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 FAQs 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.
There are also some rules that apply to all student borrowers. They include:
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 :
Parent borrowers wishing to apply for a Direct Parent PLUS Direct Loan are required to complete the following:
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 www.nslds.ed.gov. You will need your PIN number from your FAFSA.