Subsidized versus Unsubsidized

Subsidized and unsubsidized loans are federal student loans for eligible students to help cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school. The U.S. Department of Education offers eligible students at participating schools Direct Subsidized Loans and Direct Unsubsidized Loans. 

 

What's the difference between Direct Subsidized Loans and Direct Unsubsidized Loans?

In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.

 

Here is a quick overview of Direct Subsidized Loans

 

Who can get Direct Subsidized Loans?
Direct Subsidized Loans are available to undergraduate students with financial need.

How much can you borrow?
A community college student may borrow up to $3,500 as a first year student and up to $4,500 as a second year student. 

Who will pay the interest?
The U.S. Department of Education pays the interest on a Direct Subsidized Loan:
while you're in school at least half-time, 

  • for the first six months after you leave school (referred to as a grace period), and
  • during a period of deferment (a postponement of loan payments).


*Note: If you received a Direct Subsidized Loan that was first disbursed between July 1, 2012, and July 1, 2014, you will be responsible for paying any interest that accrues during your grace period. If you choose not to pay the interest that accrues during your grace period, the interest will be added to your principal balance.


Here is a quick overview of Direct Unsubsidized Loans

 

Who can get Direct Unsubsidized Loans?
Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need.

How much can you borrow?
Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.

Who will pay the interest?
You are responsible for paying the interest on a Direct Unsubsidized Loan during all periods.

*Good to know: If you choose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan).


Here is a quick overview of Federal Direct Plus Loan

 

Direct PLUS Loans are federal loans that graduate or professional students and parents of dependent undergraduate students can use to help pay for college or career school. PLUS loans can help pay for education expenses not covered by other financial aid (FA). The U.S. Department of Education makes Direct PLUS Loans to eligible parents and graduate or professional students through schools participating in the Direct Loan Program.


*Note: A Direct PLUS Loan is commonly referred to as a parent PLUS loan when made to a parent, and as a grad PLUS loan when made to a graduate or professional student.

Begin your Direct PLUS Loans application online.

*Important: Most schools require you to apply for a PLUS loan online, but some schools have different application processes. Check with your school before you apply.
*Note: Before applying, make sure you or your child have already filled out the Free Application for Federal Student Aid (FAFSA).


Here is a quick overview of Direct PLUS Loans:

  • The U.S. Department of Education is your lender.
  • You must not have an adverse credit history. A credit check will be conducted. If you have an adverse credit history, you may still be able to receive a PLUS loan if you meet additional requirements.
  • The maximum PLUS loan amount you can receive is the cost of attendance (determined by the school) minus any other FA received.


Learn more about parent PLUS loans. 

 


 

*For a list of current interest rates and fees, please visit https://studentaid.gov/understand-aid/types/loans/interest-rates.

 *Before submitting your Loan Request Form,

 

Unsubsidized Loan Categories

The Federal Government does not make a distinction for the Unsubsidized loan program, but we will refer to four different Unsubsidized loans categories to help explain the different eligibility criteria and the different loan processes. The loan categories are:

Students with No Need

Students with no need and who do not qualify for the Subsidized Loan may be eligible for:

  • Up to $3,500 per year – 1st year student
  • Up to $4,500 per year – 2nd year student
  • Students can use the regular loan request form to apply for this Unsubsidized loan
  • No other special action or process needed by student

Dependent/Special Circumstances Unsubsidized

  • Dependent students with a Rejected FAFSA because parents did not or will not provide their information
  • May borrow up to $2,000 per year
  • Students can use the regular loan request form to apply for this Unsubsidized loan

Dependent Additional Unsubsidized

Dependent students can only qualify if their parents cannot borrow a PLUS loan due to various situations

  • May borrow up to $2,000 per year
  • Students must complete Supplemental Loan Counseling and meet all other eligibility criteria
  • 1st year student does not qualify due to Experimental Site Initiative

Independent Additional Unsubsidized

  • May borrow up to $6,000 per year

Additional Unsubsidized Loan Process (General Eligibility)

