Loans

Please be informed that upon borrowing students loans, the loan information will be submitted to the National Student Loan Data System (NSLDS), and will be accessible by guaranty agencies, lenders, and schools determined to be authorized users of the data system.

Time Limitation on Direct Subsidized Loan Eligibility for First-Time Borrowers on or after July 1, 2013. For more details, see flyer.

Texas Southmost College loans are processed through the William D. Ford Federal Direct Loan Program, also known as Direct Loans. These low-interest loans are for undergraduate and graduate students and must be repaid. Loans are available to students and/or parents to help pay for educational expenses. They must be repaid after the student graduates, drops below half-time status.

• Federal Direct Subsidized Loans - The Direct Subsidized Loan is a need-based loan. A student must have financial need (based on the FAFSA results) in order to qualify. The federal government will pay the interest on the loan while the student is in school at least half-time and during any deferment period. The student begins repayment (of principle and interest) when they stop attending school on at least a half-time basis. Students have a six month grace period before they begin to repay their loans.
• Federal Direct Unsubsidized Loans - The Unsubsidized Direct Loan is NOT a need-based loan. A student does NOT have to demonstrate financial need to qualify. Interest begins to accrue on the loan once the first disbursement is made. Students can either pay the interest while attending school, or have the interest added to the balance of their loan. The student begins repayment when they stop attending school on at least a half-time basis. Students have a six month grace period and then begin repaying the loan.
  Eligibility
  • Must have financial need (based on the FAFSA results) *only applies so Subsidized Loans
  • Must be enrolled at least half-time - 6 credit hours
  • Must maintain Satisfactory Academic Progress (SAP)
  • May not exceed annual or lifetime loan limit
• Federal Direct Parent Loans (PLUS) - The Direct Parent Loan is for parents of dependent, undergraduate students. Interest begins to accrue on the loan once the first disbursement is made. Parents will have a sixty day grace period after the second disbursement is issued. The parent begins repayment of the loan after the grace period ends, and while the student is still attending college. Parents have deferment options that will allow a parent to delay repayment while the student is in school at least halftime.
  Eligibility
  • Dependent student must complete the FAFSA
  • Dependent student must be enrolled at least half-time - 6 credit hours
  • Dependent student must maintain Satisfactory Academic Progress (SAP)
  • Parent must pass a credit check
    • If the parent is denied the PLUS Loan due to credit, the dependent student may apply for additional unsubsidized loan funds
  • Parent cannot borrow more than the Cost of Attendance (less all other financial aid)

The type of loan you are offered is based on the results of your FAFSA. Students are encouraged to accept all free monies first, before accepting any form of student loans. Borrowing loans should be a student’s last option of funding.

NOTE: Students who are non-degree seeking do not qualify for Direct Loan funds.

Loan Interest Rates

Direct Loans have low-interest rates which are fixed for the life of the loan. The following rates are for loans borrowed after July 1, 2019, and before July 1, 2020. Interest rates are subject to change every July 1st. For updated interest rates, visit studentaid.gov.

• Subsidized Loan - 4.53%
• Unsubsidized Loan - 4.53%
• Parent Loan (PLUS) - 7.08%

Loan Fees

All Federal Direct Loans are assessed a loan fee by the federal government to help reduce the cost of making these low-interest loans. Loan fees are subject to change every October 1st. For updated loan fee rates, visit studentaid.gov. The fees are as follows:

• Subsidized and Unsubsidized Loans - 1.059%
• Parent PLUS Loans - 4.236%

Direct Loan Limits

The amount a student can borrow during an academic year is based on several different factors including grade level, dependency status and federal loan limits. The following chart lists the maximum yearly loan limits for Subsidized and Unsubsidized loans:

Yearly Loan Limits

Dependent Undergraduate Students:

	Base Loan Sub/Unsub	Additional Unsubsidized Amount	Total
First Year	$3,500	$2,000	$5,500
Second Year	$4,500	$2,000	$6,500

Independent Undergraduate Students (and dependent students whose parents cannot borrow a Parent Loan):

	Base Loan Sub/Unsub	Additional Unsubsidized Amount	Total
First Year	$3,500	$6,000	$9,500
Second Year	$4,500	$6,000	$10,500

The Department of Education also sets aggregate, or total, loan limits that students cannot go over. Students cannot borrow more than the following lifetime limits for Subsidized and Unsubsidized loans:

Types of Student	Maximum Amounts (subsidized and unsubsidized)
Dependent Students	$31,000 - no more than $23,000 of this amount may be subsidized ($8,000 must be unsubsidized)
Independent Students (and dependent students whose parents cannot borrow PLUS)	$57,500 - no more than $23,000 of this amount may be subsidized ($34,500 must be unsubsidized)

Disbursement of Loan Funds

Before the institution can disburse the loan funds, students must accept their loan award (s) on TSC online. Student who are first-time borrowers must also complete the online Entrance Counseling session and the Master Promissory Note.  Loan funds will then be posted to the student's TSC account at least ten days before classes begin. Students may use their loan funds to pay for their tuition and fee costs. Any remaining balance (after tuition and fees have been paid) will be issued to the student. Students can receive their balance through Bank Mobile or paper checks sent by the Finance Office.

If a student applies for a loan after school has already begun, loan funds will be posted to the student's account within ten business days of completing the three steps mentioned above. A refund will then be issued to the student by the Finance Office either by direct deposit or paper check.

Starting Fall 2014, loans must be disbursed in two payments. For students who are attending Fall and Spring, the loan disbursements will be made one per semester. For students who are attending only one semester, the first disbursements will be made at the beginning of the semester and the second disbursement will be made in the middle of the semester.

***Effective 2020-2021, all Direct Loan borrowers (students and parents) will be required to confirm they have viewed the Annual Student Loan Acknowledgment before loans can be disbursed. Schools must receive the confirmation for each borrower each award year before disbursing funds.
Note: If not all required steps are completed, a delay in processing or disbursing funds could result.