Student in the Library, Graduating Students, Students in the Classroom
Federal School Code 005753

Federal Direct Loan Information

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.

Who Can Borrow?

A student may be eligible to borrow if he or she meets the following requirements:

  • Is eligible to receive financial aid as described on the "Eligibility Requirements" page.
  • Is enrolled in an eligible degree-seeking program or certain certificate programs.
  • Has educational costs not covered by other types of financial aid.
  • Is enrolled in, attends and maintains at least 6 credit hours during the semester.
  • Has shown ability to benefit as described on the "Eligibility Requirements" page.
  • Is making Satisfactory Academic Progress (SAP) according to the standards established by federal regulations and Owens Community College.

First-time borrowers, in addition to the above requirements, must complete the Federal Direct Loan Entrance Counseling and Master Promissory Note.

How Much Can a Student Borrow?

A student loan can only cover educational costs not met by other sources of financial aid. The table below shows the maximum amount a student at Owens Community College can borrow for each academic year along with the aggregate limits. Loan eligibility is determined by the Office of Financial Aid. Factors taken into account are the cost of attendance for the loan period, the Expected Family Contribution (EFC) as determined by the information provided on the student's Free Application for Federal Student Aid (FAFSA) and the total amount of any other financial aid awarded. Therefore, the student 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 the student is in school at least half time (6 credit hours).
  • Students who are new borrowers beginning July 1, 2013, may receive the Federal Direct Subsidized Loan for a timeframe equivalent to 150% of the length of the studentís degree or certificate, provided that all other eligibility criteria are met. In addition, any previously-borrowed subsidized loan will begin to accrue interest at the time that the student reaches the 150% timeframe. Click here for more information about this limit.
  • The minimum loan amount that can be awarded is $200.

Federal Direct Unsubsidized Loans

  • Federal Direct Unsubsidized Loans are not based on financial need.
  • Interest accumulates on this loan while the student is enrolled in school.
  • Students can choose to make interest payments while in school, or the interest can be added to the total loan balance (this is called capitalization).

(Maximum Combined Subsidized and Unsubsidized)
  Freshman and students in certificate programs Sophomore* in an Associate's Degree program
Dependent Undergraduate Student $5,500
(up to $3,500 may be subsidized)
(up to $4,500 may be subsidized)
Independent Undergraduate Student $9,500
(up to $3,500 may be subsidized)
(up to $4,500 may be subsidized)

* 30 or more non-developmental credit hours must be completed for sophomore status.

Total borrowed over time while attending a two-year or four-year college (the aggregate limit does not increase until the student is enrolled in a masterís or doctoral program)
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)

What are the Costs of Getting a Loan?


To receive a Federal Direct Loan, the student must pay an origination fee which is deducted from the loan before funds are disbursed. The current origination fee is as follows:

For loans first disbursed between October 1, 2014 and September 30, 2015, there is a fee of 1.073% for the loan.

For loans first disbursed between October 1, 2015 and September 30, 2016, there is a fee of 1.068% for the loan.


The federal government pays the interest for the Federal Direct Subsidized Loan while the student is in school at least half time and during the grace period. However, interest will begin to accrue once the student reaches the 150% Federal Direct Subsidized Loan timeframe. Interest charges for the Federal Direct Unsubsidized Loan begin accumulating once the funds are disbursed to the school.

The interest rate for Federal Direct Subsidized and Unsubsidized Loans disbursed between July 1, 2015, and June 30, 2016 is 4.29% fixed.

Note: 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. Additional information regarding federal student loan benefits for members of the U.S. Armed Forces can be found here.

How Does the Process Work?

Step 1: The loan is awarded.

Student's expected loan amount is determined once the Owens receives a complete processed FAFSA and certain eligibility criteria have been reviewed. Amounts are calculated using federal and institutional guidelines.

A studentís loan can only be processed until the last day of classes for the semester(s) for which the loan is intended. Applying early is recommended. Late applicants may not meet all of the eligibility criteria by the deadline.

