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Federal Direct Loan

Federal Direct Loans

Direct Loans are low-interest federal educational loans available to college students who are enrolled at least half time, are pursuing a degree, and meet other basic requirements for federal aid.

Subsidized and unsubsidized Direct Loans do not require credit approval and offer a variety of deferment and repayment options.

Direct Loans are financed directly by the US government, so you do not need to choose a lender. All CCA students borrowing a Direct Loan must complete a Master Promissory Note (MPN) and a loan entrance counseling session prior to the disbursement of loan funds.

Direct Loans can be subsidized or unsubsidized. The federal government pays the interest on subsidized loans while the borrower is enrolled at least half-time and during authorized periods of deferment.

Subsidized loans are available to undergraduate students only.

The interest on unsubsidized loans begins to accrue immediately upon disbursement and is generally capitalized (added to the principal amount borrowed) when the borrower is no longer enrolled at least half-time.

Eligibility for subsidized Direct Loans is based on financial need as demonstrated via the FAFSA. Students who do not demonstrate sufficient need may borrow unsubsidized Direct Loans.

Independent and dependent undergraduate students may borrow combined subsidized and unsubsidized Direct Loan amounts not to exceed an annual total of:

  • $5,500 for first-year students (a maximum of $3,500 may be subsidized)
  • $6,500 for second-year students (a maximum of $4,500 may be subsidized)
  • $7,500 for third-, fourth-, and fifth-year students (a maximum of $5,500 may be subsidized)

Independent and dependent undergraduate students whose parents are unable to borrow PLUS Loans (see below) may borrow additional unsubsidized Direct Loan amounts not to exceed an annual total of:

  • $4,000 for first- and second-year students
  • $5,000 for third-, fourth-, and fifth-year students

Graduate students may borrow up to $20,500 per year through the Direct Loan program.

The maximum outstanding total subsidized and unsubsidized Direct Loan debt is:

  • $31,000 for dependent undergraduate students
  • $57,500 for independent undergraduate students (or dependent undergraduate students whose parents do not qualify for PLUS Loans). No more than $23,000 of this aggregate amount may be in the form of subsidized loans.
  • $138,500 for graduate or professional-degree students (including loans for undergraduate study). No more than $65,500 of this aggregate amount may be in the form of subsidized loans.

The interest rate on subsidized and unsubsidized Direct Loans for undergraduate students disbursed between July 1, 2018, and June 30, 2019, is fixed at 5.05 percent.

The interest rate on unsubsidized Direct Loans for graduate students disbursed between July 1, 2018, and June 30, 2019, is fixed at 6.60 percent and interest begins at the time of disbursement.

For 2019–20, subsidized and unsubsidized Direct Loans disbursed on or after October 1, 2018 have an initial origination fee of 1.066 percent of the principal amount of the loan. This fee will be deducted from each disbursement of each loan. The standard repayment period under this program is 10 years.


Applying for Direct Federal Loans

To receive a Federal Direct Loan in the 2018-19 academic year, allnew and continuing students who are first-time Federal Direct Loan borrowers at CCA must complete the following:

  • 2018–19 FAFSA application
  • Return a signed copy of your financial aid award letter to CCA that includes the amount of subsidized and/or unsubsidized Direct Loan you intend to borrow. Review the back of your award letter for more information.
  • Loan entrance counseling. Students may contact the Financial Aid Office to request a loan counseling session in person. Only first-time borrowers at CCA need to complete entrance counseling.
  • Direct Loan Master Promissory Note (MPN). This MPN can be used for all of your subsidized and unsubsidized Direct Loans while you are enrolled at CCA. You can complete and sign the Direct Loan MPN online. You must complete and sign a Direct Loan MPN to receive your loan funds.

You will need your U.S. Department of Education issued Federal PIN to complete an electronic MPN and the loan entrance counseling session -- this is the same PIN used to complete your FAFSA application. For additional information or to ask general PIN questions, visit the official PIN site.

Please review the information in “What You Need” and “What to Expect” sections on the MPN website before completing an electronic MPN. Be sure to choose California College of the Arts (Federal School Code: 001127) as the school association.

If you prefer not to complete the Direct Loan MPN online, please contact us to obtain a paper MPN. Please note by not completing the Direct Loan MPN online, this will delay the processing of your loan(s).