Loans

Loans are borrowed funds that must be repaid. By accepting a loan, the student is agreeing to the terms of borrowing and making a commitment to repay the funds borrowed. Students are encouraged to only borrow what is needed. Should a student want to lower the loan amount and borrow less than what is awarded, the student should submit a Revision Request Form.

Federal Direct Loan (FDL) recipients must maintain enrollment and attendance in at least six (6) credit hours during a semester in order to be eligible to borrow loan funds. In addition, the student must accept their loan award as well as complete the required Entrance Counseling and the Master Promissory Note.

The average annual loan for a student who borrows at HFC is $5,159. If the student attends two years, on average the student borrower will have borrowed approximately $10,318.

For example, using the current interest rate of 5.50% for loans first disbursed on or after 7/1/23, an average loan debt of $10,318, and a Standard Repayment Plan the student can expect to pay approximately $112 per month for 10 years. The higher the loan debt, the higher the monthly payment will be. NOTE: This example is based strictly on using the borrowed amount of $10,318 and does not include any interest that was accrued while in school.

Students are encouraged to utilize a loan simulator to estimate what their loan payment might be based on the amount they are intending to borrow.

Students are also encouraged to minimize the amount of loans needed by utilizing grants, scholarships, and work-study whenever possible. HFC Financial Aid will include the Federal Pell Grant as part of the financial aid award if the student is otherwise eligible. In addition, there may be state grants or scholarships for which the student is eligible. While some state grants are listed on our website, a complete list of state scholarships and grants can be found at MI Student Aid (for Michigan residents). If you are not a resident of Michigan, you may locate information about what grants or scholarships are offered from your state on the State Higher Education Agencies list.

As a condition of participating in the FDL program, HFC is required to provide borrower [student and/or parent(s)] demographic and federal loan specific information to the National Student Loan Database System (NSLDS). NSLDS information is accessible to guaranty agencies, loan servicers, lenders and schools who are authorized professional users of the system. Students can view and manage their NSLDS personal loan histories through the Federal Student Aid website.

William D. Ford Subsidized Federal Direct Student Loan (SLOAN)

Federal Direct Loan (FDL) recipients must maintain enrollment and attendance in at least six (6) credit hours during a semester in order to be eligible to borrow loan funds.

The Subsidized Direct Loan is a need-based loan. Freshman loan borrowers may borrow up to $3,500 per year for the first year of study, depending on their level of financial need. Students may borrow up to $4,500 per year after completing 31 credit hours, depending on their level of financial need.

The interest rate for subsidized loans with first disbursement dates between July 1, 2023 and June 30, 2024 is a fixed 5.50% APR. A student will not be charged any interest (nor will interest accrue) while the student is enrolled at least half-time or during authorized periods of deferment. A deferment is a period of time when a student is not required to make loan payments. The federal government “subsidizes” the interest during these periods. Repayment generally begins when the student is no longer enrolled in college on at least a half-time basis.

If you are requesting the reinstatement loan for a prior semester, the loan must have been originated prior to the end of the payment period, you must be currently enrolled, and you must have successfully completed a minimum of 6 credit hours with an earned letter grade of either an "A," "B," "C," "D" (including + or - grades), or an "S" in the prior semester. No loan proceeds can be accessed or applied to a student’s account later than 180 days after the close of a semester or when a loan record was not originated prior to the student ceasing to be enrolled.

Just prior to graduation, students are required to complete an Exit Interview.

William D. Ford Unsubsidized Federal Direct Student Loan (ULOAN)

Federal Direct Loan (FDL) recipients must maintain enrollment and attendance in at least six (6) credit hours during a semester in order to be eligible to borrow loan funds.

A ULOAN is NOT awarded on the basis of financial need. However, to apply for a ULOAN, students need to complete the Free Application for Federal Student Aid (FAFSA) and have the results released to HFC.

The interest rate for unsubsidized loans with first disbursement dates between July 1, 2023 and June 30, 2024 is a fixed 5.50% APR. A student will be charged interest on the loan from the time the loan is disbursed until it’s paid in full. If the student allows the interest to accrue (accumulate) while they are in school or during other periods of nonpayment, it will be capitalized – that is, the interest will be added to the principal amount of the loan. Further, additional interest will be based on that higher amount.

First-year students (those who have completed less than 31 credit hours) may receive up to $3,500 per year in combined subsidized and unsubsidized loans. They may receive up to $4,500 per year after they complete 31 credit hours. In addition, dependent students may apply for an additional $2,000 and independent students for an additional $6,000 in unsubsidized loan funds per school year. All unsubsidized loan amounts are restricted to no more than the student’s cost of attendance, less the amount of other financial aid the student is expected to receive.

In virtually all other respects, the unsubsidized loan program functions like the subsidized program discussed in the prior section of this publication.

