Student Borrowers

Direct Loans

What is a Direct Loan?
Direct loans are available for students enrolled at least half-time in a qualifying program and who are in good academic standing. Direct loans may be either subsidized or unsubsidized and must be repaid. Interest rates are determined each June for the upcoming academic year. The amount a student can borrow per academic year will depend upon enrollment, dependency status, and other aid received.


What are Subsidized loan funds?
Subsidized loan funds are awarded based on financial need. The federal government pays the student's interest while he/she is enrolled in school at least half-time in a qualifying program. The student begins paying interest when repayment of the loan begins.


What are Unsubsidized loan funds?
Unsubsidized loan funds are not need based. The student will be charged interest from the time funds are disbursed until the loan is paid in full. Students may choose to make monthly interest payments while in school, or they can choose to defer interest payments. If the student chooses to defer interest, it will accrue and will be added to the principal amount of the loan. Please note, if interest is capitalized, it will increase the amount the student has to repay.


What are the interest rates?
Congress has passed and the President has signed 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 from July 1, 2018 through June 30, 2019. 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 Loans (Undergraduates) 5.05%
Direct Unsubsidized Loans (Undergraduates) 5.05%
Direct PLUS Loans 7.60%

In addition to interest, students will be charged a fee of up to 1.0% of the loan which will be deducted proportionately from each loan disbursement. A portion of this fee goes to the federal government to help reduce the cost of the loans.


Am I eligible for a Direct Loan?
To apply for a Direct Loan, you must be enrolled at least half-time (6 credit hours or 15-21 contact hours, depending on your program of study). Credit hours for audited courses, courses not required for your program of study, or continuing education classes are not included as enrolled hours for financial aid purposes. You must be accepted into an eligible degree, diploma, or certificate program. You must be making Satisfactory Academic Progress according to financial aid standards. For subsidized loan funds, you must also show financial need as determined by your FAFSA results.


How do I apply for a Direct Loan?
The first step in applying for a Direct Loan is to complete the Free Application for Federal Student Aid (FAFSA) at Once you have submitted your FAFSA, the college will notify you if you are eligible for grant or Direct Loan funds. Once this notification has been received, complete the following steps to accept the Direct Loan offer:

  1. Complete online Entrance Counseling for the Direct Student Loan at You will need your FSA ID to complete this process. Entrance Counseling is a short tutorial that explains your rights and responsibilities as a borrower. There will be quizzes at the end of each section which you must pass in order to receive your loan. Please indicate that you are an undergraduate student in order to complete the correct entrance counseling.

  2. Complete the online Master Promissory Note for the Direct Student Loan at You will need your FSA ID to complete this process. The Master Promissory Note is a legally binding document that you sign online promising to pay your loan back. Again, please be sure to complete the undergraduate Master Promissory Note.

  3. Complete and return the  Direct Loan Active Confirmation Form

Once the above steps are completed, the college will certify the loan application with Direct Loans.  Direct Loans will send you a loan disclosure statement showing the amount of loan funds approved and the dates that the money will be sent to the college for disbursement.

If you will be attending summer term, a revised award notification will be sent to you after you register for summer classes indicating the grants and Direct Loan funds you are eligible for during the summer term. If you used your entire loan eligibility for the year in the Fall and Spring, you may not be eligible for additional Summer funds.


How much can I borrow?
The amount a student can borrow per academic year will depend upon enrollment and dependency status. The amounts indicated below are the maximum yearly amounts a student may borrow in both subsidized and unsubsidized loans. Students may be eligible for less than these amounts if the student is receiving other financial aid that is used to cover a portion of the cost of attendance.

Please note that if a student transfers to BRCC from another school within the same academic year and requests loan funds at BRCC, loan funds received at the former school will be included in the yearly maximum total allowed when determining the amount of loan funds available for certification at BRCC.

