The Federal Direct Loan Program provides federally insured, low-interest, long-term loans to you or your parents to help you cover the costs of attending college. The Federal Government is your lender, not a bank or other lending institution, and makes the loan directly to you or your parents through the school. The school determines your eligibility, calculates the loan amount, and disburses the money. Once the loan is made, it is managed and collected by the U.S. Department of Education. Your Direct Loan is money that is borrowed and must be repaid with interest after you leave school.Students seeking a loan under the William D. Ford Federal Direct Loan Program must complete a
Free Application for Federal Student Aid (FAFSA) to determine their eligibility.
Requirements for William D. Ford Federal Direct Loans
To be eligible for a Federal Direct Loan, a student must:
There are four (4) types of Federal Direct Student Loans
Federal Direct Subsidized Loan:
Direct Subsidized Loans are made to undergraduate students who have a financial need to help cover the cost of college. Eligibility for this loan is based on the information you provided on the FAFSA. The
interest on this type of loan is paid by the Federal government while a student is attending college and during other deferment periods.
To be eligible for a Subsidized Federal Direct Loan, in addition to the Federal Direct Loan requirements, the applicant must also:
MAXIMUM A STUDENT CAN BORROW IN SUBSIDIZED LOANS
COST OF ATTENDANCE -
EXPECTED FAMILY CONTRIBUTION – Estimated financial assistance= ESTIMATED FINANCIAL NEED
Federal Direct Unsubsidized Loan:
Direct Unsubsidized Loans allows students to borrow money in addition to any subsidized loan amounts for which you may be eligible; the student does not have to demonstrate financial need. The
interest on this type of loan is paid by the student while attending school or the interest is accrued and added to the principal loan amount. To be eligible for an Unsubsidized Federal Direct Loan in addition to the Federal Direct Loan requirements, the applicant must also:
Federal Direct PLUS Loan
Direct PLUS Loans are federal loans that parents of dependent undergraduate students can use to help pay for college.
interest rate is fixed. Interest is charged from the date of the first disbursement until the loan is paid in full. The parent will pay an
origination fee, deducted proportionately each time a loan disbursement is made.
The annual limit on a PLUS Loan is equal to the student's cost of attendance minus any other financial aid the student receives. For example, if the cost of attendance is $6,000 and the student receives $4,000 in other financial aid, the student's parent can request up to $2,000 in a PLUS Loan.
In most cases, the loan will be disbursed in at least two installments, and no installment will be more than half the loan amount. The college will use the loan funds to pay the student's tuition, fees, room and board, and other school charges (in that order.) If any loan funds remain, the parent will receive the remaining amount as a check or other means. Any remaining loan funds must be used for the student's educational expenses.
The repayment period for a Direct PLUS Loan begins at the time the PLUS loan is fully disbursed, and the first payment is due within 60 days after the final disbursement. However, for Direct PLUS Loans with a first disbursement date on or after July 1, 2008, the parent may defer repayment while the student for whom the PLUS Loan was borrowed is enrolled at least half-time, and for an additional six months after the student ceases to be enrolled at least half-time. Interest will continue to accrue during periods of deferment.To be eligible for a Federal Direct PLUS Loan, in addition to the Federal Direct Loan requirements, the applicant must also:
MAXIMUM A STUDENT CAN BORROW IN UNSUBSIDIZED AND PLUS LOANS
COST OF ATTENDANCE - ESTIMATED FINANCIAL ASSISTANCE = MAXIMUM LOAN AMOUNT
Federal Direct Consolidation Loan:The Direct Consolidation Loan allows a student to combine all eligible loans borrowed from different Federal Loan programs into one new loan with a new (possibly lower) interest rate and repayment schedule. The student will also have only one loan servicer once the loans are consolidated.
Maximum Annual Loan Amounts
Base Amount (may be subsidized or unsubsidized)
Additional Unsubsidized Amount
Total Subsidized and Unsubsidized Amount
1st year - fewer than 30 credits earned
up to $3,500 per year
up to $2,000 per year
up to $5,500 per year
2nd year –30 or more credits earned
up to $4,500 per year
up to $6,500 per year
undergraduate aggregate maximum
up to $23,000
up to $8,000
up to $31,000
Total Subsidized & Unsubsidized Amount
up to $6,000 per year
up to $9,500 per year
2nd year - 30 or more credits earned
up to $10,500 per year
up to $34,500
up to $57,500
Origination fees are fees that are a percentage of the total loan amount. The loan fee is deducted proportionately from each loan disbursement students receive. This means the money a student receives will be less than the amount actually borrowed. Students are responsible for repaying the entire loan amount borrowed and not just the amount received.
The origination fee for the corresponding year in which a student requested federal student loans can be found on the
Federal Student Aid Website.
Interest rates for all federal student loans and for the corresponding year in which a student requested federal student loans can be found on the
Federal Student Aid Website.
How to Apply for a Federal Direct Student Loan:
How to Apply for a Federal Direct PLUS Loan:
What Happens Next:
Alternative loans, also called private loans, are used at KCC by students and their families when:
Students and parents who are eligible for Federal Direct Loan funds should always borrow through the Federal Direct Loan program before turning to alternative loans to finance their education.