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Financial Aid
Federal Direct Subsidized Loan

*** FEDERAL UPDATE 2022***
Loan Debt Releif

The Federal Direct Subsidized Loan is a federal loan program that replaced the Stafford Loan program at San Diego Mesa College in fall 1995. Instead of borrowing from a bank, students now borrow directly from the Federal Government. Federal Direct Subsidized Loans are serviced by and repaid directly to the Department of Education through the Direct Loan Servicing Center (1-800-848-0979 or

Each academic school year an eligible community college student may borrow up to $3500 as a grade level I student (fewer than 30 units completed toward major and general education requirements) or up to $4500 as a grade level II student (30 or more units completed toward major and general education requirements). All students eligible to borrower must provide the Financial Aid Office with a copy of their Student Educational Program Plan, which can be obtained by visiting an academic counselor. As with all financial aid applicants, a student must also be meeting the Standards of Academic Progress in order to borrow loan funding. Loan proceeds are paid in two installments, even if the loan is for one semester. Please visit the forms page or click the link on the side bar to the left to view the current semester's payment dates.

  • Grade level I student (fewer than 30 units completed toward major and general education requirements) may borrow up to $3500 per academic year.
  • Grade level II student (30 units or more completed toward major and general education requirements) may borrow up to $4500 per academic year.

Although Federal Direct Subsidized Loans obtained through Mesa College are subsidized, meaning the federal government pays the interest on the loan while the student is in school at least half-time, there is a 1.051% fee to cover origination and insurance costs that are deducted from the proceeds of the loan. PLEASE NOTE: As of October 1, 2013, the sequester increases the origination fees charged to Direct Loan borrowers beyond last year's increases. However, taking into account all of the underlying circumstances, including operational requirements, the new loan fee percentages will apply only with regard to loans where the first disbursement is made on or after December 1, 2013. The new loan fees are 1.072 percent for Direct Subsidized Loans and Direct Unsubsidized Loans and 4.288 percent for Direct PLUS Loans (both parent and graduate student PLUS Loans).  The interest rate on the loan is variable and changes each school year. The highest the interest rate can go is 8.25%.

For loans first disbursed on or after July 1, 2013, the interest rate for Direct Subsidized and Unsubsidized undergrad loans is 6.8%, and for Direct Plus loans is 7.90%. There is no longer a separate interest rate for periods of in-school deferment or grace.

    Click Here for current Federal Direct Student Loan Interest Rates

Subsidized Loan - The federal government pays all interest while you are enrolled at least half-time and during all eligible periods of deferment. San Diego Mesa College will always evaluate your eligibility for a subsidized loan prior to evaluating or awarding an unsubsidized loan. Please follow the steps listed below under the STEPs heading. 
Unsubsidized Loan - The borrower is responsible for all interest. Repayment of interest begins immediately after the loan is disbursed unless the borrower chooses to capitalize the interest and let it continue to accrue. At San Diego Mesa College, if you wish to receive an unsubsidized loan you will need to complete a separate worksheet and request form including a statement of justification and budget planning worksheet.  The San Diego Community colleges [Mesa, City & Miramar] are all participating in the US Department of Education's Experimental Sites program which is intended to help reduce borrower debt.  Please see "Experimental Site Initiative"  for more detailed information.

*** Important Changes affecting Student Loan borrowers ***

Subsidized Loan Limitation

  • A student ceases to be eligible for subsidized student loans when they have received loans for 150% of the published length of the program.
  • This regulation applies to loans disbursed to "New" borrowers [defined as a borrower with no outstanding balance on a FFELP or DLP loan] on or after July 1, 2013.

Please follow the following link to go directly to Direct Loan Entrance Counseling information related to the subsidized loan 150% maximum eligibility.

