Southwestern College

Types of Loans

Direct Subsidized Loans provide low interest rates and are available to students who demonstrate financial need as determined by the information provided on the Free Application for Federal Student Aid (FAFSA).  The Federal government pays the accruing interest on the loan while the student is attending school at least half time or during deferment.

Direct Unsubsidized Loans provide low interest rates and are available to all students regardless of financial need. The student’s interest begins to accrue from the date the loan is disbursed, and payment is delayed if the student has an in -school, grace or deferment status. If the accruing interest is not paid, it will be added to the principal amount of the loan and increase the repayment amount. Students have the option of paying interest as it accrues, reducing the total cost of the loan.

Experimental Sites Initiative (ESI) Participation. Effective 2013-2014, Southwestern College has been approved by the US Department of Education to participate in an experimental initiative to reduce over -borrowing and risk of loan default. This allows us to eliminate Unsubsidized Loan eligibility for certain groups of students. This decision is final and cannot be appealed to the US Department of Education.

Based on this initiative, the following categories of students will not be eligible for unsubsidized loans:

  • 1ST YEAR, CALIFORNIA RESIDENT STUDENTS - 1st year is defined as students who have completed less than 30 units in their current program of study, of which 24 units must be degree applicable.
  • STUDENTS WITH AGGREGATE LOAN DEBT OF $12,500 OR MORE - Students who have borrowed subsidized and unsubsidized loans with a combined total of $12,500 or more (includes loans from  all  school attended).
  • STUDENTS WITH AN APPROVED SATISFACTORY ACADEMIC PROGRESS (SAP) APPEAL - Students who were SAP disqualified, and then were approved for financial aid on approved appeal.

Private/ Plus Loans Southwestern College does not participate in the Alternative Private or PLUS Loan programs.

Federal Loan Limits 

Annual maximum loan limits are dependent upon financial aid eligibility, dependency status and grade level (including transfer units). A student’s status as a dependent or independent is determined by information provided by the student to the US Department of Education on the FAFSA. Students who have “no need” (no financial aid need) and who do not qualify for the Subsidized Loan may be eligible for the Unsubsidized Loan. 


Dependent/Independent Students - Direct Loan Annual Limits



Yearly Maximum

No Need  - Unsubsidized Only

Dependent: $3,500

Dependent : $2,000


Independent : $6,000


Non-resident only  (ESI)

Dependent: $5,500


Independent: $9,500

Dependent : $5,500


Independent : $9,500


Non-resident only  (ESI)

Grade Level 1:

0 to 29.9 completed units


Independent: $3,500

Grade Level 2:


completed units

Dependent: $4,500


Independent: $4,500

Dependent: $2,000


Independent: $6,000

Dependent: $6,500


Independent: $10,500

Dependent: Up to $6,500


Independent:  Up to $10,500


Aggregate Loan Limits - Maximum Total Outstanding Loan Debt

Subsidized/Unsubsidized Aggregate


Dependent Students

$31,000 (maximum $23,000 subsidized)

Independent Students

$57,500 (maximum $23,000 subsidized)

Dependent/Special Circumstances Unsubsidized:

  • 2nd year Dependent student with Rejected FAFSA because parents refuse to provide information may borrow up to $2,000 per academic year
  •  1st year California resident student does not qualify due to ESI.

Subsidized Direct Loan Lifetime Eligibility.  Effective July 1, 2013, students who are considered new borrowers (students who have never borrowed a subsidized loan and those who previously borrowed and repaid a subsidized loan) will have a lifetime limit on subsidized loan eligibility of 150% of their declared academic program.  The 150% limit is calculated using the required timeframe for each student’s declared academic program. For example, a student enrolled in a two year Associate’s degree program will be limited to three years of subsidized loan eligibility.  Once a student reaches the 150% limit, there is no further eligibility for subsidized loans at a two year school. Students who transfer to a community college from a four year university and who have already borrowed three years (or more) of subsidized loans prior to transfer have reached the 150% limit and will not be eligible for additional subsidized loans.  For additional information please refer to the following link:

Interest Rates

The interest rates below are effective for all Direct Loans with a first disbursement on or after July 1, 2016. 

Under the new interest rate structure, all Direct Loans will be “variable-fixed,” meaning students would receive a new rate with each new loan, but then that rate is to be fixed for the life of the loan. There are also interest rate caps at 8.25% for Direct Subsidized Loans and Direct Unsubsidized Loans for undergraduate students.

The chart below shows the interest rates for Subsidized and Unsubsidized loan programs. Both types of loans have the same repayment terms and interest rates are fixed rates for the life of the loan.



First Disbursement on/After

First Disbursement


2015-16 Fixed

Interest Rate

Interest Rate




Direct Subsidized








Direct Unsubsidized







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Last updated: 4/28/2017 10:18:14 AM