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

Federal Direct Stafford Loan Information

The Federal Direct Stafford 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 Stafford 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, as certified by the Owens Office 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 Stafford 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 requested, 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 Stafford Loans

  • Based on financial need
  • Federal government pays the interest while the student is in school at least half time (6 credit hours)
  • For loans disbursed between July 1, 2012, and July 1, 2014, interest will accumulate during the grace period (the period of time before repayment which occurs after the student is no longer in school half time).
  • Students who are new borrowers beginning July 1, 2013, may receive the Federal Direct Subsidized Stafford 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.

Federal Direct Unsubsidized Stafford Loans

  • 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)

The minimum loan amount that can be awarded is $200.

(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 Stafford)
Independent Undergraduate Student $57,500 (of which no more than $23,000 can be Subsidized Stafford)

What are the Costs of Getting a Loan?


To receive a Federal Direct Stafford Loan, the student must pay an origination fee. The current origination fee is as follows:

For loans first disbursed on or after March 1, 2013, and before December 1, 2013, there is a fee of 1.051% for the loan.*

For loans first disbursed on or after December 1, 2013, and before October 1, 2014, there is a fee of 1.072% for the loan.*

*This fee is deducted from loans before funds are sent to the school.


The federal government pays the interest for the Federal Direct Subsidized Stafford Loan while the student is in school at least half time. However, interest will begin to accrue once the student reaches the 150% Federal Direct Subsidized Stafford Loan timeframe. Interest charges for the Federal Direct Unsubsidized Stafford 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, 2013, and June 30, 2014 is 3.86% fixed

Note: Eligible U.S. Military Service Members may be able to request an interest rate of 0% from the Federal Direct Loan Program. Eligible borrowers should contact the Direct Loan servicer for further details.

How Does the Process Work?

Step 1: Student's expected loan amount is determined once the FAFSA results have been received and certain eligibility criteria have been reviewed. Amounts are calculated using federal and institutional guidelines.

Step 2: 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 their 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 Stafford 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 them to complete.

Please visit to complete Entrance Counseling and the Master Promissory Note.

Step 3: The student's loan information is transmitted to the U.S Department of Education.

Step 4: Direct Loan Servicing will send the student a Plain Language Disclosure and a Disclosure Statement which indicates the anticipated disbursement dates and amounts. Students should keep these disclosures for their records.

Step 5: Once disbursements begin for the semester, Owens will apply the loan funds to the studentís Owens account, as long as the student still meets eligibility requirements and class attendance has been verified for at least six credit hours. Students must be enrolled in at least six credit hours at the time of their loan disbursement. 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 6: Shortly before the student graduates or drops below half-time status, the student must complete Exit Counseling. Please visit to complete Exit Counseling.

Step 7: Once the student has graduated or is no longer enrolled at least half-time, the student receives a one-time, six-month grace period, after which the student begins repayment of the loan.

When Does the Money Disburse?

It is a federal regulation that 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.

Funds will automatically be applied to the studentís Owens account balance after eligibility and attendance in the studentís classes has been verified. Any amount remaining after tuition, fees, and authorized charges have been paid will be refunded to the student.

If the student would like to cancel all or a portion of their loan, please contact Oserve.

What if the Student Stops Attending Class?

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 should stop attending Owens at least half-time, or before the student graduates, the student must complete the Federal Direct Loan Exit Counseling.

When Do Students Start Repayment on their Loan?

Repayment of the studentís loan begins six months after he/she drops below 6 credit hours, withdraw or graduate. Students with a Federal Direct Unsubsidized Loan have the option of paying the interest while in school and keeping it current, or the interest can be added to his/her total loan balance (this is called capitalization). Please contact the studentís loan servicer for more information.

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.

If the student should experience difficulty in repaying his/her loan(s), the student should contact his/her loan servicer for advice and assistance, including deferment and forbearance options. Students may also qualify for reduced monthly payments based on his/her 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 income tax refund 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 be disqualified from receiving any additional federal financial aid.
  • The student may be denied professional licenses to practice an occupation.

Who's Who?

Direct Loan Servicer

The Direct Loan Servicer collects payments, processes deferment and forbearance requests and handles correspondence on behalf of the Federal Direct Loan program. The studentís loan servicer is listed on NSLDS.


The. U.S. Department of Education is the lender for the Federal Direct Stafford Loan program.

Application Deadline

A studentís loan cannot be processed after 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.

In order for loan funds to be disbursed, the studentís signed, completed Federal Direct Loan Master Promissory Note (MPN) must be received by the loan servicer within a designated time frame. Generally, the MPN must be received no later than 118 days after the last date of enrollment for the loan period.

Visit Campus pictureOnline Classes picture