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Loans

All student loans are processed through the new Federal Direct Loan Program (Direct). This means that federal student loans will be funded by the U.S. Department of Education rather than private lenders.

As an authorized participant, KCTCS Colleges will ensure students and parents are able to borrow funds to meet their educational needs. However, students and parents are required to take some steps to participate. Please review the Private Lending FAQ s and contact your local College Financial Aid Office for questions and assistance.

Payments are made to the U.S. Department of Education. Students do not have to start repayment until six months after they graduate or they fall below half-time status. However, you can make payments at any time towards your loan.

The U.S. Department of Education pays (subsidizes) the interest while the borrower is in school and during grace and deferment periods on subsidized Direct Loans. The borrower is responsible for paying the interest that accrues on unsubsidized Direct Loans.

You have a grace period of 6 months after you graduate, leave school or drop below half-time status before you must begin repayment on a loan. During the grace period on a subsidized loan you don't have to pay any principal and you won't be charged interest. On an unsubsidized loan you don't have to pay any principal, but you will be charged interest. You can either pay the interest as you go along or it will be capitalized (i.e., added to the principal loan balance) later.

Common Rules

There are also some rules that apply to all student borrowers. They include:

  • All students must complete the FAFSA (this must also be completed for Parent PLUS Direct Loans)
  • All students must meet the general eligibility requirements for financial aid
  • All students will go to KCTCS Student Services Center and enter their e-ID and password to accept their Direct Loan(s) (Exception Parent PLUS Direct Loans are noted below)

Student Borrowers

Because this is the first year for KCTCS to participate in the Federal Direct Loan Program, all students wishing to apply for a Subsidized Direct Loan and/or Unsubsidized Direct Loan need to complete the following :

  1. Direct Loan Master Promissory Note https://studentaid.gov/
  2. Entrance Loan Counseling https://studentaid.gov/
  3. Accept your student Loan in KCTCS Student Services Center

Parent Borrowers

Parent borrowers wishing to apply for a Direct Parent PLUS Direct Loan are required to complete the following:

  1. Complete a Direct Loan PLUS loan request form from your respective college.
  2. Direct Loan Master Promissory Note https://studentaid.gov/

 

  • One lender one choice.
  • Direct Loans are never sold by the federal government, so student borrowers always know who holds their loans and the terms of their loans. FFELP (i.e., Stafford) loans are frequently sold, with promised benefits not honored by the new loan holder(s).
  • Borrowers will be able to consolidate their previous FFELP loans with their direct loans for free through the Federal Direct Consolidation Program
  • Loans are able to be processed quickly with only one lender involved resulting in a smoother student loan delivery process.
  • Federal Direct Loans offer a true, income contingent loan repayment option with loan forgiveness after 25 years of repayment. Borrowers with a desire to work in relatively low-paying, community service jobs can do so while minimizing the fear of defaulting on the repayment of their student loans.
  • Direct Lending has the new Public Service Loan Forgiveness program that will forgive remaining debt after 10 years of eligible employment and qualifying loan payments for people working in key public service professions such as teaching, government, social work, law enforcement, and non-profit 501(c)(3) organizations.
  • Under the Direct Loan Program the Parent PLUS Interest Rate is 7.9%. Under FFELP the Parent PLUS Interest Rate was 8.5%.

The Department of Education is the new lender; therefore, you must complete the required forms with them in order to receive your loan funds.

Federal Student Direct loans can be consolidated along with outstanding student loan debt from FFELP (i.e., Stafford Loans). After graduation you have a choice. You may either make individual payments to your previous lender(s) for FFELP and the Department of Education for Direct Loans. However, if you do not want to consolidate your FFELP and Direct Loans, you will have to make separate payments to the different loan servicers. For information on consolidation or an application to consolidate go to the Federal Direct Consolidation website.

Yes, the eligibility requirements and loan amounts are the same. The Department of Education acts as a lender, providing funds for Direct Loans and Parent or Grad PLUS loans in the same amounts as the Stafford and Parent or Grad PLUS loans offered through the Federal Family Education Loan Program. (In FFELP banks and other private lenders provide these loans.)

No, you will not be able to choose a private lender for receiving a new loan, as the Department of Education is the only student loan lender after July 1, 2010.  
Changing from FFELP to Direct Lending will not affect your loan eligibility because Direct Loans are subject to many of the same regulations as FFELP loans. For instance, students must meet satisfactory academic progress and be within their aggregate loan limits to receive any kind of federal loans.
The National Student Loan Data System has information about your federal student loans. It is important that you keep track of your student loan debt. To review your loan information, you can log in to https://nsldsfap.ed.gov/nslds_FAP/. You will need your PIN number from your FAFSA.  