Subsidized Loan Limit Examples

Program Length   

Limitation on Subsidized Loan Eligibility

4 year BA/BS Degree

6 years of subsidized loan eligibility

2 year AA/AS Degree

3 years of subsidized loan eligibility

1 year Certificate Program

1.5 years of subsidized loan eligibility

10 week Certificate Program

15 weeks of subsidized loan eligibility

STEPs: All Applicants for Federal Direct Subsidized Loans need to:

  • complete a FAFSA
  • complete a Financial Aid file at Mesa College
  • be making academic progress as defined for financial aid recipients. Please see the Standards of Academic Progress
  • complete a loan Entrance Counseling Session
    (available at
  • sign a promissory note and provide two personal references with different U.S. addresses
    - You can complete and sign the electronic Master Promissory Note (eMPN) on- line at
    - The eMPN can be signed at any time. However, you will not have a student loan until you complete the on-line Entrance Counseling, stop by the Financial Aid Office, pick-up and complete the "Student Loan Request", and complete any other requirements. Additionally, the loan request must have been processed and accepted by the Department of Education.
    - The process to complete an eMPN is easy and user friendly. You will have to complete 9 Steps. If, you stop the process before finishing all 9 steps, you will have to start from the beginning with Step 1.
  • complete and submit a Loan Request form
  • obtain an educational program plan ***
  • be enrolled in at least 6 units
  • not be in default on any previously borrowed federal student loans or owe an overpayment on grants.
  • complete a loan Exit Counseling Session once you are ready to graduate, transfer, or have dropped below half-time {6 units for the regular 16 week semester} (available at
Avoiding Loan Default

You have decided to take out a Federal Direct Subsidized Student Loan. As you probably know, this will have an impact on your future creditworthiness and financial aid eligibility. Please take a moment to review this important information on keeping your loan in good standing. Knowing your obligations will help you avoid stressful situations in the future.

What is default?

Default is the failure to make regularly scheduled payments on a loan. The failure to submit deferment/forbearance paperwork can also lead to loan default.

What is a deferment/forbearance?

Deferment/forbearance is a temporary break from your regular student loan payments. You can request a deferment or forbearance from your lender for reasons of economic hardship, unemployment, temporary disability, and returning to school half-time or more. In the case of a subsidized student loan, a deferment does not accrue interest, whereas you are responsible for paying the interest during periods of forbearance . If you have unsubsidized federal loans from previous institutions, they will always accrue interest.

Can my loan be forgiven?

Although there are some loan forgiveness programs for teachers (inquire with your lender), the vast majority of borrowers are required to pay their loans in full. The Department of Education does forgive loans in cases of total and permanent disability as certified by a doctor. Please note, loan forgiveness for total and permanent disability is very rare and may prohibit you from receiving federal financial aid in the future. Student loans are rarely forgiven if the borrower declares bankruptcy.

What can happen if I don't make payments or submit deferment information to my lender?

1. Damage to Your Credit

Federal student loans are reported to the credit bureaus as soon as the funds are disbursed. The loan will continue to be reported monthly until it is paid in full. Although missing one payment on your student loan may not seem like a big deal, it can have a lasting impact on your credit history. Other lenders will look very closely at your student loan repayment as it is likely one of your first major financial obligations. Borrowers have been denied home loans, car loans, insurance, and even employment due to a poor repayment history.

2. Your Debt Becomes Larger

The longer you take to repay your student loan, the more it will eventually cost you. With each missed payment, more interest will have time to accrue. If you consistently fail to make payments on your loan, your lender can chose to send your loan to a collection agency. If this occurs, you will be responsible for paying the outstanding principal of the loan, any accrued interest, and possibly the collection fees associated with your delinquency. Your lender can also take you to court for not paying your student loan. If this occurs, you may be held liable for your lender's legal fees. Another process that may occur is acceleration , meaning that the entire balance (principal, interest, legal fees, and collection costs) will become due at once. If you allow this to happen you lose all eligibility for deferments/forbearances. Ultimately, if you refuse to pay your student loan your lender has the option of garnishing your wages, social security payments, federal tax return, lottery gains, etc.

3. You Are Prevented From Applying For and Renewing Professional Licenses

In some states, including California, borrowers who default on any federal student loans are prevented from applying for and renewing professional licenses, including medical and law licenses. The borrower would not be permitted to receive the license until the default status is cleared.

