Loans

Federal Direct Subsidized and Unsubsidized Loans are the most commonly used loans for domestic students. Federal loans are available to undergraduate and graduate students who are U.S. citizens, permanent residents, or eligible noncitizens. If you submit the Free Application for Federal Student Aid (FAFSA), you will have your federal loan eligibility offered to you as a part of your financial aid offer letter.

Direct Subsidized loans are offered to undergraduate students with demonstrated financial need as calculated by the FAFSA, while Direct Unsubsidized loans are available for all undergraduate and graduate students who submit the FAFSA. For Subsidized loans, the U.S. Department of Education pays the interest while students are enrolled at least half-time (6 credits required for degree completion or more). Interest accrues on Unsubsidized loans while students are in school and on both types of loans after students leave school. Students can elect to pay the interest as it accrues if they wish. If not paid, interest will be capitalized with the loan principal when repayment begins.

Undergraduate Maximum Loan Amounts

	Year in School	Annual Maximum Total	Annual Maximum Subsidized
Dependent Students	1st Year	$5,500	$3,500
	2nd Year	$6,500	$4,500
	1st Year	$7,500	$5,500
Independent Students	3rd Year	$9,500	$3,500
	2nd Year	$10,500	$4,500
	3rd Year	$12,500	$5,500

The lifetime borrowing limit is $31,000 for dependent students and $57,500 for independent students, of which up to $23,000 can be Subsidized.

Graduate Maximum Loan Amounts

Graduate students can borrow up to $20,500 per academic year of the Unsubsidized Loan. The lifetime borrowing limit is $138,500, including any undergraduate loans.

Undergraduate Subsidized/Unsubsidized Loan Interest Rates

• For loans first disbursed between 7/1/2024-6/30/2025, the interest is 6.53%.
• For loans first disbursed between 7/1/2023-6/30/2024, the interest is 5.50%.

Graduate Unsubsidized Loan Interest Rates

• For loans first disbursed between 7/1/2024-6/30/2025, the interest is 8.08%.
• For loans first disbursed between 7/1/2023-6/30/2024, the interest is 7.05%.

These interest rates are fixed for the life of the loan. Interest rates are subject to change each July 1st or as mandated by Congress.

Origination Fee

The Department of Education deducts a loan fee proportionately from each loan disbursement you receive, called an origination fee. For loans first disbursed on or after Oct. 1, 2020, and before Oct. 1, 2025, the Subsidized/Unsubsidized origination fee is 1.057%.

Origination fees are subject to change each October 1st or as mandated by Congress.

Receiving Your Loan

In order to receive a loan, you must “Accept” the loan(s) offered to you on your Financial Aid Dashboard. In addition, you must also complete a Master Promissory Note and Loan Entrance Counseling. Students must be enrolled at least half-time (6 credits required for degree completion) to receive a federal loan.

Generally, loans are disbursed (paid out) at the beginning of each term. Loan funds are applied to the student’s tuition and fee bill. If financial aid funds applied to the bill for the semester exceed the tuition and fees charged, a refund will be issued by ArtCenter to the student. Students can elect to receive refunds via mailed paper check or direct bank deposit.

Can I cancel my loan?

Students have a right to cancel all or a portion of a loan disbursement within 120 days of the date the school disbursed the loan money (by crediting the loan money to the school, by paying it directly to the students, or both). If a student elects to cancel a loan that has already been disbursed, the loan funds received will have to be returned, but no interest or fees will be charged. If a student elects to cancel a loan after funds have already been applied to their tuition bill, they may owe a balance to ArtCenter.

Repayment

Loan repayment begins six months after graduation, or after enrollment drops below half-time (6 credits). Students who leave school or drop below half-time must complete Loan Exit Counseling. After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you are required to begin repayment. During this period, you will receive repayment information from your Direct Loan servicer, and you will be notified of your first payment due date.

Payments are usually due monthly. The standard repayment period is 10 years but can be as long as 25 years depending on total borrowing and chosen repayment plan. You can learn more about repaying your loan here, view a sample repayment schedule here, and simulate your loan payments here.

What is a grace period?

The grace period is a set period of time after you graduate, leave school, or drop below half-time enrollment before you must begin repayment on your loan. The grace period gives you time to get financially settled and to select your repayment plan. Direct Subsidized Loans and Direct Unsubsidized Loans have a six-month grace period before payments are due. Not all federal student loans have a grace period. Note that for most loans, interest will accrue during your grace period.

What if I have trouble repaying my loan?