Step 2: The student accepts the loan and completes Entrance Counseling and the Master Promissory Note.

An award notice is sent to the student's Ozone account. Students who do not have an Ozone account will receive a notice by mail. Once the notice is received, the student must respond to his/her award package. Students should keep a copy of their award notice for their records.

If the student has not previously completed the online Federal Direct Loan Entrance Counseling and a Federal Direct Loan Master Promissory Note, these requirements will be posted to the student's Ozone account as a requirement for him/her to complete.

Please visit to complete Entrance Counseling and the Master Promissory Note. In order for loan funds to be disbursed, a studentís signed, completed Federal Direct Loan Master Promissory Note (MPN) must be received by the U.S. Department of Education within a designated time frame, which is generally no later than 20 days after the last date of enrollment for the loan period.

If the student would like to cancel all or a portion of their loan, he/she should contact Oserve.

Step 3: The student receives a disclosure statement.

Owens sends the student's loan information to the U.S Department of Education, who is the lender for the Federal Direct Loan program.

The U.S. Department of Education will then send the student a Plain Language Disclosure and a Disclosure Statement which indicates the anticipated disbursement dates and amounts. Students should keep these for their records. The specific terms and conditions which 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 the studentís Owens account, as long as the student student is enrolled in at least six credit hours, meets eligibility requirements, and has been verified as attending class attendance for at least six credit hours at the time of their loan disbursement.

All loan funds are disbursed in a minimum of two disbursements. If the studentís loan is for two or more semesters, one disbursement will occur for each semester. If the studentís loan is for only one semester, the loan will be provided to the student in two separate disbursements within the semester. The second disbursement will be issued after half of the semester has been completed. For first year, first time borrowers, federal regulations require that disbursements of loan funds not be issued until 30 days after the start of classes.

Any amount remaining after tuition, fees, and authorized charges have been paid will be refunded to the student by the Office of Student Accounts. Funds will be provided to the student based on the refund option that the student selected on the Owens HigherOne debit card website.

Step 5: The student establishes an account with his/her servicer.

Once the loan has been disbursed, the student may receive a notice from his/her 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. Students can also identify their loan servicer by checking NSLDS.

The student should set up an online account with his/her servicer as soon as possible and notify them any time there is a change in name, address, phone number, or email address.

Step 6: The student completes exit counseling.

Shortly before the student graduates or drops below half-time status, the student must complete Exit Counseling, which is available at

Step 7: The student repays the loan.

Once the student has graduated or is no longer enrolled at least half-time (six credits or more), the student receives a one-time, six-month grace period, after which the student begins repayment of the loan.

Students with a Federal Direct Unsubsidized Loan are encouraged to pay the interest while in school. This will prevent the 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. Click here for details.

What if the Student Stops Attending Class?

For students who do not complete all classes in which they 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, before the student stops attending Owens at least half-time, or before the student graduates, the student must complete the Federal Direct Loan Exit Counseling.

What if Students Default on their 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 the student well as he/she moves forward in life.

Students who are experiencing difficulty in repaying his/her loan(s) should immediately contact their loan servicer for advice and assistance, including deferment and forbearance options. Students may also qualify for reduced monthly payments based on their income.

If loan payments are not made and the delinquency is not resolved, the studentís loan(s) will go into default. Default means that the student has failed to make payments on the student loan(s) according to the terms of the Master Promissory Note (MPN). If the studentís loan defaults:

  • The studentís wages can be garnished.
  • The studentís federal and state income tax refund(s) can be withheld.
  • The studentís default will be reported to a national credit bureau, and will make it difficult for the student to make major credit purchases such as a new car or home.
  • The student will lose eligibility for additional federal financial aid.
  • The student may be denied professional licenses to practice an occupation.
  • The entire unpaid balance of the studentís loan and any interest is due immediately, and the student loses eligibility for deferment, forbearance and repayment plans.
  • The student may be subject to legal action and additional collection costs.

Visit Campus pictureOnline Classes picture