 

With the Direct Loan program who will I make repayment to?

Payments are made to the U.S. Department of Education. Students do not have to start repayment until six months after they graduate or they fall below half-time status. However, you can make payments at any time towards your loan.

The U.S. Department of Education pays (subsidizes) the interest while the borrower is in school and during grace and deferment periods on subsidized Direct Loans. The borrower is responsible for paying the interest that accrues on unsubsidized Direct Loans.

You have a grace period of 6 months after you graduate, leave school or drop below half-time status before you must begin repayment on a loan. During the grace period on a subsidized loan you don't have to pay any principal and you won't be charged interest. On an unsubsidized loan you don't have to pay any principal, but you will be charged interest. You can either pay the interest as you go along or it will be capitalized (i.e., added to the principal loan balance) later.

Repay Your Direct Loans and Federal Family Education Loan (FFEL) Program Loans.

Overview of Direct Loan and FFEL Program Repayment Plans
Repayment Plan Eligible Loans

Monthly Payment and Time Frame

Eligibility and Other Information
Standard Repayment Plan
  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • all Consolidation Loans (Direct or FFEL)
          

Payments are a fixed amount.

Up to 10 years (up to 30 years for Consolidation Loans).

All borrowers are eligible for this plan.

You’ll pay less over time than under other plans.
Graduated Repayment Plan
  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • all Consolidation Loans (Direct or FFEL)

Payments are lower at first and then increase, usually every two years.

Up to 10 years (up to 30 years for Consolidation Loans).

All borrowers are eligible for this plan.

You’ll pay more over time than under the 10-year Standard Plan
Extended Repayment Plan
  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • all Consolidation Loans (Direct or FFEL)

Payments may be fixed or graduated.

Up to 25 years.
  • If you're a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.
  • If you're a FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans.
Revised Pay As You Earn Repayment  Plan (REPAYE)
  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS loans made to students
  • Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents
  • Your monthly payments will be 10 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you're married, both your and your spouse’s income or loan debt will be considered, whether taxes are filed jointly or separately (with limited exceptions).
  • Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 or 25 years.
  
  • Any Direct Loan borrower with an eligible loan type may choose this plan.
  • Your monthly payment can be more than the 10-year Standard Plan amount.
  • You may have to pay income tax on any amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).
Pay As You Earn Repayment Plan (PAYE)
  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS loans made to students
  • Direct Consolidation Loans that do not include (Direct or FFEL) PLUS loans made to parents
  • Your maximum monthly payments will be 10 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you're married, your spouse's income or loan debt will be considered only if you file a joint tax return.
  • Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 years.
  • You must be a new borrower on or after Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011.
  • You must have a high debt relative to your income.
  • Your monthly payment will never be more than the 10-year Standard Plan amount.
   

.
  • You’ll pay more over time than under the 10-year Standard Plan.
  • You may have to pay income tax on any amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).
Income-Based Repayment Plan (IBR)
  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans made to students
  • Consolidation Loans  (Direct or FFEL) that do not include  Direct or FFEL PLUS loans made to parents
  • Your monthly payments will be 10 or 15 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you're married, your spouse's income or loan debt will be considered only if you file a joint tax return.
  • Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 or 25 years.
  • You may have to pay income tax on any amount that is forgiven.
  • You must have a high debt relative to your income.
  • Your monthly payment will never be more than the 10-year Standard Plan amount.
  • You’ll pay more over time than under the 10-year Standard Plan.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).
Income-Contingent Repayment Plan (ICR)
  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS Loans made to students
  • Direct Consolidation Loans
  • Your monthly payment will be the lesser of
    • 20 percent of discretionary income, or
    • the amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income.
  • Payments are recalculated each year and are based on your updated income, family size, and the total amount of your Direct Loans.
  • If you're married, your spouse's income or loan debt will be considered only if you file a joint tax return or you choose to repay your Direct Loans jointly with your spouse.
  • Any outstanding balance will be forgiven if you haven't repaid your loan in full after 25 years.
  • Any Direct Loan borrower with an eligible loan type may choose this plan.
  • Your monthly payment can be more than the 10-year Standard Plan amount.
  • You may have to pay income tax on the amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).
  • Parent borrowers can access this plan by consolidating their Parent PLUS Loans into a Direct Consolidation Loan
Income-Sensitive Repayment Plan
  • Subsidized and Unsubsidized Federal Stafford Loans
  • FFEL PLUS Loans
  • FFEL Consolidation Loans

Your monthly payment is based on annual income.

