Kettering University participates in the Federal Direct Loan Programs.  Students and/or Parents borrow directly from the federal government.

Eligibility

Federal Direct Loans are for undergraduate, graduate and professional degree students, enrolled at least half-time, who meet the general requirements to receive federal aid.

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 and graduate 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 Consolidatin Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.

Direct Student Loan Change

The government has eliminated the interest subsidy during the six-month grace period on all Direct Subsidized Loans disbursed after July 1, 2012 and before July 1, 2014:

  1. Elimination of the interest subsidy means interest will begin accruing during the six- month grace period.
  2. The six-month grace period begins after the student is no longer enrolled at least half-time.

Applying for a Federal Direct Loan

You must complete the Free Application for Federal Student Aid (FAFSA).    The financial aid office will determine your eligibility, and the amount you are eligible for will appear on your Financial Aid Award Letter.   You can accept your loan by completing the Request for a Direct Federal Loan Form.   You must fulfill certain conditions before loan funds can be credited to your account.  These include, but may not be limited to:

  • For First Time Borrowers -  Completion of a Loan Entrance Interview – An Entrance Interview is actually a counseling session which is designed to help you better understand your obligation as a borrower and provides other useful information on the loan process. Entrance Interviews are required for all first time borrowers.
  • Signing the Master Promissory Note You must complete a Master Promissory Note (MPN) at https://studentloans.gov  using your federal Personal Identification Number (PIN).   The same PIN used to complete your online FAFSA is used to sign your MPN.

Federal Direct Student Loan Limits 

The chart below lists the maximum annual subsidized and unsubsidized combine amounts a student may borrow in the Federal Direct Loan program.   The annual maximum amount may be awarded to you as a combination of subsidized and unsubsidized.   You must pay the interest on the portion that is unsubsidized while in school, and during any grace or in-school deferment periods, unless you elect to have the interest added to the principal.  This is called capitalization.   Having the interest capitalized will mean larger payments when you begin repayment.     

Federal Loans

Loan Details

 Annual Award Limits

Direct Subsidized Loan

• For undergraduate students who are enrolled at least half-time* and demonstrate fi nancial need • Interest is 3.4% for loans made between July 1, 2012 and June 30, 2013 • Student is not charged interest on the loan while in school and during deferment periods • The U.S. Department of Education (ED) is the lender; payment is owed to ED

 

Between $3,500 and $5,500 depending on year in school

 

Direct Unsubsidized Loan

• For undergraduate and graduate students who are enrolled at least half-time* • Interest is 6.8% • Student is responsible for interest during all periods • ED is the lender; payment is owed to ED

 

Between $5,500 to $20,500 (minus any subsidized amount received for the same period) depending on year in school and dependency status

 

Direct PLUS Loan for Parents

• For parents of dependent students • Dependent students must be enrolled at least half-time* • Interest is 7.9% • Parent must not have negative credit history • Parent is responsible for interest during all periods • ED is the lender; payment is owed to ED

 

Maximum amount is cost of attendance* minus any other fi nancial aid the student receives

 

Direct PLUS Loan for Graduate or Professional Students

• For graduate or professional degree students who are enrolled at least half-time* • If the student has not requested the annual maximum Unsubsidized Stafford Loan amount they are eligible for, the school must notify the student of this eligibility and give them the opportunity to request it • Student must not have negative credit history • Interest is 7.9% • Student is responsible for interest during all periods • ED is the lender; payment is owed to ED

 

Maximum amount is cost of attendance* minus any other fi nancial aid the student receives

 

Loan Repayment Plans

Repayment Plan

Eligible Loans

Monthly Payment and

Time Frame

Quick Comparison

Standard Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • all PLUS loans

Payments are a fixed amount of at least $50 per month.

Up to 10 years

You'll pay less interest for your loan over time under this plan than you would under other plans.

Graduated Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • all PLUS loans

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

Up to 10 years

You'll pay more for your loan over time than under the 10-year standard plan.

