Types of Loans, Limits & Interest Rates

Before you borrow, it helps to understand exactly what you are signing up for. This page explains the types of loans available at SWC, how much you can borrow, the current interest rate, and the origination fee that is deducted from your loan before it is paid out. Read through everything carefully — the more you understand about your loan before you borrow, the better positioned you will be when it is time to repay.

Types of Loans

Unsubsidized loans are available to all students regardless of financial need. Interest begins building from the day your loan is paid out and continues to accrue during school, grace periods, and deferment. If you do not pay the interest as it builds, it will be added to your loan balance — a process called capitalization — which increases the total amount you must repay. You have the option to pay the interest as it accrues to keep your balance from growing.

Southwestern College does not participate in the federal PLUS Loan program or any private loan programs.

Subsidized loans are for students who demonstrate financial need. The federal government pays the interest on your loan while you are enrolled at least half-time (6 units), during your six-month grace period after leaving school, and during deferment. Because the government covers the interest during these periods, your loan balance does not grow while you are in school. This makes subsidized loans the most affordable borrowing option available.
Unsubsidized loans are available to all students regardless of financial need. Interest begins building from the day your loan is paid out and continues to accrue during school, grace periods, and deferment.

If you do not pay the interest as it builds, it will be added to your total loan balance. This is a process called capitalization, which increases the overall total amount you must repay. You have the option to pay the interest as it accrues to keep your total loan balance from growing.

Federal Loan Limits

How much you can borrow each year depends on your grade level, dependency status, and remaining eligibility. Grade level is based on the number of units you have completed at SWC, including any official transfer units already on file at SWC. Units taken at other colleges that have not yet been transferred to SWC will not be counted.

Students who do not qualify for a subsidized loan because they have no demonstrated financial need may still be eligible for an unsubsidized loan.

The minimum loan SWC will certify is $100. If your eligibility is less than $100, you will not receive a loan.

Annual Loan Limits

Your annual loan limit is the maximum you can borrow in a single academic year. The amount depends on your grade level and whether you are classified as a dependent or independent student. Most students under age 24 are considered dependent, meaning your parents' income is factored into your financial aid. You are considered independent if you are 24 or older, married, a veteran, on active duty, have legal dependents of your own, are an orphan or ward of the court, are an emancipated minor, or are homeless or at risk of homelessness. Contact the Financial Aid Office if you have additional questions about your specific situation.

Grade Level

Subsidized Maximum

Combined Sub/Unsub Maximum

0 to 29.9 units completed

Dependent: $3,500

Independent: $3,500

Dependent: $5,500

Independent: $9,500

30 or more units completed

Dependent: $4,500

Independent: $4,500

Dependent: $6,500

Independent: $10,500

Aggregate Loan Limits

The aggregate limit is the total amount you can borrow across your entire undergraduate career at all schools combined, not just SWC. Once you reach this limit you cannot borrow any additional federal loans. The same dependent and independent definitions above apply here as well.

Dependency Status	Subsidized Maximum	Combined Sub/Unsub Maximum
Dependent Students	$23,000	$31,000
Independent Students	$23,000	$57,500

Important: New Lifetime Borrowing Limit Beginning July 1, 2026

Starting with the 2026-2027 award year, a new lifetime borrowing limit of $257,500 applies to all federal student loans combined: undergraduate, graduate, and professional borrowing together. This limit is separate from the undergraduate aggregate limits shown above. It includes all loans ever borrowed, even amounts that have already been repaid, forgiven, or canceled. If you plan to continue your education beyond an associate or bachelor's degree, keep this lifetime limit in mind as you decide how much to borrow now.

Interest Rates

Interest rates for Direct Loans are set annually by the U.S. Department of Education based on the May Treasury auction. Each loan you take out receives the rate in effect at the time of its first disbursement, and that rate is then fixed for the life of that loan. Each new loan you take out may carry a different rate.

Loan Type	Disbursement Period	Fixed Interest Rate
Direct Subsidized and Unsubsidized (Undergraduate)	7/1/2024 - 6/30/2025	6.53%
Direct Subsidized and Unsubsidized (Undergraduate)	7/1/2025 - 6/30/2026	6.39%
Direct Subsidized and Unsubsidized (Undergraduate)	7/1/2026 - 6/30/2027	6.52%*

*The 2026-2027 rate is based on the May 2026 Treasury auction and is pending official confirmation from the U.S. Department of Education. This page will be updated once the official rate is published

Federal law limits how high undergraduate Direct Loan interest rates can go, regardless of market conditions. The maximum allowable rate for Direct Subsidized and Unsubsidized Loans for undergraduate students is 8.25%. Current rates are well below this limit, but this cap protects borrowers if economic conditions change significantly in a future year.

Origination Fee

All Direct Loans have an origination fee that is deducted from your loan before it is paid out to you. For loans disbursed on or after October 1, 2020, the origination fee is 1.057%.

For example, if you borrow $1,000, the origination fee of $10.57 is deducted first and you receive $989.43. Keep this in mind when deciding how much to borrow because the amount you receive will always be slightly less than the amount you requested.

Types of Loans

Federal Loan Limits

Interest Rates

Origination Fee

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