If you are unable to make your scheduled loan payments, contact your loan servicer immediately. Your servicer can help you understand your options for keeping your loan in good standing. For example, you may wish to change your repayment plan to lower your monthly payment or request a deferment or forbearance that allows you to temporarily stop or lower the payments on your loan. Learn more about deferment or forbearance options.

Loan Forgiveness

There are some circumstances that may result in your no longer having to repay your federal student loan. For instance, some or all of your federal loan(s) could be forgiven in exchange for your performing certain types of service such as teaching or public service, or the obligation to make further payments on your loan might be discharged based on specific factors such as your school closing or your becoming totally and permanently disabled. Find out what circumstances qualify your loans for forgiveness, cancellation, or discharge.

In addition to the Direct Subsidized and Unsubsidized Loans, the Federal Direct PLUS Loan is a credit-based loan available to:

1. parents of dependent undergraduate students to borrow on their student’s behalf (Parent PLUS loan), or
2. graduate students to borrow on their own behalf (Graduate PLUS loan).

Students will not have this loan included in their financial aid offer. Parents or graduate students must apply separately for this loan via StudentAid.gov and may borrow up to the student's total cost of attendance, minus all other financial aid.

Application:

• Parent PLUS Loan Application – for parents of dependent undergraduate students to borrow on the student’s behalf; the parent is the borrower and responsible for repayment.
• Graduate PLUS Loan Application – for graduate students to borrow on their own behalf. Graduate students should borrow their maximum Direct Unsubsidized Loan eligibility before borrowing a PLUS loan.

Eligibility:

The PLUS loan is available to credit-worthy parents of dependent undergraduate students or graduate students who have submitted a FAFSA, regardless of financial need. To be approved, the applicant must not have an adverse credit history. Conditions that result in an adverse credit history include:

• • One or more debts with a total combined outstanding balance greater than $2,085 that are 90 or more days delinquent or that have been placed in collection or charged-off (written off) during the two years preceding the date of the credit report.
  • Having been subject to any of the following conditions during the five years preceding the date of the credit report: default determination, discharge of debts in bankruptcy, foreclosure, repossession, tax lien, wage garnishment, or write-off of a federal student aid debt.

How to Apply:

You must sign in to StudentAid.gov using your own FSA ID, request a PLUS loan using the links in the Application section above, and complete a Master Promissory Note (MPN), agreeing to the terms of the loan. Graduate or professional students who have not previously received a federal loan will also be required to complete Loan Entrance Counseling.

A credit check will be conducted once you submit the loan application. If you are approved, the Department of Education will send us confirmation of your loan approval and the details of the requested amount. The loan will be added to the student’s financial aid award after processing. If you have a credit freeze on your account, you will need to lift it before applying for the PLUS Loan.

Options if Denied:

If you are denied a PLUS loan because of adverse credit, you may:

• • • Reapply with a credit-worthy cosigner (also called an endorser).
    • Appeal the denial with the Department of Education if there are extenuating circumstances related to your credit history that you can document.

If you were initially denied the PLUS loan but have since qualified by obtaining an endorser or documenting extenuating circumstances, you will also be required to complete PLUS Credit Counseling, which can be completed at StudentAid.gov.

Graduate PLUS and Parent PLUS Loan Interest Rates

• • • For loans first disbursed between 7/1/2024-6/30/2025, the interest is 9.08%.
    • For loans first disbursed between 7/1/2023-6/30/2024, the interest is 8.05%.

These interest rates are fixed for the life of the loan. Interest rates are subject to change each July 1st or as mandated by Congress.

Interest accrues while the student is in school, during any grace period, and during repayment. You can pay the interest as it accrues if you wish. If not paid, interest will be capitalized with the loan principal when repayment begins.

Origination Fee

The Department of Education deducts a loan fee proportionately from each loan disbursement you receive, called an origination fee. For loans first disbursed on or after Oct. 1, 2020, and before Oct. 1, 2025, the PLUS loan origination fee is 4.228%.

Origination fees are subject to change each October 1st or as mandated by Congress.

How much to request:

Unlike the Subsidized and Unsubsidized Loans, there is not an annual borrowing limit for the PLUS Loan. When completing your application, you must indicate the amount of the PLUS Loan you would like to borrow. Students can review their bill (Account Activity) on the Finance Dashboard on Inside after they are registered for classes to estimate any remaining out of pocket cost they owe to ArtCenter. Borrowers can request:

• • • the “Maximum” amount of loan (which will be calculated as the student’s cost of attendance minus all other financial aid awarded), or
    • a specific dollar amount. Please keep in mind the loan period for which you are requesting the loan, and the loan origination fee withheld from each disbursement when calculating your request.

