Federal Direct Loans
The Federal Direct Loan Program provides low-interest loans to students to help cover educational costs not paid by other sources of financial aid. This is a loan and will require repayment. Please carefully review the following information before accepting a loan.
Repayment of the Federal Direct Loan begins 6 months after you graduate or 6 months after you drop below half-time status.
Federal Direct Subsidized Loan
This is a need-based loan for which the government pays the interest while you are in school at least half-time.
Interest will begin to accumulate at the start of your 6-month grace period (the period of time before repayment, which occurs after you are no longer in school at least half-time).
Federal Direct Unsubsidized Loan
There is no financial need requirement to be eligible for an Unsubsidized Loan. However, total financial aid, which includes the Unsubsidized Loan, cannot exceed the cost of attendance.
Unlike the Subsidized Loan, interest accumulates while you are attending school and can be paid monthly or capitalized (added to the total loan balance) until you leave school.
Who Can Borrow?
You may be eligible to borrow if you meet the following requirements:
- Are eligible to receive financial aid
- Are enrolled in an eligible degree-seeking program or certain certificate programs
- Have educational costs not covered by other types of financial aid
- Are enrolled in, attend and maintain at least 6 credit hours during the semester
- Have shown an ability to benefit
- Are making Satisfactory Academic Progress (SAP) according to the standards established by federal regulations and Owens Community College
If you are a first-time borrower, you must also complete the Federal Direct Loan Entrance Counseling and Master Promissory Note.
Review Eligibility Requirements
How Much Can a Student Borrow?
A student loan can only be used for educational costs not covered by other sources of financial aid. Factors that affect your loan eligibility include:
- The cost of attendance for the loan period
- The Student Aid Index (SAI), as determined by the information provided on your Free Application for Federal Student Aid (FAFSA®)
- The total amount of any other financial aid awarded
Therefore, you may not be eligible for the maximum amounts. Conservative borrowing is strongly encouraged.
Federal Direct Subsidized Loans
- Federal Direct Subsidized Loans are based on financial need.
- The federal government pays the interest while you are in school at least half-time (6 credit hours).
- The minimum loan amount is $200.
Federal Direct Unsubsidized Loans
- Federal Direct Unsubsidized Loans are not based on financial need.
- Interest accumulates on this loan while you are enrolled in school.
- You can choose to make interest payments while in school, or have the interest added to your total loan balance (this is called capitalization).
Loan Limits
Review the maximum amount you can borrow for each academic year, along with the aggregate limits.
Annual Federal Direct Loan Limits
These are the maximum combined subsidized and unsubsidized loan limits.
| Student Type | Freshmen and students in certificate programs | Sophomore* in an Associate’s Degree program |
|---|---|---|
| Dependent Undergraduate Student | $5,500 (up to $3,500 may be subsidized) |
$6,500 (up to $4,500 may be subsidized) |
| Independent Undergraduate Student | $9,500 (up to $3,500 may be subsidized) |
$10,500 (up to $4,500 may be subsidized) |
* 30 or more non-developmental credit hours must be completed for sophomore status.
Aggregate Borrowing Limits
This is the total borrowed over time while attending a two-year or four-year college. The aggregate limit does not increase until you are enrolled in a master’s or doctoral program.
| Student Type | Borrowing Limit |
|---|---|
| Dependent Undergraduate Student | $31,000 (of which no more than $23,000 can be subsidized) |
| Independent Undergraduate Student | $57,500 (of which no more than $23,000 can be subsidized) |
Beginning July 1, 2026, there is a lifetime limit of $257,500 which may be borrowed for undergraduate, graduate, and professional coursework. For students who were enrolled prior to July 1, 2026, this lifetime limit does not apply for up to 3 years as long as a Direct Loan was previously disbursed for the same program of study.
Costs of Getting a Loan
Origination Fee
To receive a Federal Direct Loan, you will be charged an origination fee, which is deducted from the loan before funds are disbursed. For loans first disbursed between October 1, 2020, and September 30, 2026, the origination fee is 1.057%.
Interest
The federal government pays the interest for the Federal Direct Subsidized Loan while you are in school at least half-time and during the grace period. Interest charges for the Federal Direct Unsubsidized Loan begin accumulating once the funds are disbursed. The interest rate is set when the loan is disbursed.
| Federal Direct Subsidized and Unsubsidized Loans Disbursement Date | Interest Rate |
|---|---|
| Between July 1, 2025, and June 30, 2026 | 6.39% fixed |
Active-Duty U.S. Military Service Members
Eligible active-duty U.S. Military Service Members may request a 6% cap on their Federal Direct Loans and Federal Family Education Loans which were obtained prior to entering active duty.
In addition, certain members of the U.S. Military Service serving in a hostile area may be able to request an interest rate of 0% from the Federal Direct Loan Program. Eligible borrowers should contact the servicer for further details.
How the Loan Process Works
Step 1: The loan is awarded.
Your expected loan amount is determined once Owens receives a complete, processed FAFSA® and has reviewed the applicable eligibility criteria. Amounts are calculated using federal and institutional guidelines.
