Direct Student Loans

A Direct Loan is a low-interest loan from the government to help you pay for college. There are two types: Subsidized and Unsubsidized.

Remember, you must pay back these loans after you finish school.

Direct Subsidized Loans	Direct Unsubsidized Loans
Offered by the Department of Education.	Offered by the Department of Education.
You must be enrolled in school at least half-time (6 credit hours) to be eligible.	You must be enrolled in school at least half-time (6 credit hours) to be eligible.
You must meet Satisfactory Academic Progress requirements.	You must meet Satisfactory Academic Progress requirements.
You get a six-month grace period before you start repayment.	You get a six-month grace period before you start repayment.
Loans are offered based on financial need from the results of your FAFSA.	No financial need required.
The Government pays the interest while you are in school.	The Government does not help with the interest.

 

Review additional information on federal student loans. Difference between a Subsidized Loan and an Unsubsidized Loan

An origination fee is a charge for processing your student loan. It’s a percentage of the total loan amount and is taken out before you get the loan money. For example, if you borrow $5,000 with a fee of 1.057%, $52.85 will be deducted, so you’ll get $4,947.15. However, you still must pay back the full $5,000. Learn about fees for federal student loans.

Interest is the extra money you pay to borrow loan funds. It’s calculated as a percentage of the amount you borrowed. Federal student loans have a fixed interest rate, which means the rate stays the same for the entire loan period. The interest rate can vary based on the type of loan and when it was issued. View the current interest rates.

Federal student loans have limits on how much you can borrow. These limits vary depending on various items:

• Your grade level in school
• Your dependency status (whether you’re considered dependent or independent)
• The direct loan amounts you have already borrowed.

Federal Direct Annual Loan Limits for Dependent Undergraduate Students

	Subsidized Loans	Unsubsidized Loans
First Year –Certificate Programs and Associates Program< 30 credits completed	$3,500	$2,000
Second Year-Associates Programs 30+ credits completed	$4,500	$2,000
Third Year and Beyond –Bachelor degree only	$5,500	$2,000

Federal Direct Annual Loan Limits for Independent Undergraduate Students

	Subsidized Loans	Unsubsidized Loans
First Year –Certificate Programs and Associates Program< 30 credits completed	$3,500	$6,000
Second Year-Associates Programs 30+ credits completed	$4,500	$6,000
Third Year and Beyond –Bachelor degree only	$5,500	$7,000

 Federal Direct Loan Total Limit for Undergraduate Study

	Total Limit	How much can be Subsidized?
Dependent Students	$31,000	$23,000
Independent Students	$57,500	$23,000

When a student borrows money through the Federal Direct Student Loan Program, the college provides information to the National Student Loan Data System and its authorized users such as guaranty agencies, lenders and educational institutions.

You can view your loan borrowing history at Federal Student Aid.

Before you can get money from a Direct Loan, you need to do entrance counseling if it’s your first time borrowing. During this session, you’ll learn about your rights and responsibilities and go over the terms of your loan.

The MPN is a legal paper you sign before getting a Direct Loan. It can cover several loans for up to 10 years. By signing it, you promise to pay back all the loans, plus interest and fees. The MPN also tells you how long you have to do things like canceling part or all of a loan.

To request an increase in your loan award amount or to request a new loan:

Login to myOTC and choose Request A New Loan from the financial aid menu.

Hints on requesting a new loan:

• You may request the entire amount offered or enter the amount you wish to borrow.
• You may not be eligible for the full amount you request. If you are not, we will offer the max amount you are eligible for.
• If you enter less than the amount you are eligible for, we will only offer up to that amount.
• In the loan periods section, you may check the boxes for the semesters you wish to borrow. Note, there are deadlines as to when we can accept new loan requests for each term.
• If you only check the fall box, you will only be approved for the loan if you are enrolled in all courses to graduate in that fall term.
• If you check a combination of terms in the loan period section, note that the loan amount will be divided between those terms.
• If you previously declined your loans, you may submit the Request a New Loan to request a reinstatement of your loans.

If you do not wish to borrow the full amount of student loans shown in myOTC in My Awards, you may choose to reduce the amount before you accept or decline it. Go to the loan you wish to reduce and enter the new, lesser amount you wish to borrow and click accept. The status will show “In Review” until the Financial Aid office processes your request.