Extended Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • all PLUS loans

Payments may be fixed or graduated.

12-25 years

  • Your monthly payments would be lower than the 10-year standard plan.
  • If you are a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.

    • FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans.

For example, if you have $35,000 in outstanding FFEL Program loans, and $10,000 in Direct Loans, you can use the extended repayment plan for your FFEL Program loans, but not for your Direct Loans.

  • For both programs, you must also be a new borrower as of Oct. 7, 1998.
  • You'll pay more for your loan over time than under the 10-year standard plan.

Income-Based Repayment Plan (IBR)

  • Direct Subsidized and Unsubsidized Loans
  • all PLUS loans made to students
  • Consolidation Loans (Direct or FFEL) that do not include consolidated PLUS loans made to parents

Your maximum monthly payments will be 15 percent of discretionary income, the difference between your Adjusted Gross Income and 150% of the poverty guideline for your family size and state of residence (conditions apply). 

Up to 25 years.

  • You must have a partial financial hardship.
  • Your monthly payments will be lower than payments under the standard plan.
  • You'll pay more for your loan over time than you would under the 10-year standard plan.
  • If you have not repaid your loan in full after making the equivalent of 25 years of qualifying monthly payments and 25 years have passed, any outstanding balance on your loan may be canceled.

Income-Contingent Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS Loans made to students
  • Direct Consolidation Loans

Payments are calculated each year and are based on your annual income*, family size, and the total amount of your Direct Loans for up to 25 years.

*If you are married, your spouse's income is included.

  • Your monthly payments will be lower than the standard repayment plan.
  • You'll pay more for your loan over time than under the 10-year standard plan.
  • If you do not repay your loan after 25 years under this plan, the unpaid portion will be forgiven.
  • You may have to pay income tax on the amount that is forgiven.

Income-Sensitive Repayment Plan

  • Subsidized and Unsubsidized Federal Loans
  • FFEL PLUS Loans made to students
  • FFEL Consolidation Loans that do not include a PLUS loan made to parents
  • Your monthly payment is based on annual income.
  • Your payments change as your income changes.

Up to 10 years

  • Your monthly payments will be lower than payments under the 10-year standard plan.
  • You'll pay more for your loan over time than you would under the 10-year standard plan.

Borrower Grace Periods

After you graduate, leave school, or drop below half-time enrollment, you have a period of time before you have to begin repayment. This "grace period" will be

Six months for a Federal Loan (Direct Loan Program or Federal Family Education Loan (FFEL) Program).

PLUS Borrowers - The repayment period for a Direct PLUS Loan begins at the time the PLUS loan is fully disbursed, and the first payment is due within 60 days after the final disbursement. However, a graduate student PLUS Loan borrower (as well as a parent PLUS borrower who is also a student) can defer repayment while the borrower is enrolled at least half-time, and, for PLUS loans first disbursed on or after July 1, 2008, for an additional six months after the borrower is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower during the deferment.

Parent PLUS Loan borrowers whose loans were first disbursed on or after July 1, 2008, may choose to have repayment deferred while the student for whom the parent borrowed is enrolled at least half-time and for an additional six months after that student is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the parent during the deferment.

Sample Loan Repayment

You can use the following chart as a reference to estimate your monthly loan repayment amount assuming that your borrow the Federal Direct Subsidized and Unsubsidized Loan for all 4  ½ years you are enrolled at Kettering University as a dependent student using the Standard Repayment Plan.  You should use this as a reference only; for more specific repayment examples go to the U.S. Department of Education's Direct Loan Program.

 

Grace Period

Repayment Term

Interest Rate

Principal Amount Borrowed

Estimated Monthly Payment

Estimated Total Principal & Interest Payment

Federal Direct Subsidized Loan

 

6 months

 

10 years

 

6.8%

 

$21,750

 

$250.30

 

$30,036

Federal Direct Unsubsidized Loan

 

6 months

 

10 years

 

 

6.8%

 

$9,000

 

$103.57

 

$12428.40