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?
- How Much Can a Student Borrow?
- What are the Costs of Getting a Loan?
- How Does the Process Work?
- What if the Student Stops Attending Class?
- What if Students Default on their Loan?
Who Can Borrow?
You may be eligible to borrow if you meet the following requirements:
- Are eligible to receive financial aid as described on the Eligibility Requirements page.
- 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 ability to benefit as described on the Eligibility Requirements page.
- 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.
How Much Can a Student Borrow?
A student loan can only be used for educational costs not covered by other sources of financial aid. The table below shows the maximum amount you can borrow for each academic year along with the aggregate limits. Factors which 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®) and 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 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 you are enrolled in school.
- You can choose to make interest payments while in school, or the interest can be added to your total loan balance (this is called capitalization).
| ANNUAL FEDERAL DIRECT LOAN LIMITS (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) |
$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 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) |
|
|---|---|
| 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?
Fees
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, 2025, there is an origination fee of 1.057% for the loan.
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, 2024, and June 30, 2025 | 6.53% fixed |
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.
Your expected loan amount is determined once Owens receives a complete processed FAFSA® and certain eligibility criteria have been reviewed. Amounts are calculated using federal and institutional guidelines.
Your 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: 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 can be viewed in Ozone. If you do not have an Ozone account, an award notice will be sent by mail. Once the notice is received, 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 requirements will be posted to your Ozone account as items for you to complete at StudentAid.gov before loan funds can be disbursed. Loans will be cancelled if verification of entrance counseling and MPN completion is not received by Owens 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 studentfinancial@tif2005.com from your Owens email account.
Step 3: You receive a disclosure statement.
Owens sends your 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 you a Plain Language Disclosure and a Disclosure Statement which indicates the anticipated disbursement dates and amounts. You should keep these for your 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 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, the loan will be provided 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 you by the Office of Student Accounts. Funds will be provided to you based on the refund preference that 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 any time your 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, which is available at StudentAid.gov.
Step 7: You repay the loan.
Once you have graduated or are no longer enrolled at least half-time (six credits or more), you receive a one-time, six-month grace period, after which you begin repayment of the loan.
You are encouraged to pay the interest on your Federal Direct Unsubsidized Loan 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 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.
You should immediately contact your loan servicer if you are experiencing difficulty in 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 who 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. Click here for information to protect yourself.
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 and any 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.
FAFSA® is a registered trademark of the U.S. Department of Education.