Types of Loans, Limits & Interest Rates

 Types of Loans

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. See Annual and Aggregate Loan Limits below.

Dependent students whose FAFSA is rejected because they did not include parent information may be allowed to borrow from unsubsidized loan only.  Such students must contact the Financial Aid Office and request instructions directly from the loan specialist.  

The minimum loan that Southwestern College will certify is $100. Students with less than $100 of eligibility will not receive a loan.

Annual and aggregate loan limits

Annual loan limits Subsidized maximum Combined Sub / Unsub maximum
Grade level 1 (0 to 29.9 units completed)* Dependent: $3,500
Independent: $3,500
Dependent: $5,500
Independent: $9,500
Grade level 2 (30 or more units completed)* Dependent: $4,500
Independent: $4,500
Dependent: $6,500
Independent: $10,500
Aggregate loan limits Subsidized maximum Combined Sub / Unsub maximum
Dependent Students $23,000 $31,000
Independent Students $23,000 $57,500

*Grade level is based on units either earned at Southwestern College or already transferred and accepted to Southwestern
College. Students for whom our records show less than 30 units earned at Southwestern College or already transferred to
Southwestern College will be considered Grade level 1 for loan purposes. Units taken at other colleges previously and not yet
transferred to Southwestern College will not be considered.

Interest Rates

The interest rates below are effective for all Direct Loans with a first disbursement on or after July 1, 2023. 

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
Before
2023-24 Fixed
Interest Rate
Interest Rate
Cap
Direct subsidized and unsubsidized  loans 7/1/2023 7/1/2024 5.50% 8.25%

Fees

Borrowers are required to pay an origination and insurance fee.  These fees are deducted from the proceeds of the loan.  For loans disbursed before October 1, 2023, the origination fee is 1.057%.  For loans disbursed on or after October 1, 2023, the origination fee is 1.057% (no change this year).  If your loan is certified prior to the October fee change date, but cannot be disbursed prior to October 1 (ex. missing promissory note, Entrance Counseling not complete, etc.), then your loan will be cancelled and reinstated with the new fees (not applicable this year due to no fee change).