Dependent Student Subsidized Unsubsidized Total
First Year $3,500 $2,000 $5,500
Second Year $4,500 $2,000 $6,500


Independent Student Subsidized Unsubsidized Total
First Year $3,500 $6,000 $9,500
Second Year $4,500 $6,000 $10,500


How will I receive my loan funds?
Your loan funds will be disbursed to the college in two disbursements according to the disbursement schedule provided by Direct Loans in your loan disclosure statement. Funds will be posted into your college financial aid account so that you may charge your tuition, fees and books provided that you applied for a loan early enough to have the money in your account at the time these expenses are due.


Refunds for the remainder of loan funds after tuition, fees, and books are deducted will be disbursed to students following the Important Dates for Financial Aid schedule. If your Direct Loan request was submitted after this date, loan refunds will usually be disbursed within 4 weeks after you submit your Direct Loan Active Confirmation form for processing to the Financial Aid Office.


When do I repay the money?
Once a student graduates, leaves school, or drops below half-time status, he/she will have six months before beginning repayment. Loan payments will be made directly to the student's loan servicer. The student is also required to complete an exit counseling session online. To complete your exit counseling, click on the link below.


What is Default?
Default means failure to honor the repayment agreement of a loan. That includes failure to make payments on time, failure to make payments in the correct amount, or failure to file deferment requests properly or on time.

  • When a loan enters default, the lender transfers the loan to the guarantor. The guarantor then owns the loan from the lender.

  • It is our goal to help students keep their student loan(s) out of default and to assist in bringing and/or keeping their accounts current.


Repayment Solutions

There are several options available to those who find themselves in repayment trouble.

  • Deferment – you may postpone your payments when certain criteria are met such as unemployment, economic hardship, disability, and school enrollment.

  • Forbearance – permits the reduction of payments, provides an extension of time, or temporarily postpones payments. Financial problems that do not meet the requirements for a deferment might qualify you for the forbearance.

  • Consolidation – by consolidating your student loans, you might be able to reduce your monthly payments. Visit for more information.

  • Alternative Payment Plan – Some borrowers qualify for other special payment plans such as Income Sensitive, Graduated, or Lowered Payment Plans.

You may contact your lender or servicer for more information.


Options After Default
Federal regulations provide three options to help borrowers in default on student loans restore their benefits.

The three options are:

  • Reinstated Eligibility - You may still be able to regain your eligibility to participate in federal student financial aid programs even though your loan is in default. You must make six voluntary, on-time, consecutive monthly payments. Your loan will still be considered in default but you will have reinstated your eligibility to apply for federal student aid. The amount you will have to pay will be determined by the amount of your debt and your individual economic circumstance.

  • Rehabilitation – Loan Rehabilitation allows you to remove your loan from default. Under Loan Rehabilitation you make on-time, voluntary, consecutive monthly payments for a minimum of one year (12 consecutive months).

  • Consolidation – Loan Consolidation is available to all borrowers, including those in default. Loan Consolidation allows you to combine several loans into a single account with new repayment options.


Consequence of Default

  • After your student loan has defaulted, the entire balance becomes due and you are no longer eligible for any Title IV financial aid or for any of the options described above.

  • Other consequences of default may include:

    • Reporting the default to all national credit bureaus.

    • Withholding of a percentage of your wages until the debt is paid in full.

    • Adding collection and attorneys’ fees to the balance of your loan(s).

    • Seizure of your IRS tax refund by the guarantor or U.S. Department of Education.


Tips for Student Loan Management

  • Do not lose copies of your loan documents, and repayment schedules. (And note amount, overall cost, and interest rates).

  • Note the billing cycles of your loans.

  • Remember to give lenders your correct address, telephone number, and email address before leaving school.

  • Know the correct billing servicers for each lender.

  • Promptly update your lender with any status changes (e.g. school status, unemployment) prior to your payment due date. Look for written acknowledgement.

  • If you return to school, follow up with each lender to insure that they have received your enrollment verification or deferment. Look for written acknowledgement.

  • Ensure each lender/servicer has your current status. (i.e. forbearance, deferment, etc.)

  • Keep deferment status current with each lender.


Helpful Websites

Guidance for Borrowers with Defaulted Student Loans

National Student Loan Data System (NSLDS)

Mapping Your Future

Adventures in Education

Defaulting on Student Loans