Direct Loans are low-interest loans for students and parents to help pay for the cost of your college education.
The lender is the U.S. Department of Education (DOE) rather than a bank or other financial institution.
Federal Direct Subsidized Loans
Federal Direct Subsidized Loans are 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 nor is repayment required while the borrower is enrolled at least half-time.
NEW REGULATION- 150% Direct Subsidized Loan Limits
First-time borrowers taking out federal Direct subsidized loans (Federal Government subsidy pays the interest on your loan) on or after July 1, 2013 are subject to the 150% Direct Subsidized Loan Limit, which limits the amount of time a student is eligible to borrow subsidized loans to 150% of their published program length.
Those affected will be:
First-time borrowers in an undergraduate program who take out a new loan are subject to the 150% subsidy limit. A first-time borrower is defined as a borrower with no outstanding balance of principal or interest on a federal Direct loan or Federal Family Education Loan Program (FFELP) loan on July 1, 2013 or on the date they first borrow a Direct loan after July 1, 2013.
First-time borrowers are defined as:
– A new student starting college for the first time on or after July 1, 2013.
– A third-year student who did not borrow any Direct loans for the first two years, taking out their first loan on or after July 1, 2013.
– A student who returns to school on or after July 1, 2013, and paid off their Direct loans in full before the start date of their new program.
For additional detailed information please visit the website at: https://studentloans.gov/myDirectLoan/directSubsidizedLoanTimeLimitation.action
Federal Direct Unsubsidized Loans
Federal Direct Unsubsidized Loans are not based on financial need and are available to students who do not qualify for a Direct Subsidized Loan or qualify for only a partial Direct Subsidized Loan. Under this program the borrower is responsible for the interest which accrues while the student is in school. The borrower may choose to pay the interest charged on the loan or allow the interest to be capitalized (added to the loan principal) when the loan enters repayment.
Federal Direct Parent PLUS Loans
Parents can borrow a Federal Direct Parent PLUS Loan to help pay your education expenses if you are a dependent, undergraduate student. The school will determine the actual amount you may borrow. You must file a FAFSA and be enrolled at least half-time in an eligible program at an eligible school. Parents must be creditworthy to receive the loan.
The Facts Regarding Parent PLUS loans:
- The annual borrowing limit on a Parent PLUS Loan is equal to your Estimated Cost of Attendance minus any other financial aid you receive.
- Parent PLUS loans are the financial responsibility of the parents, not the student.
- The Parent Plus Loan interest rate is fixed. Interest is charged on a Parent Plus Loan from the date of the first disbursement until the loan is paid in full. For current interest rates please visit www.studentloans.gov
- The Parent PLUS Loan requires an origination fee. For current rates please visit www.studentloans.gov
- There are two repayment options available for the Parent PLUS loan: either 60 days after the loan is fully disbursed or to begin repayment six months after you graduate or cease to be enrolled on at least a half-time basis.
- To apply for the Parent PLUS loan, your parent must complete a Master Promissory Note (MPN) and a loan application by visiting the Direct loan website.
Cohort Default Rate
About the Cohort Default Rate
Federal student loan borrowers generally have to begin repaying their loans six months after graduating, leaving school, or dropping below half-time enrollment. If borrowers make no payments for any period of 270 days, or roughly 9 months, they will default on their student loans.
The U.S. Department of Education tracks the number and percentage of federal student loan borrowers who default on their student loans within three years of entering repayment. This is the Cohort Default Rate, commonly known as “three-year” CDRs.
The Department of Education releases official cohort default rates for each school that is eligible to participate in the federal student loan program once per year. The current rates (FY 2020) were released in August 2023 and the FY 2021 rates should be released in August 2024.
The national cohort default rate average and Bergen Community College’s cohort default rate is currently 0% due to the moratorium on student loan payments and interest charges that was in effect until August 31, 2023.
Helpful Definitions for Deciphering the CDR
Cohort Default Period
- The three-year period that begins on October 1 st of the fiscal year when the borrower enters repayment and ends September 30th of the second fiscal year following the year in which the borrower entered repayment.
- This is the period during which a borrower’s default affects the school’s cohort default rate.
Cohort Default Rate
- The percentage of a school’s borrowers who enter repayment on federal student loans during a federal fiscal year (October 1 to September 30) and default within the cohort default period.
Cohort Fiscal Year or Cohort Year
- The fiscal year for which the cohort default rate is calculated.
- For example, when calculating the 2017 cohort default rate, the cohort fiscal year is FY 2017 (October 1, 20016 to September 30, 2017).
Default
- Failure to repay a debt. Loans must be repaid.
- Making no payments on student loans for 270 days will cause loans to go in a default status.
- Defaulting on student loans is very detrimental to your credit.
Treasury Offset
- When your federal and state income tax refunds are intercepted and applied toward the repayment of your defaulted loan.
Wage Garnishment
- When your employer is required to withhold a portion of your pay and send it to your loan holder to repay your defaulted loan.
Bergen Community College’s Three-Year Official Cohort Default Rates
NOTES: The Cohort Default Rate listed below may not reflect changes from the appeal process.
Cohort Fiscal Year: 2021 |
|||||
|---|---|---|---|---|---|
| Rate Type | Rate Sub Type | Numerator | Denominator | Rate | Date Processed |
| 3YR DRAFT | ACTUAL | 0 | 1685 | 0 | 01/27/2024 |
Cohort Fiscal Year: 2020 |
|||||
|---|---|---|---|---|---|
| Rate Type | Rate Sub Type | Numerator | Denominator | Rate | Date Processed |
| 3YR DRAFT | ACTUAL | 0 | 1691 | 0 | 08/05/2023 |
| 3YR DRAFT | ACTUAL | 0 | 1689 | 0 | 01/28/2023 |
Cohort Fiscal Year: 2019 |
|||||
|---|---|---|---|---|---|
| Rate Type | Rate Sub Type | Numerator | Denominator | Rate | Date Processed |
| 3YR DRAFT | ACTUAL | 81 | 1860 | 4.3 | 09/20/2022 |
| 3YR DRAFT | ACTUAL | 81 | 1863 | 4.3 | 01/29/2022 |
Last Cohort Default Rate data update date: January 2024.
Consequences of Default
The consequences of defaulting can not only impact your ability to borrow but can impact your finances as well. Consequences may include:
- The entire unpaid balance of your loan and any interest you owe becomes immediately due.
- Your loans may be turned over to a collection agency.
- You can be sued for the entire amount of your loan.
- You will be liable for the costs associated with collecting your loan, including attorney fees.
- Your wages may be garnished.
- Your federal and state income tax refunds may be taken for treasury offset.
- The federal government may withhold part of your Social Security benefit payments.
- Your defaulted loans will appear on your credit history for up to 7 years after the default claim is paid.
- It my take years to reestablish a good credit record.
- You may not be able to purchase or sell assets, such as real estate.
- You will not receive additional federal financial aid until you repay the loan in full or make arrangements to repay what you already owe and make at least six consecutive, on-
time, monthly payments. - You may be ineligible for assistance under most federal benefits programs.
- You can no longer receive deferment or forbearance, and you lose eligibility for other loan repayment benefits, such as the ability to choose a specific repayment plan.
- Subsidized interest benefits will be denied.
- You may not be able to renew professional licenses.
- You may be prohibited from enlisting in the Armed Forces.
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YOU WILL STILL OWE THE FULL AMOUNT OF YOUR LOAN.