Northern Essex Community College participates in the William D. Ford Federal Direct Student Loan program administered by the U.S. Department of Education and NECC. This means that the loan listed on your award letter is a loan you will borrow directly from the federal government. Loans are financial assistance that must be repaid after you leave school or drop to less than six credits.

In order to receive these funds you must complete a promissory note. The promissory note is the legal agreement you make to borrow and repay this money. In addition to the completion of the promissory note, all first time borrowers at NECC must complete an entrance counseling session. To request an adjustment to an existing Stafford Loan, borrowers must complete and submit a Direct Loan Request Form.

Subsidized Direct Loan
The Subsidized Direct Stafford Loan is offered to students who demonstrate financial eligibility according to federal regulations. For a Subsidized Direct Loan, the federal government pays the interest while the student is enrolled in at least 6 credits. Therefore, no interest accrues during the in-school or grace period. The 2012-2013 year interest rate for the Subsidized Loan is 3.4%, fixed for the life of the loan.

Unsubsidized Direct Loan
The Unsubsidized Direct Stafford Loan is offered to students who do not qualify on the basis of calculated financial eligibility for a Subsidized Direct Loan, or who qualify for only a portion of the Subsidized Direct Loan annual limit. Interest is charged on an unsubsidized loan while the student is enrolled in school, beginning after the loan is disbursed. Students may elect to pay the interest or have it capitalized (added to the principal) and pay it during the repayment period. The interest rate for the Unsubsidized Loan is 6.8%, fixed for the life of the loan.

Loan Disbursement

Once you have completed your promissory note and entrance counseling (if required) your loan will be processed. Loan funds are disbursed after all students’ eligibility for financial aid funds have been verified and the business office applies financial aid funds to students’ accounts. This is typically done around the middle of the semester. Students who have credit balances after their charges have been paid will be eligible for a refund check. An origination fee of 1.0 percent, partially offset by a 0.5 percent up-front rebate, is deducted automatically from amounts borrowed. The net result is that the amount disbursed is less than the loan amount approved. The borrower retains the rebate by making the first 12 monthly payments on time. If you withdraw from the college or drop below six credits before your loan is disbursed, you may not be eligible for the loan funds. Check with the Financial Aid Office before withdrawing or reducing your course load to less than six credits.

Leaving School or Falling Below Six Credits

This will begin the 6-month grace period leading to repayment of your loan(s). You must complete an Exit Interview. If you return to NECC or another school on a half-time or more basis you should file a deferment form which will tell the servicing agency that you are able to postpone repayment of your loan.

Repayment

The Direct Loan Servicing Center will contact you at your last known address to inform you about going into repayment. They will also send you either a monthly statement or book of coupons to use each month. You are responsible for notifying the servicer and the Financial Aid Office of any changes to your name or address. Failure to make payments may result in a default that will affect your ability to obtain further financial aid at any school and will directly impact your ability to obtain consumer credit in the future.

Deferments

A deferment is a postponement of payment on a loan, during which interest does not accrue if the loan is subsidized.

You may qualify for a deferment while you are:

• Enrolled at least half time in an eligible post secondary school or studying full time in a graduate fellowship program or an approved disability rehabilitation program.
• Unemployed or meet our rules for economic hardship (limited to 3 years).

You may also be eligible for a deferment based on qualifying active duty service in the U.S. Armed Forces or National Guard.

In most cases, you need to submit a deferment request to the Direct Loan Servicing Center along with documentation of your eligibility for the deferment. Visit their website for more information.

If you’ve gone back to school and the Direct Loan Servicing Center receives enrollment information that shows you’re enrolled at least half time, it will automatically put your loans into deferment and notify you. You have the option of canceling the deferment and continuing to make payments on your loan.

If you are in default on your loan, you are not eligible for a deferment.

Forbearance

If you can’t make your scheduled loan payments, but don’t qualify for a deferment, your lender may be able to give you a forbearance. A forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. Some common reasons for getting a forbearance are illness, financial hardship or serving in a medical or dental internship or residency.

If you are in default on your loan, you are not eligible for a forbearance.

Borrowing money for your education is a serious and binding legal obligation. You are advised to use care in determining if and how much you should borrow. Please do not hesitate to ask for assistance or advice in making this decision. Your loans are a part of your present and your future.

If you have any questions about the loan or loan processing, or do not understand the information provided, please contact the Financial Aid Office by email at aid@necc.mass.edu and a financial aid counselor will respond within one business day. Please note: it may take more than one day if you are emailing us during peak enrollment periods – August to mid September, and January to mid February.

For additional information on direct loans, please click the link below:
The William D. Ford Federal Direct Loan Program