planning to transfer to four-year colleges, especially, should be aware that loans are almost always the largest portion of a financial aid package at those colleges and should consider total educational indebtedness before borrowing at Santa Monica College.
Federal Stafford Loans prior to July 1, 2010 may have been awarded through the Federal Family Education Loan (FFEL) Program which would have included lending institutions such as banks and credit unions. Students who have borrowed loans on or after July 1, 2010 may only receive federal loan aid through the Direct Loan Program. Please Note - both programs provide Federal Stafford Subsidized, Federal Stafford Unsubsidized, and PLUS loans, they also have origination and insurance fees that could range from 1-4% and they are deducted from the loan proceeds before the loan is received. These fees are also calculated into the student’s loan repayment obligation.
To ensure students are aware of all the provisions and responsibilities of borrowing from the educational loan programs, all loan applicants must attend an entrance interview loan counseling meeting before receiving an initial loan check disbursement, and an annual loan exit interview. Students may request a loan by completing the Loan Request Form.
Subsidized and Unsubsidized Federal Stafford Loan
Federal Stafford Loans under Direct Loan Program are only offered to students who are enrolled in at least half-time (6 units) and who demonstrate financial need through the financial aid application process. The need-based (Stafford Subsidized Loan) can have the interest paid by the Federal government while you are enrolled in school above 6 units. Students who do not demonstrate need for Federal Stafford Aid may still obtain a loan; however, the interest will be charged directly to the student (unsubsidized). Interest on unsubsidized loans starts to accrue at the time of check disbursement.
Federal Stafford loan interest changes annually and is based on Federal Treasury Bill rate. Interest will never exceed 8.25%. Monthly repayments, which begin six months after enrollment stops or drops below half-time, are based on the total amount borrowed but will never, be less than $50 per month. In addition to the FAFSA, this loan requires a separate loan application (available in the Financial Aid Office).
Annual Maximum:
- $3,500 until completion of first year of program
- $4,500 after completion of the first 30 units of the program
Loan Request Accepted:
- Through November 26—for Fall 2012 term;
- Through May 24—for Spring 2013 term
Subsidized Federal Stafford Loan Repayment Schedule
Sample Subsidized Federal Stafford Repayment ($)
| Loan Amount | Monthly Payment | Total Interest @ 3.4% | Total Prepaid |
|---|---|---|---|
| 3,500 | 50 | 406.63 | 3906.63 |
| 5,500 | 54.13 | 995.59 | 6495.59 |
| 8,000 | 78.73 | 1448.24 | 9448.24 |
| 12,000 | 118.1 | 2172.25 | 14172.25 |
| 15,000 | 147.63 | 2715.19 | 17715.19 |
Federal Additional Unsubsidized Stafford Loans, like Subsidized Federal Stafford Loans, are made through the Direct Lending Program. Only students who are considered to be independent may apply for this type of Federal Stafford. Because they are significantly more costly loans, with interest accruing while the student is in school, Santa Monica College strongly discourages borrowing through this program. Students must exhaust all other resources and demonstrate that enrollment cannot continue without these additional loan funds. Applicants must also apply for Subsidized Federal Stafford Loans before applying for this type of federal aid. The interest rate for this loan is fixed at 6.8%. Students who are considering the additional unsubsidized Federal Stafford must make an appointment with the loan coordinator for additional loan counseling. Annual Maximum: $4,000
Federal Parent Loan for Undergraduate Students (PLUS)
Federal PLUS loans are loans borrowed by parents of dependent students and are also made through banks. Repayment and interest accrual begins on the day of disbursement. The interest rate is variable and changes annually, but will not exceed 9% for new borrowers.
Please note that all federal loans are submitted to the National Student Loan Data System (NLSDS), and are accessible by guaranty agencies, lenders, and schools determined to be authorized users of the data system.
Emergency Book Loan Program
The Financial Aid Office offers a short-term emergency book loan program. This loan program offers short term (30 day) loans of $250 (or less) for those students who meet eligibility requirements on a first come first serve basis. No interest is charged on this short-term loan. For financial aid recipients, repayment is due upon receipt of financial aid funds from the school.
SMC Loan Policy
In an attempt to decrease the number of student loan defaults and lower the level of student loan indebtedness, Santa Monica College (SMC) will adhere to the following student loan policy:
SMC Student Loan Philosophy
While SMC believes that student loans are an integral part of the federal aid programs, we are deeply concerned about student loan default and high student loan indebtedness. Therefore, whenever possible, we will encourage students to select work-study or off- campus employment instead of student loans. In addition, we will encourage students to borrow as little as possible at the community college level where educational costs are lower than at four-year colleges and universities.
Loan Application: Case by Case
SMC will now require loan applicants to submit a written request for student loans. Loan requests will be considered on a case-by-case and year-by-year basis. Student Loan Request forms can be submitted after a student's other Federal and State aid has been awarded--or after a determination has been made that the student is not eligible for other aid. Since research has shown that students who have academic progress problems are more likely to fall into default, a student's academic progress (or lack of it) will play a substantial part in the determination of the loan request. In some cases, the student's request may be approved, but the amount of the loan may be reduced.
Loan Approvals
Students whose loan requests are approved will be sent an award letter and a loan application. The award letter will direct the student to attend a loan entrance interview. At the loan entrance interview, a staff member will provide the student with essential repayment and deferment information regarding the loan. In addition, the staff member will accept the student's completed loan application. All student loans are processed through the Department of Education's Direct Loan program. Borrower's must complete a Direct Loan Master Promissory Note (MPN) and Entrance Counseling for each year you are approved for a loan at Santa Monica College. The goal of Entrance Counseling is to help you understand what it means to take out a federal student loan.
Loan Exit Interviews
In order to ensure that student borrowers are fully informed on loan repayment and deferment issues, loan recipients will be required to have a loan exit interview each academic year that they remain enrolled at SMC.
Additional Guidelines
Students, whose loan requests for a Stafford Loan are approved for the academic year in the Fall Term and then go on Financial Aid Probation Warning for the Spring Term (before their loan applications are certified), will not have their loan applications certified. They will need to re-submit a request for student loan form.
First time Stafford Loan borrowers in the first year of their academic program must wait 30 days into their first semester to receive their first check. In addition, they will be required to have a special first time borrower loan information meeting with the Financial Aid Officer before the first check will be released.
For more information on Loans - please visit the SMC Financial Aid website - Loans page.