4. You Cannot Receive Federal Financial Aid

As long as you are in default status, you cannot receive any federal financial aid including Pell Grants, FSEOG Grants, Federal Work Study, and Federal Student Loans. You may also be ineligible for state-awarded financial aid.


Federal Direct Subsidized Loan Autopacking *NEW*

Dear Mesa Student.

San Diego Mesa College understands that students may experience difficult and overwhelming financial hardships. In an effort to address these concerns, the Financial Aid Office will begin auto-packaging the Federal Direct Subsidized Loan Program to federal aid applicants that meet the eligibility criteria. Eligibility criteria will include:

• San Diego Mesa College is your Campus of Record
• Your File Review Status is Complete
• You have an ISIR (Student Aid Report) which is Official (valid EFC)
• You meet Satisfactory Academic Progress (SAP) for Financial Aid Recipients
• Your Verification status has been documented as Complete or was Not Required
• You do not have a prior Bachelor degree
• You are not a high school student or admitted on a provisional admission’s status
• You are not receiving financial aid from another school
• You do not already have a Direct Loan for the academic year
• You have not withdrawn from school for the term within the Aid Year
• Your Student Budget balance is greater than $100

Please note that the purpose of auto-packaging Federal Direct Subsidized loans is to inform students of available resources or options in a comprehensive and convenient format; Mesa College does not encourage students to increase their level of debt or engage in unnecessary loan borrowing. Be advised that additional steps will be required to be completed by students who accept borrowing funds.


How Can I Prevent Student Loan Default?

1. Set up automatic debit for your student loan

Setting up automatic payments will relieve you of having to remember to send payment each month. Arrange for a payment date immediately after you get paid each month to avoid bouncing your payment to your lender. You can arrange for automatic payments for your Mesa College Federal Direct Loan at this website:

2. Keep your address up-to-date with your lender.

Your lender cannot alert you of a problem with your account if they cannot find you. Be sure to notify your lender every time your address or phone number changes. It may also be helpful to provide your lender with your email address. If you are planning to leave the country it is an excellent idea to provide your lender with an alternative way to keep in touch with you, for example by email or by corresponding with a relative. You are responsible for making your payments each month, even if you do not receive a bill.

3. Tell your lender if you cannot afford to make your payment.

Your lender will not know that you cannot afford to make a payment unless you notify them. Your lender will likely be able to offer you a solution that will provide relief from your payments and protect your credit.

4. If you return to school, notify your lender.

If you return to school at least half time you can defer your student loan payments (on loans received after 7/1/1993). However, your lender will not be automatically notified that you have returned to school. You are responsible for notifying your lender. If your student loan goes into default while you are in school, your lender does not have to clear any negative credit reporting associated with your default.

5. Do not avoid your lender.

If your lender is attempting to contact you because you are past due, they are not calling to scold you. Rather, they wish to inform you of the status of your account and possibly to offer you solutions to bring your account current. Avoiding the issue of a past due student loan will not make the problem go away. In fact, avoiding your lender will likely escalate the seriousness of your default. Lenders have several methods of collecting from defaulted borrowers. As the borrower becomes more delinquent, the collection methods become more severe.

6. Plan your borrowing carefully.

Cutting back on your spending now can save you money and stress later. If you budget carefully, you may find that you do not need to take out a student loan. The best way to avoid student loan default is to avoid taking out a loan in the first place. If taking out a loan is unavoidable, borrow as little as possible. If you took out a federal loan after September 1, 1995 while attending San Diego Mesa College , your lender is the U.S. Department of Education. Any Stafford loans received prior to this date will be serviced through various servicers. You will need to contact your lender or guarantor to determine where payments are sent.

  • Internet: (On this website you can view your loan account, set up automatic payments, email questions, and request forms.)
  • Phone: 1-800-848-0979
  • Payments: U.S. Department of Education, Direct Loan Payment Center, P.O. Box 530260, Atlanta , GA 30353-0260