A Federal Direct Loan based on financial need, for which the federal government pays the interest that accrues while the borrower is in an in-school, grace, or deferment status.

For Direct Subsidized Loans first disbursed between July 1, 2012, and July 1, 2014, the borrower will be responsible for paying any interest that accrues during the grace period. If the interest is not paid during the grace period, the interest will be added to the loan's principal balance.

A Federal Direct Loan for which the borrower is fully responsible for paying the interest, regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues through the life of the loan.

Direct Parent PLUS Loans are available to credit-worthy parents of dependent students who enroll at least half-time (six credit hours per semester) and meet Satisfactory Academic Progress (SAP) standards with Lone Star College (LSC).  

To apply for a Parent PLUS Loan, students must first submit the FAFSA for the appropriate aid year through www.studentaid.gov and include Lone Star College's school code.  Then the parent must visit www.studentaid.gov and access the Apply for a PLUS Loan page.  The parents’ credit history will be checked by the U.S. Department of Education when the parent applies for the loan to determine eligibility.  

If approved, the maximum amount of a PLUS loan will be determined by the total cost of attendance minus any other financial aid awards.  The parent is responsible for repaying the loan to the Department of Education, plus any interest.  Parent borrowers may be required to complete PLUS Loan entrance counseling.  

If a parent is denied the Parent PLUS Loan, the dependent student can borrow additional Direct Unsubsidized Loan funds.  To receive the additional Unsubsidized funds, the student or parent should submit the denial letter provided by the Department of Education to the Financial Aid Office. 

A private loan is a student or parent loan from a bank, credit union, private company, a nonprofit, or state-affiliated lender to pay for educational costs.  If a student does not qualify for federally funded loans, such as Federal Direct Subsidized or Federal Direct Unsubsidized loans, private loans may be an option.  Private loans are credit-based, and most require that the borrower or co-borrower have an established credit history to qualify.

Learn More About Private Loans

You also need to complete the following steps for federal student loans:

Entrance Counseling and the Master Promissory Note (MPN) must be completed to ensure the disbursement of your federal student loans.

Federal student loan interest rates are set by federal law and vary by loan type and disbursement date.

Interest begins accruing on Unsubsidized and PLUS loans as soon as the loan is disbursed.

For current and past interest rates, click here.

You have certain rights and responsibilities as a borrower.

Your rights:

• Have a grace period.
• Prepay your loan without penalty.
• Request a copy of your master promissory note.
• Request documentation that your loan is paid in full.
• Choose repayment plan. Be informed of your repayment date.
• Be informed of and provide consent of any changes in the terms of your loan.

Your Responsibilities:

• Complete exit counseling.
• Repay your loan.
• Notify timely monthly payments.
• Notify your lender of your eligibility of a deferment or cancelation of loan and/or payments.
• You use proceeds of loans for education-related purposes.
• Make a payment even if you do not receive a payment statement.

If you receive a loan while attending Lone Star College, you must complete exit counseling when you leave, drop below half-time enrollment (6 credits), or graduate.

This counseling will assist you with understanding your rights and responsibilities that apply to your loan.

Information Covered

• Loan repayment plan
• Repayment options
• Deferment and forbearance options
• Cancelation options
• Loan consolidation
• Loan rehabilitation
• Debt management
• Prepayment
• Consequences of default on loan and service obligation

Your loan enters a grace period after you leave Lone Star College, drop below a half-time enrollment (6 credits), or graduate. This one-time grace period lasts six months, and you must begin repaying your loan immediately when your grace period ends.

Your loan services will notify you with information about repayment. You can select a repayment plan. Generally, you have 10 to 25 years to repay your loan.

Contact your loan services immediately if you encounter problems making a payment. They can explore your options, which include:

• Deferment
• Forbearance
• Restructured Payment Plan

If you monthly payment does not arrive by the due date, your loan is considered delinquent. In this case, you may face additional late fees and have your delinquency reported to various national credit bureaus..

Failure to maintain monthly payments on schedule can result in serious financial and legal consequences. A loan is considered in default when you fail to make a payment for 270 days.

Once the loan is in default, the entire balance becomes immediately due - principle, interest, and collection fees.

Default loans are not eligible for deferment or forbearance.

Every entity involved in your loan - your school, the financial institution that holds your loan, your loan guarantor, and the federal government - all can take action to recover the money you owe.

Typical actions include:

• The U.S. Department of Education requires you to repay immediately the entire unpaid amount of your loan.
• The Department of Education sues you, takes all or part of your federal and state tax refunds and other federal or state payments, and/or garnishes your wages so your employer is required to send part of your salary to pay off your loan.
• The Department of Education requires you to pay reasonable collection fees and costs, plus court costs and attorney fees.
• You are denied a professional license.
• You lose eligibility for other federal student aid and assistance under most federal benefit programs.
• You lose eligibility for loan deferments.
• The Department of Education reports your default to national credit rating bureaus.

Remove loan default

You have three options to remove the default status:

A school's responsibilities in the Direct Loan Program begin with meeting and maintaining the loan program participation requirements.
Operational requirements can include:

• confirming borrower eligibility;
• originating Direct Loans;
• counseling students;
• requesting Direct Loan cash;
• disbursing Direct Loan cash;
• Reconciling school-based Direct Loan records with records in COD

ED’s Direct Loan database;

• carrying out administrative and fiscal management functions;
• closing out each award year