If you need assistance in calculating how much you would like to borrow accommodating the loan origination fee, please explore this PLUS Loan Calculator.

While it is an option, do not request an “Unknown” loan amount as we cannot process this request. If you select Unknown, we will need to contact you to specify the loan amount you wish to borrow.

Receiving Your Loan

Students must be enrolled at least half-time (6 credits required for degree completion) to receive a federal loan.

Generally, loans are disbursed (paid out) at the beginning of each term. Loan funds are applied to the student’s tuition and fee bill. If financial aid funds applied to the bill for the semester exceed the tuition and fees charged, a refund will be issued by ArtCenter to the student, or the parent if requested on the Parent PLUS Loan application. Students can elect to receive refunds via mailed paper check or direct bank deposit. Parents can only receive refunds via mailed paper check.

Can I cancel my loan?

Borrowers have a right to cancel all or a portion of a loan disbursement within 120 days of the date the school disbursed the loan money (by crediting the loan money to the school, by paying it directly to the student/borrower, or both). If a borrower elects to cancel a loan that has already been disbursed, the loan funds received will have to be returned, but no interest or fees will be charged. If a borrower elects to cancel a loan after funds have already been applied to the tuition bill, the student may owe a balance to ArtCenter.

Repayment

If you receive a Direct PLUS Loan as a graduate or professional student, you do not have to make any payments while you are enrolled in school at least half-time, and for an additional six months after you graduate, leave school, or drop below half-time enrollment.

If you are a parent borrower, you will generally be expected to start making payments on your Direct PLUS Loan after the loan is fully disbursed (paid out). However, you may request a deferment while your child is enrolled at least half-time and for an additional six months after your child graduates, leaves school, or drops below half-time enrollment. You do not have to make any payments while your loan is deferred. You will have the option of requesting a deferment as part of the loan application. You can also contact your servicer to request a deferment.

During any period when you are not required to make payments, interest will accrue on your loan. All borrowers may choose to pay the accrued interest or allow the interest to be capitalized (added to your loan principal balance) when you have to start making payments. Your loan servicer will notify you when your first payment is due.

Repayment Plans

There are several repayment options available that are designed to meet the individual needs of borrowers. Some repayment plans are not available to Parent PLUS Loan borrowers. Your loan servicer can help you understand which repayment options are available to you.

Payments are usually due monthly. The standard repayment period is 10 years but can be as long as 25 years depending on the total borrowing and chosen repayment plan. Payments are made to your Direct Loan servicer each month. You can learn more about repaying your loan here, view a sample repayment schedule here, and simulate your loan payments here.

What if I have trouble repaying my loan?

If you are unable to make your scheduled loan payments, contact your loan servicer immediately. Your servicer can help you understand your options for keeping your loan in good standing. For example, you may wish to change your repayment plan to lower your monthly payment or request a deferment or forbearance that allows you to temporarily stop or lower the payments on your loan. Learn more about deferment or forbearance options.

Loan Forgiveness

There are some circumstances that may result in your no longer having to repay your federal student loan. For instance, some or all of your federal loan(s) could be forgiven in exchange for your performing certain types of service such as teaching or public service, or the obligation to make further payments on your loan might be discharged based on specific factors such as your school closing or your becoming totally and permanently disabled. Find out what circumstances qualify your loans for forgiveness, cancellation, or discharge.

Private educational loans are loans offered by banks and private lending institutions, rather than by the federal government. Students who are not eligible for federal loans, or who require additional funding beyond the maximum loan amounts under the federal student loan program, may wish to explore private loans.

Borrowers wishing to pursue a private educational loan will need to apply directly through the lender of their choice. Borrowers can compare private loan options at Fast Choice. It is important to apply early as processing may take several weeks.

Borrowers may apply for a private loan up to the estimated cost of attendance minus all other financial aid received. Loan approval is based on the borrower’s creditworthiness and ability to pay the loan rather than calculated financial need. Often a credit-worthy co-borrower is required, called a “co-signer.”

Interest rates, loan fees, and repayment schedules vary among lenders. Private loans can have variable or fixed interest rates, which may be higher or lower than the rates on federal loans depending on the borrower’s circumstances. Some lenders require interest payments while the student is in school. Most lenders require repayment of principal and interest to start within six months of the student's separation from school.