A couple hints when reducing your loans:

• If you have requested an unsubsidized loan, you will need to decline the unsubsidized loan prior to reducing the subsidized loan.
• If you do not wish to borrow the loan and wish to cancel the entire amount, click Decline.
• You may not decline a loan that has already been disbursed to your student account.
• You will receive a Right to Cancel email after your loan is disbursed with further information about loan cancellation after disbursement.

If you do not wish to borrow the loan shown in myOTC, in My Awards, you may choose to decline your student loan.  Go to the loan you wish to decline and click on Decline. The status will show “In Review” until your request is processed.

A couple hints when declining your loan(s):

• You may reduce the term to zero by entering 0 in the box and submit.  To decline the loan. See above steps to reduce the loan amount.
• If your loan has already disbursed to your student account for that term, you will be unable to decline it.

For first time students receiving student loans (first time borrowers), Financial Aid will delay your student loan disbursements for a minimum of 30 days after the semester begins.  Therefore, OTC will not include your student loan disbursement with the first group of financial aid disbursements for the semester.

The Department of Education defines a first-time borrower as having zero direct loan debt.

Student loan disbursements are made in two equal payments as follows:

Loan Period Disbursements

Fall/Spring

• • Fall disbursement according to the date in the fall “Right to Cancel” email
  • Spring disbursement according to the date in the spring “Right to Cancel” email

Fall Only

• • First half disbursed according to the date in the “Right to Cancel” email
  • Second half disbursed after mid-terms as long as still enrolled in at least 6 credit hours

Spring Only

• • First half disbursed according to the date in the “Right to Cancel” email
  • Second half disbursed after mid-terms as long as still attending at least 6 credit hours

Summer Only

• • First half disbursed according to the date in the “Right to Cancel” email
  • Second half disbursed after mid-terms as long as still attending at least 6 credit hours

Ozarks Technical Community College does not participate in any of the Federal Plus Loan Programs. The Federal Direct Loan Program is the only student loan program the college participates in for students.

A student graduating from OTC who borrowed a Federal Direct Loan while attending OTC, is required to complete student loan exit counseling.

A student, who borrowed from the Federal Family Education Loan Program (FEEL) or Direct Loan Program while attending OTC, is required to complete student loan exit counseling if their current enrollment becomes less than half time.

Exit Counseling must be completed through StudentAid.gov.  OTC will receive electronic notification that you have fulfilled this requirement.

To calculate your student loan payments, you can use an online calculator.

Loan Simulator | Federal Student Aid

A loan servicer is a company that manages your federal student loans for the U.S. Department of Education. They handle tasks like:

• Billing: Sending you bills and collecting payments.
• Customer Service: Answering your questions.
• Repayment Plans: Helping you understand or change your repayment plan.

A grace period is the time after you graduate, leave school, or drop below half-time enrollment before you must start repaying your student loans. For Direct Subsidized and Direct Unsubsidized Loans, this period lasts six months.

A deferment lets you temporarily stop making monthly payments on your federal student loan if you qualify.

• Unsubsidized Loans: Interest will keep increasing during deferment.
• Subsidized Loans: Interest won’t add up during deferment.

You can choose to pay the interest as it adds up or let it be added to your loan balance at the end of the deferment period. If you need a deferment, contact your loan servicer.

Forbearance lets you temporarily stop making monthly payments or make smaller payments on your student loans. However, interest will keep increasing during this time.

• Your loan interest will continue to grow.
• There are different types, and they apply in various situations. If you have questions or need to request a forbearance, contact your loan servicer.

Loan consolidation happens when you combine one or more federal student loans into a single Direct Consolidation Loan. This new loan has a fixed interest rate and just one monthly payment.

Pros:

• Lower Monthly Payment: Your monthly payment might go down.
• Access to Forgiveness Programs: You might qualify for federal loan forgiveness programs.

Cons:

• Longer Repayment Period: You might have to pay for a longer time.
• More Interest: You could end up paying more interest over the life of the loan.

If you don’t repay your student loan as agreed in the promissory note, your loan can go into default. This usually happens if you miss a payment for more than 270 days.

Consequences of Default:

• Legal Trouble: You could face legal consequences.
• No More Aid: You might not be able to get more student aid in the future.

If you’re having trouble making payments, contact your loan servicer for help.

In some cases, you might not have to pay back your federal student loans. This can happen through discharge, forgiveness, or cancellation. These terms all mean the same thing—you won’t have to repay some or all of your loan.

Visit studentaid.gov to see current options for loan forgiveness.