Up to 15 years.
  • You’ll pay more over time than under the 10-year Standard Plan.
  • The formula for determining the monthly payment amount can vary from lender to lender.

What steps do I need to take in order to get a Direct Loan?

Common Rules

There are also some rules that apply to all student borrowers. They include:

  • All students must complete the FAFSA (this must also be completed for Parent PLUS Direct Loans)
  • All students must meet the general eligibility requirements for financial aid
  • All students will go to KCTCS Student Services Center and enter their e-ID and password to accept their Direct Loan(s) (Exception Parent PLUS Direct Loans are noted below)

Student Borrowers

Because this is the first year for KCTCS to participate in the Federal Direct Loan Program, all students wishing to apply for a Subsidized Direct Loan and/or Unsubsidized Direct Loan need to complete the following :

  1. Direct Loan Master Promissory Note https://studentaid.gov/
  2. Entrance Loan Counseling https://studentaid.gov/
  3. Accept your student Loan in KCTCS Student Services Center

Parent Borrowers

Parent borrowers wishing to apply for a Direct Parent PLUS Direct Loan are required to complete the following:

  1. Complete a Direct Loan PLUS loan request form from your respective college.
  2. Direct Loan Master Promissory Note https://studentaid.gov/

What are the benefits of using the Direct Loan Program (DL)?

  • One lender one choice.
  • Direct Loans are never sold by the federal government, so student borrowers always know who holds their loans and the terms of their loans. FFELP (i.e., Stafford) loans are frequently sold, with promised benefits not honored by the new loan holder(s).
  • Borrowers will be able to consolidate their previous FFELP loans with their direct loans for free through the Federal Direct Consolidation Program
  • Loans are able to be processed quickly with only one lender involved resulting in a smoother student loan delivery process.
  • Federal Direct Loans offer a true, income contingent loan repayment option with loan forgiveness after 25 years of repayment. Borrowers with a desire to work in relatively low-paying, community service jobs can do so while minimizing the fear of defaulting on the repayment of their student loans.
  • Direct Lending has the new Public Service Loan Forgiveness program that will forgive remaining debt after 10 years of eligible employment and qualifying loan payments for people working in key public service professions such as teaching, government, social work, law enforcement, and non-profit 501(c)(3) organizations.
  • Under the Direct Loan Program the Parent PLUS Interest Rate is 7.9%. Under FFELP the Parent PLUS Interest Rate was 8.5%.

Why do I have to start over if I already have federal (FFELP) loans from prior years?

The Department of Education is the new lender; therefore, you must complete the required forms with them in order to receive your loan funds.

I have prior loans from a bank, what options do I have in repayment now that I will have FFELP Loans and Direct Loans?

Federal Student Direct loans can be consolidated along with outstanding student loan debt from FFELP (i.e., Stafford Loans). After graduation you have a choice. You may either make individual payments to your previous lender(s) for FFELP and the Department of Education for Direct Loans. However, if you do not want to consolidate your FFELP and Direct Loans, you will have to make separate payments to the different loan servicers. For information on consolidation or an application to consolidate go to the Federal Direct Consolidation website.

Is my eligibility for loans and the amounts I can receive in federal loans the same in Direct Lending as it was in FFELP?

Yes, the eligibility requirements and loan amounts are the same. The Department of Education acts as a lender, providing funds for Direct Loans and Parent or Grad PLUS loans in the same amounts as the Stafford and Parent or Grad PLUS loans offered through the Federal Family Education Loan Program. (In FFELP banks and other private lenders provide these loans.)

Can I still use my prior bank for Stafford Loans, or Parent PLUS Loans if I choose to do that?

No, you will not be able to choose a private lender for receiving a new loan, as the Department of Education is the only student loan lender after July 1, 2010.

How will my receipt of prior loans from banks/lenders affect my Direct Loan eligibility?

Changing from FFELP to Direct Lending will not affect your loan eligibility because Direct Loans are subject to many of the same regulations as FFELP loans. For instance, students must meet satisfactory academic progress and be within their aggregate loan limits to receive any kind of federal loans.

How much debt have you acquired?

The National Student Loan Data System has information about your federal student loans. It is important that you keep track of your student loan debt. To review your loan information, you can log in to https://nsldsfap.ed.gov/nslds_FAP/. You will need your PIN number from your FAFSA.

 

A male admissions advisor assits a male student.

 

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