Federal Direct Loan Program

There are two ways to receive federal Stafford Loans, Grad PLUS loans and parental PLUS loans: through the Federal Family Educational Loan Program (FFELP) or the William D. Ford Direct Loan Program (Direct Loan). Borrowers who attend colleges that participate in the FFELP program receive their loan funds from a lender (most often a bank) of their choosing. Borrowers who attend colleges that participate in the Direct Loan program receive their loan funds directly form the federal government. All colleges have the right to choose which program they wish to participate in. Savannah College of Art and Design has chosen 100 percent participation in the Direct Loan program so all of our students and parents will receive their loan funds from this source.

The Stafford Loan
Stafford Loans are available to degree-seeking and certificate students who are enrolled at least half time (10 quarter hours) and meet the applicable criteria (see "Eligibility for Participation in Federal Financial Aid Programs") to borrow funds from the federal government. Students do not need to demonstrate need to qualify for a Stafford Loan. The interest rate on Direct Loan Subsidized and Unsubsidized Stafford loans is presently a fixed rate of 6.8 percent.

A subsidized loan is awarded on the basis of financial need. If you qualify for a subsidized loan, the federal government pays interest on the loan ("subsidizes" it) until you begin repayment, and during authorized periods of deferment thereafter. A subsidized student loan is offered on the basis of total educational cost minus the EFC determined by the federal government. As long as a student's EFC combined with "free money" (grants, scholarships, etc.) does not exceed the student's official budget, the student will receive at least a partially subsidized student loan. See the following example:

Example
A dependent freshman student with a budget of $31,000 and an EFC of $25,000 who receives no "free money" would qualify for a fully subsidized federal student loan of $3,500. That's because the budget ($31,000) minus the EFC ($28,000) equals $6,000, which is greater than the amount of the available student loan.

However, if that same student were to receive a $5,000 scholarship, his or her loan would not be fully subsidized, because the budget ($31,000) minus the EFC ($25,000) minus the scholarship ($5,000) equals $1,000, which is less than the amount of the available student loan. In this case the student would receive a $1,000 subsidized loan and a $2,500 unsubsidized loan, which totals the $3,500 the maximum loan amount.

An unsubsidized loan is not awarded on the basis of need. If you qualify for an unsubsidized loan, you will be charged interest from the time the loan is disbursed until it is paid in full. You may choose to pay the interest monthly or allow it to accumulate and be capitalized periodically.

Federal Stafford Loan Fund Gross Amounts

	Three-term Max/ One-term Max First Level	Three-term Max/ One-term Max Second Level

Freshman	$3,500/$1,167*	$4,000/$1,333**
Sophomore	$4,500/$1,500*	$4,000/$1,333**
Junior, Senior and Fifth-year	$5,500/$1,833*	$5,000/$1,667**
Graduate	$8,500/$2,833*	$12,000/$4,000***


*	Available as subsidized, unsubsidized or a combination, depending on need (see "Example").
**	Available as unsubsidized only to all independent students and dependent students whose Parent PLUS loan has been denied for adverse credit.
***	Available as unsubsidized only to all graduate students.

Aggregate Debt
Aggregate debt is the maximum dollar amount a student may borrow under the Stafford Loan program during the course of his or her education. Each student is responsible for monitoring his or her aggregate debt level. The federal program maximums are as follows:

	Total Amount Average Monthly Borrowed Repayment Amount *

Undergraduate (dependent)	$23,000 $ 290
Undergraduate (independent)	$46,000** $ 560
Graduate (two-year)	$138,500*** $1,686


* **	Average repayment is based on $12.17 per $1,000 borrowed. No more than $23,000 of this may be subsidized loans.
***	No more than $65,500 of this may be subsidized loans. May include undergraduate debt.

The Parental Loan for Dependent Undergraduate Students
The Direct Loan Program enables credit-worthy parents, stepparents and adoptive parents of dependent undergraduate students with remaining need to receive additional loan funds for education. PLUS applicants must be U.S. citizens or resident aliens and can borrow up to full cost of education less student aid and other outside resources. The interest rate on Direct Loan Parent PLUS loans is presently a fixed rate of 7.9 percent.

Parents interested in this loan should apply early, as processing normally takes five to 10 business days. During August and September, the application volume is high and the process can take much longer, which may result in the loan not being approved before school starts. Loans shown on Applicant Early Award Letters and Award Notifications are still subject to credit approval. You will be notified by the loan servicer of the credit decision on your loan. Our records show that approximately 17 percent of PLUS loan applications are denied due to adverse credit. If your PLUS loan is denied, you should contact the Direct Loan Applicant Services directly at 800.557.7394 to discuss your options. Resolving adverse credit issues may take an additional four to six weeks. If you are unable to resolve the adverse credit problems, you may abandon the effort thus enabling the student to borrow additional unsubsidized loan funds (see above).

These additional funds may be requested by completing and submitting a Parent Request for Student to Receive Additional Loan Funds form. This form is available online or from the school. (Handwritten letters are not accepted in lieu of this form.)

