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Federal Direct Stafford Loans

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:

  • be a U.S. Citizen or eligible non-citizen (Learn more)
  • maintain satisfactory academic progress
  • not be in default on a prior educational loan(s)
  • be matriculated and registered for a minimum of 6 undergraduate credits per semester.

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:

  • show financial need

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:

  • not borrow in excess of the Cost of Attendance

Federal Direct PLUS Loan
Direct PLUS Loans are federal loans that parents of dependent undergraduate students can use to help pay for college.
The 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:

  • Be the parent of a dependent student
  • The parent must be U.S. Citizens or eligible non-citizen
  • The parent must be able to pass a credit check
  • The parent must not be in default of any loan or owe an overpayment for FSA grant

 

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

Dependent Students

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 $2,000 per year

up to $6,500 per year

undergraduate aggregate maximum

up to $23,000

up to $8,000

up to $31,000

Independent Students

Base Amount (may be subsidized or unsubsidized)

Additional Unsubsidized Amount

Total Subsidized & Unsubsidized Amount

1st year - fewer than 30 credits earned

up to $3,500 per year

up to $6,000 per year

up to $9,500 per year

2nd year - 30 or more credits earned

up to $4,500 per year

up to $6,000 per year

up to $10,500 per year

undergraduate aggregate maximum

up to $23,000

up to $34,500

up to $57,500

Origination Fees
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 
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:

  • First-time Direct Loan borrowers at KCC, must complete an Entrance Counseling. If you are a first-time Direct Loan borrower at KCC, you must sign an Electronic Master Promissory Note
  • Decide the amount you wish to borrow (refer to the maximum loan amount table above)
  • Complete and submit an online Federal Direct Loan Request 
    Click here for a step-by-step guide on how to apply for a Direct Loan online.

    A paper application is also available under downloadable forms, which may be completed and submitted to the Financial Aid Office in Room U201.


    Increasing/Decreasing/Canceling a Direct Loan: Students who wish to increase, decrease or cancel a Direct Loan before the funds disburse must complete and submit a Direct Loan Adjustment Request, to the Financial Aid Office.

How to Apply for a Federal Direct PLUS Loan:

  • A PLUS Loan request can be found under downloadable forms, the form must be completed in its entirety and submitted to the financial aid office
  • After the credit check is approved, the parent must Complete an Electronic Master Promissory Note for the Parent Plus Loan
  • Once the loan is processed by the Financial Aid Office a "disclosure statement" notification will be sent to the parent.
  • If the credit check is denied the student will have the option to borrow additional Unsubsidized Loan amounts, a student should inquire with the Financial Aid Office for additional information.

What Happens Next:

  • It takes approximately two weeks for a loan to be processed by KCC
  • If an online loan request is submitted, the student will receive a confirmation via e-mail as notification that the loan has been processed by the school. If a paper application has been submitted a disclosure statement follows.
  • Your request will be processed after we have determined that:
            a. you have filed a FAFSA for the current academic year;
            b. the information you provided on your FAFSA is correct;
            c. you have registered for at least 6 credits or the equivalent
  • The Bursar’s Office will be notified about your request-in-progress within 3 to 5 business days.
  • Once your request has been submitted the student will be sent a Loan Disclosure Statement in the mail  from the Dept. of Education,  that summarizes information about the type of loan, the approved amounts and the estimated dates of disbursement
  • Your electronic Master Promissory Note (e-MPN) must be acknowledged and approved by the Dept. of Education before any funds can be authorized for disbursement
    • Note: if you previously signed an MPN that did not result in a disbursement of Direct Loan funds, you must resign your MPN for any new loan requests
  • Your loan will be disbursed in at least 2 installments. The first disbursement can be no more than 1/2 of the total approved loan amount. For loans covering the full academic year (Fall & Spring semesters), each disbursement will be about 30 days after the start of the fall and spring semester respectively. For loans covering one semester, the second disbursement will occur midway through the semester
  • Your class attendance will be checked to make sure you actually began attending your classes and are continuing to attend on at least a half-time (6 credit) basis prior to the release of any loan funds. If you receive a disbursement of Direct Loan funds for classes you have never attended, you must return the entire payment immediately to the College.             
  • The Bursar may deduct unpaid tuition charges from your loan before releasing funds to you.
  • You will be notified via e-mail as to the date your funds become available. The portion of your loan not deducted for tuition charges will be issued as a payment to your CUNY Scholar Support Prepaid Card or direct deposited to your personal bank account on the scheduled disbursement date. If you have not elected the prepaid card or direct deposit options, your loan proceeds will be available as a check mailed to your home

Alternative Loans:
Alternative loans, also called private loans, are used at KCC by students and their families when:

  • the student is not eligible for Federal Direct Loans because they do not meet the federal eligibility requirements
  • the student is receiving the maximum Federal Direct Loans allowed for a particular loan period but still needs additional funds to meet the cost of attendance
  • Alternative loan costs vary widely between lenders. All private lenders will review the borrower’s credit history and some will require a co-signer. The Office of Financial Aid at KCC does not endorse or recommend any particular alternative loan program or any particular private lender. Students and their families should carefully consider the interest rates, loan fees, and terms of the alternative loan program before deciding on a private lender
  • Some alternative loan programs have restrictions regarding the minimum number of credits for which the student must enroll, as well as the requirement that the student must be matriculated (enrolled in a degree program)

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.



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