William D. Ford Federal Direct Loan Program
Loans made by the federal government, called federal student loans, usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources.
Students must be enrolled and attending at least 6 credit hours per semester to be eligible for Federal Direct Loans.
Please visit the Federal Student Aid website at studentaid.ed.gov for additional loan information.
NOTE: CCCC requires the student to complete a FAFSA before certifying all loans. Entrance Counseling and a signed Master Promissory Note (MPN) are a requirement under the federal default-reduction regulations before disbursing the loan funds. All students who are using Financial Aid must have all previous college transcripts submitted and evaluated for Satisfactory Academic Progress before aid will be awarded.
NOTE: Cloud County Community College does not participate in alternative loan programs.
Before you take out a loan, it’s important to understand that a loan is a legal obligation that you will be responsible for repaying with interest. You may not have to begin repaying your federal student loans right away, but you don’t have to wait to understand your responsibilities as a borrower.
Be a responsible borrower.
- Keep track of how much you’re borrowing. Think about how the amount of your loans will affect your future finances, and how much you can afford to repay. Your student loan payments should be only a small percentage of your salary after you graduate, so it’s important not to borrow more than you need for your school-related expenses.
- Research starting salaries in your field. Ask your school for starting salaries of recent graduates in your field of study to get an idea of how much you are likely to earn after you graduate.
- Understand the terms of your loan and keep copies of your loan documents. When you sign your promissory note, you are agreeing to repay the loan according to the terms of the note even if you don’t complete your education, can’t get a job after you complete the program, or you didn’t like the education you received.
- Make payments on time. You are required to make payments on time even if you don’t receive a bill, repayment notice, or a reminder. You must pay the full amount required by your repayment plan, as partial payments do not fulfill your obligation to repay your student loan on time.
- Keep in touch with your loan servicer. Notify your loan servicer when you graduate; withdraw from school; drop below half-time status; transfer to another school; or change your name, address, or Social Security number. You also should contact your servicer if you’re having trouble making your scheduled loan payments. Your servicer has several options available to help you keep your loan in good standing.
The William D. Ford Federal Direct Loan (Direct Loan) Program is the largest federal student loan program. Under this program, the U.S. Department of Education is your lender. There are four types of Direct Loans available:
- Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.
- Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but in this case, the student does not have to demonstrate financial need to be eligible for the loan.
- Direct PLUS Loans are loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.
- Direct Consolidation Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer. Go to StudentAid.gov/repay-loans/consolidation for more information.
What’s the difference between Direct Subsidized Loans and Direct Unsubsidized Loans?
- Direct Subsidized Loans have slightly better terms to help out students with financial need.
Overview of Direct Subsidized Loans:
- Direct Subsidized Loans are available to undergraduate students with financial need.
- The institution determines the amount the student can borrow, and the amount may not exceed the student’s financial need.
- The U.S. Department of Education pays the interest on a Direct Subsidized Loan
- ○ while the student is in school at least half-time,
○ for the first six months after the student leaves school (referred to as a grace period*), and
○ during a period of deferment (a postponement of loan payments).
*Note: If a student received a Direct Subsidized Loan that was first disbursed between July 1, 2012, and July 1, 2014, the student will be responsible for paying any interest that accrues during the student’s grace period. If the student chooses not to pay the interest that accrues during the grace period, the interest will be added to the principal balance.
*Note: As of July 1, 2013, a first time Federal Subsidized Student Loan borrower is no longer eligible for the Subsidized Student Loan program if the student exceeds 150% of the published length necessary to graduate within an undergraduate degree program.
In addition, a borrower reaching the 150% limit becomes ineligible for the interest subsidy benefits on all Federal Subsidized Loans disbursed to the borrower on or after July 1, 2013. Students who change majors multiple times, drop classes excessively or retake classes excessively are most likely to be affected by Public Law 121-141.
Please contact the Financial Aid office with questions regarding the 150% usage period.
Overview of Direct Unsubsidized Loans:
- Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need.
- The institution determines the amount the student can borrow based on the cost of attendance and other financial aid the student receives.
- The student is responsible for paying the interest on a Direct Unsubsidized Loan during all periods.
- If the student chooses not to pay the interest while the student is in school and during grace periods and deferment or forbearance periods, the interest will accrue (accumulate) and be capitalized (that is, the interest will be added to the principal amount of the student’s loan).
PLUS loans are federal loans that parents of dependent undergraduate students can use to help pay education expenses. The U.S. Department of Education makes Direct PLUS Loans to eligible borrowers through schools participating in the Direct Loan Program.
Overview of Direct PLUS Loans:
- The U.S. Department of Education is the lender.
- The borrower must not have an adverse credit history.
- The maximum loan amount is the student’s cost of attendance (determined by the school) minus any other financial aid received.
- The parent is responsible for paying the interest on a Direct Unsubsidized Loan during all periods.
- If the parent chooses not to pay the interest while the student is in school and during grace periods and deferment or forbearance periods, the interest will accrue (accumulate) and be capitalized (that is, the interest will be added to the principal amount of the parent’s loan).
The Direct PLUS Loan enters repayment once the loan is fully disbursed (paid out). The parent borrower may contact their loan servicer to request a deferment
- while the parent or the student is enrolled at least half-time and
- for an additional six months after the student ceases to be enrolled at least half-time.
If your loan is deferred, interest will accrue on the loan during the deferment. You may choose to pay the accrued interest or allow the interest to capitalize when the deferment period ends. Your loan servicer will notify you when your first payment is due.
For Direct Loans the maximum loan limit per year for freshman (0-29 hours completed) will be $5,500.00 per school year (up to $3,500.00 of which may be subsidized loans). The maximum loan limit per year for sophomores (30-64 hours completed) will be $6,500.000 per school year (up to $4,500.00 of which may be subsidized loans). Independent students may be eligible for an additional $4,000.00 in unsubsidized loans. Please contact the Financial Aid Office to determine eligibility. These amounts are based on full time enrollment status and all federal aid may not exceed the school’s budget or cost of attendance.
The annual maximum loan amount an undergraduate student may receive must be prorated when the borrower is enrolled in a program that is one academic year of more in length, but is in a remaining period of study that is shorter than a full academic year.
Bear in mind that loan limit proration determines the maximum loan amount that a student may borrow for a program or remaining balance of a program, not the loan amount that the student actually receives. In some cases, the actual loan amount that the student is eligible to receive (based on costs, EFC, and other aid) may be less than the prorated loan amount.
The interest rate for a William D. Ford Direct Loan is variable, and is adjusted every July 1, and will be set by Congress. Loan funds are to be used towards education related expenses.
Most federal student loans have loan fees that are a percentage of the total loan amount. The loan fee is deducted proportionately from each loan disbursement you receive. This means the money you receive will be less than the amount you actually borrow. You're responsible for repaying the entire amount you borrowed and not just the amount you received.