The interest rate for the PLUS loan is variable and tied to the 91-day Treasury Bill rate but is capped at nine percent. Interest begins to accrue when the first disbursement is made. There is no grace period for repayment; it begins 60 days after the final disbursement for the loan period. For estimated repayment amounts, and additional information on this loan, call Direct Loan Applicant Services at 800.557.7394 or visit the Direct Loan Web site at www.ed.gov/directloan.

The PLUS Loan for Graduate-level Students
The Direct Loan Program enables credit-worthy graduate-level students with remaining need to receive additional loan funds for education. PLUS applicants must be U.S. citizens or resident aliens and can borrow up to the full cost of education less all other student aid and outside resources. The interest rate on Direct Loan Grad PLUS loans is presently a fixed rate of 7.9 percent.

Students interested in this loan must a) complete the annual FAFSA form; b) apply for their annual loan maximum eligibility under the Federal Subsidized and Unsubsidized Stafford Loan programs before applying for a Graduate PLUS loan; and c) complete and submit a Financial Aid Application for Federal Direct PLUS for Graduate Students form. This or from the college.

All first-time Grad PLUS borrowers are also required to complete Entrance Loan Counseling. This is required even if you have borrowed a student Stafford Loan in the past and received loan counseling for those loans. This is not a school policy but is based on federal regulations enacted recently. See below for complete instructions on how to fulfill this requirement.

Loans shown on Applicant Early Award Letters and Award Notifications are still subject to credit approval. Students will be notified by the loan servicer of the credit decision on their loan. Records show that approximately 17 percent of PLUS loan applications are denied due to adverse credit. If a student's PLUS loan is denied, he or she should call Direct Loan Applicant Services directly at 800.557.7394 to discuss options. Resolving adverse credit issues may take four to six weeks.

Graduate PLUS loans go into repayment 60 days after the final disbursement for the loan period; however, students can request an in-school deferment if enrolled at least half time (10 quarter hours). Similar to unsubsidized loans, interest will be charged from the time the loan is disbursed until it is paid in full. You may choose to pay the interest monthly or allow it to accumulate and be capitalized periodically. Graduate PLUS funds are not counted in the annual or cumulative aggregate debt limits for student loans. The interest rate for the PLUS loan is variable and tied to the 91-day Treasury Bill rate, but is capped at nine percent. For estimated repayment amounts and additional information on this loan, call Direct Loan Applicant Services at 800.557.7394 or visit the Direct Loan Web site at .

How are direct loans disbursed?
The total amount of the loan for which you qualify will be evenly divided among the quarters for which your aid is processed. The amount shown on your award notification, the gross amount of the loan, will be reduced by the origination fee charged by the federal government at the time of disbursement, resulting in the net amount of the loan. The net amount is what will be applied to your charges on your student account.

Approved loans, which have an origination and promissory note accepted by the servicer, are disbursed on the first business day following the drop/add period of the quarter for which the funds are intended or within five days of approval, whichever is later. In the case of PLUS loans they must also have a positive credit decision.

Federal regulations also mandate that all first-time student borrowers must complete entrance loan counseling (see next section for details) before disbursement of student loan funds. These funds are subject to the U.S. Department of Education's Title IV refund rules if you totally withdraw during any quarter for which the funds have been disbursed.

Required tuition and fees must be paid in full before students may receive refunds from their student accounts. Financial aid funds in excess of required fees generate a refund. Refunds or excess funds are handled by the bursar's office. No cash advances are made prior to the disbursement of funds; students must plan ahead and have their own funds available to purchase books and supplies, pay rent and cover other expenses.

This requirement should be fulfilled online well in advance of the first anticipated disbursement of your student loan funds.

To fulfill the entrance loan counseling requirement online:

1.	Sign onto the Web site of the Department of Education at www.dlssonline.com and proceed to the entrance loan counseling area.
2.	Read carefully through all the information presented, remembering that the questions asked in the online quiz will thoroughly test your understanding of the subject matter.
3.	Take the online quiz, scoring appropriately to receive credit.
4.	Print out a copy of the Rights and Responsibilities Summary Checklist for your records.
5.	SCAD will be notified electronically of your successful completion of Entrance Loan Counseling.

If you are unable to complete this requirement online or you want additional information on this subject, you may attend a session offered at the beginning of every term or visit us at our offices once you have begun attending classes. It is important to the Department of Education, as well as the Savannah College of Art and Design, that students understand the terms of student loans to which they obligate themselves.This requirement should be fulfilled online well in advance of the first anticipated disbursement of your student loan funds.

Repayment of federal student loans is deferred until six months from the date the student graduates or is enrolled in less than 10 hours. When you reach this status, it will be reported to your lender(s) and they will disclose to you information about repayment. Additionally, SCAD offers an Exit Loan Counseling session at the end of every term that provides valuable information on your rights and responsibilities in repayment of your student loans. This information is also available at our office, by mail or online at .