  • Must complete a FAFSA for the 2020-21 school year
  • Must be enrolled in 6 or more units at San Diego City College for each semester
  • Must be in Good Standing based on the FA Satisfactory Academic Progress (SAP) standards and did not have to appeal
  • The maximum amount for one semester will be one half (1/2) of the annual loan limit

 

Experimental Site Initiative

Effective with the 2012-2013 school year, San Diego City College (along with San Diego Mesa College and San Diego Miramar College) were approved by the U.S. Department of Education to participate in an experimental initiative regarding "Overborrowing" that allows our college to reduce or limit Unsubsidized Loan eligibility and borrowing for certain groups or categories of students.

 

Based on this experiment, the following groups or categories of students will not be eligible to borrow Unsubsidized Loans:

  • 1st Year students
  • Students approved on FA appeal

See below for further information.

 

First Year Students

1st year is defined as a student who has completed less than 30 units in his/her current program or major based on the student's educational plan.

  • Units that will be counted towards the 30 units are units the fulfill the major, general ed or district requirements for your current program or major based on your academic plan.
  • Units that will not be counted towards the 30 units are units that are basic skills or remedial, ESOL, electives or any other units that are not applicable to your current program or major based on your academic plan.

 

Students Approved on FA Appeal

If you did not meet the FA Standards for Satisfactory Academic Progress (SAP) you will not be eligible for an Unsubsidized Loan even if you submit a FA Appeal and are approved for other aid.

 

Alternative Loans

We do not recommend students borrow an alternative loan unless they have no other option.

Alternative loans are private loans that you borrow through a lending institution and are not part of the federal government programs. Alternative loans are more expensive than the federal government Direct Loans and should only be used when all other options have been exhausted. Most lenders do credit checks in order for you to qualify for a loan.

In addition to completing the Alternative Loan application, you will also need to complete a FAFSA application before our office can certify an Alternative Loan application. We take into consideration all other aid you are eligible for including the Federal Direct Subsidized loan and the Federal Direct Unsubsidized loan, if eligible.

Be sure to research all possibilities for scholarships, grants, Work Study, and federal loan programs before borrowing from an alternative loan program. You are always free to choose the lender of your choice. Choose the loan that best suits your needs and remember to borrow only what you need!

 

Federal Work Study Sign Up

At this time, we are taking names for this year's work study positions. For more information, please submit an email to cityaid@sdccd.edu

 

To be eligible for Work Study, you must:

  • be enrolled in at least 6 units for the Fall 2020 semester;
  • have unmet need of at least $4,000;
  • have met the Satisfactory Academic Progress (SAP) standards in Good Standing and you do not or did not have to submit a FA appeal for any reason.

 

If awarded, please be sure to submit a copy of your Social Security card and CA Driver’s License or ID. 

 

Federal Work Study (FWS) allows students the opportunity to earn part of their FA by working in assigned jobs, both on and off campus. Awarding of FWS funds is extremely limited due to the small amount of funds received each year. FWS awards range from $1,000 to $4,000 per school year. Students must be in Good Standing based on the FA Satisfactory Academic Progress policies to be considered for FWS. Students that must appeal will not be considered for FWS. Students must complete an employment packet and meet all eligibility requirements. Students with convictions may be ineligible to work depending on the type and number of convictions.

 

Students are paid a salary that is at least equal to the current minimum wage, but all current Federal Work Study jobs pay more than the minimum wage. Federal Work Study is different from the other FA programs in that a student is allocated a certain amount of money to earn. As work on the job is completed, a monthly timecard is submitted for the hours worked just as at a regular job. Once a month, the student receives a paycheck for the hours worked for the previous month. Students may work until their Federal Work Study award is earned in full, until their last date of attendance or until the end of the Spring 2021 semester, whichever occurs first. At that time, the Federal Work Study job ends. There is no guaranty that students will continue to receive Federal Work Study for the following year.