Your loan can be processed only through the last day of classes for the semester(s) for which it is intended. Applying early is recommended. Late applicants may not meet all of the eligibility criteria by the deadline.
Step 2: You accept the loan and complete Entrance Counseling and the Master Promissory Note.
You will receive a notice in your Owens email account when your awards are available to view online. Once you receive the notice, you must respond to your award package. You should keep a copy of your award notice for your records.
If you have not previously completed the online Federal Direct Loan Entrance Counseling and a Federal Direct Loan Master Promissory Note, these will be posted to your account as items for you to complete at StudentAid.gov before loan funds can be disbursed.
Loans will be cancelled if Owens does not receive verification of entrance counseling and MPN completion within 170 days after the last date of enrollment for the loan period or the end of the spring semester, whichever is earlier.
If you would like to cancel all or a portion of your loan after you have accepted it, please email Student Financial Services.
Step 3: You receive a disclosure statement.
Owens submits your loan information to the U.S. Department of Education, the lender for the Federal Direct Loan program.
The U.S. Department of Education will then send you a Plain Language Disclosure and a Disclosure Statement that indicate the anticipated disbursement dates and amounts. You should keep these for your records. The specific terms and conditions that apply to a loan will be provided on the disclosure statements and Master Promissory Note.
Step 4: The loan is disbursed.
Once disbursements begin for the semester, Owens will apply the loan funds to your Owens account, as long as you are enrolled in at least six credit hours, meet eligibility requirements, and have been verified as attending at least six credit hours of coursework at the time of the loan disbursement.
All loan funds are disbursed in a minimum of two disbursements:
- If your loan is for two or more semesters, one disbursement will occur for each semester. If your loan is for only one semester, it will be disbursed in two separate payments during the semester.
- The second disbursement will be issued when half the semester has been completed.
For first-year, first-time borrowers, federal regulations require that loan funds not be disbursed until 30 days after the start of classes.
Any amount remaining after tuition, fees, and authorized charges have been paid will be refunded to you by the Office of Student Accounts. Funds will be disbursed to you based on the refund preference you selected.
Step 5: You establish an account with your servicer.
Once the loan has been disbursed, you may receive a notice from your student loan servicer. The Direct Loan Servicer collects payments, processes deferment and forbearance requests and handles correspondence on behalf of the Federal Direct Loan program. You can also identify your loan servicer by checking StudentAid.gov.
You should set up an online account with your servicer as soon as possible and notify them of any name, address, phone number or email address changes.
Step 6: You complete exit counseling.
Shortly before you graduate or drop below half-time status, you must complete Exit Counseling at StudentAid.gov.
Step 7: You repay the loan.
Once you have graduated or are no longer enrolled at least half-time (6 credits or more), you will receive a one-time, 6-month grace period, after which you will begin repayment of the loan.
You are encouraged to pay the interest on your Federal Direct Unsubsidized Loan while in school. This will prevent accrued interest from being added to the total loan balance (this is called capitalization) when repayment begins. Please contact the loan servicer for payment instructions.
Special benefits and repayment options are available for members of the U.S. Armed Forces (PDF).
What if I Stop Attending Class?
If you do not complete all classes in which you are enrolled for the semester, federal regulations may require that the school return a portion or the full amount of the loan to the U.S. Department of Education. In addition, you must complete Federal Direct Loan Exit Counseling before you stop attending Owens at least half-time or before you graduate.
What if I Default on My Loan?
Making student loan payments on time is one of the easiest ways to establish a good credit history. A good credit rating will serve you well as you move forward in life. Contact your loan servicer immediately if you are having difficulty repaying your loan. Your servicer can provide free advice and assistance, including deferment and forbearance options. You may also qualify for reduced monthly payments based on your income.
Avoid companies that promise to eliminate your debt or resolve your default—they will often pressure you to pay up front for services that are available to you at no cost through your federal loan servicer. They may also promise immediate results, demand that you sign an authorization, or ask for your FSA ID.
Learn how to protect yourself from loan forgiveness scams.
Failure To Make Payment
If loan payments are not made and the delinquency is not resolved, your loan will go into default. Default means that you have failed to make payments on the student loan(s) according to the terms of the Master Promissory Note (MPN).
If your loan defaults:
- Your wages can be garnished.
- Your federal and state income tax refund(s) can be withheld.
- Your default will be reported to a national credit bureau, and will make it difficult for you to make major credit purchases such as a new car or home.
- You will lose eligibility for additional federal financial aid.
- You may be denied professional licenses to practice an occupation.
- The entire unpaid balance of your loan, plus any accrued interest, is due immediately, and you lose eligibility for deferment, forbearance and repayment plans.
- You may be subject to legal action and additional collection costs.
Contact Us
Student Financial Services (SFS)
Student Financial Services helps you with tuition, payment plans and financial aid at Owens Community College.
Phone: (567) 661-7777
Fax: (567) 661-7414
Send SFS an email.
FAFSA® is a registered trademark of the U.S. Department of Education.