Federal Parent Loan for Undergraduate Students (PLUS)

Parent Loan for Undergraduate Students (PLUS) borrowers are parent(s) of dependent students. This loan has a fixed interest rate, currently 8.05%, which is adjusted each year. Parent(s) must begin making payments no later than 60 days after the loan has been disbursed. Parent(s) may borrow up to the cost of attendance (COA) less the amount of financial aid the student is expected to receive.

Students do not have to have financial need in order for their parent to qualify for this loan. Students are required to complete the Free Application for Federal Student Aid (FAFSA) and the parent whose information was provided on the FAFSA must complete a PLUS Loan Request Form and Consent to Obtain Credit (which can be obtained from the Office of Financial Aid).

Alternative Loans

HFC does not encourage students to borrow more than what is absolutely necessary during an academic year. On a regular basis, students should be monitoring their total indebtedness and how that translates to a monthly payment once repayment begins.

If you are thinking about attending college, think Federal Aid First. Federal loans usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources.

However, there are times when the Federal Direct Loan Program requirements and annual/aggregate limits do not allow students to borrow enough funding to meet the COA. In these instances, students may want to consider alternative loans as an option to meet their needs.

Alternative loans are offered by banks or other lending institutions to assist students and/or parents in bridging the gap between college costs and traditional funding sources. The terms and conditions of these loans can vary depending on specific lender guidelines. We strongly recommend that students research alternative loan programs carefully before beginning the application process to ensure that they understand the eligibility requirements, interest rates, loan fees, grace/repayment periods and terms, as well as any borrower benefits. Students may research alternative loan opportunities online by performing a general search via their web browser. HFC will only certify an alternative loan for students who are enrolled in a degree or certificate program and are making Satisfactory Academic Progress.

Entrance Counseling

First-year undergraduates and first-time FDL borrowers must complete the Direct Loan Entrance Counseling on the U.S. Department of Education's studentaid.gov website under the "Complete Counseling" link. This interactive counseling session and quiz helps students develop budgets for managing educational expenses and also understand their loan responsibilities.

**Students must complete Entrance Counseling before loan funds can be disbursed to their account.

New borrowers or prospective students are encouraged to take the demo Entrance Counseling to gain a better understanding of federal student loans.

NOTE: Entrance Counseling is NOT the same as the Financial Awareness Counseling Tool on the same site. Taking a demo counseling session will NOT fulfill the requirement.

More detailed information regarding the Federal Direct Loan Program can be found in the Entrance Counseling Guide published by the U.S. Department of Education.

Exit Counseling

Direct Loan Exit Counseling is required for FDL borrowers who are graduating, transferring to another college, leaving school or dropping below half-time enrollment. This counseling session helps borrowers understand their rights and responsibilities in repayment and helps them choose a repayment plan. You must use your Department of Education PIN to access this counseling session. To complete the Exit Counseling session, go to the studentaid.gov website. Click the "Complete Counseling" link and follow the link to "Exit Counseling" to begin.

Current borrowers are encouraged to take the demo Exit Counseling to gain a better understanding regarding federal student loans and the repayment of those loans.

NOTE: Exit Counseling is NOT the same as the Financial Awareness Counseling Tool on the same site. Taking a demo counseling session will NOT fulfill your requirement.

More detailed information regarding the Federal Direct Loan Program can be found in the Exit Counseling Guide published by the U.S. Department of Education.

Loan Limits

HFC Financial Aid determines both the loan type(s)as well as the actual amount of loan for which you are eligible to receive each academic year. This is determined based on year you are in school as well as whether you are considered dependent or independent for FAFSA purposes.

Regardless of your eligibility, there are also federal limits on the amount of subsidized and unsubsidized loans that you be eligible to receive each academic year (annual loan limits) and the total amount you may borrow for undergraduate study (aggregate loan limits).

Note that once a student has reached their aggregate loan limit, they are no longer eligible for loan funding, regardless of whether or not they have completed their degree.

The following chart shows the annual and aggregate limits for subsidized loans for first-and second-year undergraduate students.

**Dependent students whose parents are unable to obtain a PLUS loan may be eligible for additional loan funds, up to the independent annual loan limit.
***HFC First-Year Undergraduate: Students with less than 31 completed credit hours
****HFC Second-Year Undergraduate: Students with 31 or more completed credit hours

Time Limits for Loans - Repealed

Since 2013, Direct Loan statutory requirements have limited a first-time borrower’s eligibility for Direct Subsidized Loans to a period not to exceed 150% of the length of the borrower’s educational program. In addition, under certain conditions, the requirements have caused first-time borrowers who have met or exceeded the 150% limit to lose the interest subsidy on their Direct Subsidized Loans. The FAFSA Simplification Act, part of the Consolidated Appropriations Act, 2021 (Public Law 116-260) provides for a repeal of the 150% Subsidized Usage Limit (SULA) requirements.

Federal loan servicers will retroactively apply subsidy benefits to any period of time, such as an in-school deferment, during which a borrower would have been entitled to subsidy benefits. This may include removing accrued interest and reapplying payments, where appropriate.

Contact your Federal Loan Servicer with questions regarding your subsidized loan eligibility.