Student Loans
The Federal Family Educational Loan Program (referred to as FFELP) is a partnership between the public and private sectors to bring students and parents of students low-interest loans to help pay for educational expenses. In FFELP, low-interest educational loans are made by private lending institutions or non-profit public agencies to the students or to the student’s parent. These loans are insured by the Michigan Guaranty Agency or the Great Lakes Higher Education Corporation.
There are two types of FFELP loans: subsidized and unsubsidized. For the subsidized loan, the federal government pays the interest for the student while the student is attending school and during the grace period of the loan. A student must show need to qualify for this loan. For the unsubsidized loan, the federal government does not pay the interest for the student and the student does not have to indicate a financial need to qualify. Families of all income levels are eligible. A student may also qualify for a combination of the two loans up to the maximum loan amounts. The interest rate is not to exceed 8.5%. Repayment begins six months after a student ceases to be enrolled at least half-time.
While the federal government, state and private corporations subsidize and guarantee the loans, the student must obtain the loan from a participating lending institution – bank, saving and loan association, or credit union. GCC is not a direct lending institution. All students must fill out the FAFSA to determine loan eligibility as well as submit an MPN and the Federal Stafford Loan Request Form. Students are also required to participate in an entrance interview. A Budget Worksheet is also a requirement if the student requests a loan amount exceeding the amount shown on the student’s Financial Aid Proposal or a student receives additional financial aid in excess of $500 after the original proposal has been received. Loan application materials can be obtained from the GCC Financial Aid Office or online.
The base maximum loan amounts (including both subsidized and unsubsidized loans) are as follows: First year undergraduate student = $3,500 and second year undergraduate student = $4,500. Additional unsubsidized loans can be obtained if a student qualifies for these loans. First year students are defined as students who have earned up to 27 credit hours, inclusively. Students who have earned 28 credit hours or greater are considered second year students. No student at GCC is considered above second year standing. Students are not required to apply for the full maximum each year. In fact, students are advised to apply for a minimal amount based on actual educational needs. Students who have borrowed more than $20,000 (includes past loan history at prior institutions) in Federal student loans will be required to submit an academic plan outlining their courses by semester, anticipated graduation date, and future loan borrowing. The academic plan must be approved by the Director of Financial Aid before any loan funds will be granted.
All students receiving loan funds are required to participate in both entrance and exit counseling. Entrance counseling takes place prior to the first disbursement of the loan and exit counseling is conducted prior to or at the time the student borrower ceases enrollment. Student loan counseling discusses information regarding the responsibilities of indebtedness, repayment options and consequences should the student fail to repay the loan. The deadline date for processing loans for first semester is November 15 and April 15 for second semester.
The recipient of a student loan must recognize that such a loan is a debt incurred by the student, not the parents. The responsibility for understanding the conditions and regulations of the loan process, as well as the repayment schedules, rests with the student borrower.
PLUS Loan for Parents
The PLUS loan is intended to meet the needs of dependent undergraduate students. Parents or legal guardians with good credit histories are able to borrow up to the cost of education minus the financial aid the student is receiving. The interest rate is not to exceed 9% and begins to accrue as soon as the loan is obtained with repayment beginning within 60 days unless a deferment has been requested.