The William D. Ford Federal Direct Loan Program provides low-interest loans to eligible students to help pay for educational expenses. Unlike grants and scholarships, federal student loans must be repaid, with interest, according to the terms of the loan. With Direct Loans, the funds come directly from the federal government and borrowers are assigned a single contact, the loan servicer, for everything related to repayment even if the borrower receives Direct Loans at different schools.

Students must complete the Free Application for Federal Student Aid (FAFSA®) each academic year to be considered for Federal Direct Loans. Eligibility is determined based on federal regulations, enrollment status, academic progress, dependency status, grade level, and other eligibility requirements.   Borrowers must be enrolled at least half time (minimum of six credit hours) and meet all other eligibility requirements including Satisfactory Academic Progress.

Additional information regarding Federal Student Loans is provided by the U.S. Department of Education. 

The Federal Direct Subsidized Loan (DLSUB)

The Federal Direct Subsidized Loan (DLSUB) is a need-based federal loan. Undergraduate students who have unmet financial need can be considered for this loan up to the amount of the students’ borrowing limit but the amount cannot exceed the educational cost of attendance minus other financial aid.

The U.S. Department of Education pays the interest while the student is enrolled at least half-time, during the six-month grace period after leaving school, and during approved periods of deferment.

The Federal Direct Unsubsidized Loan (DLUNS)

The Federal Direct Unsubsidized Loan (DLUNS) is a non-need-based federal loan.  Borrowers  can be considered for this loan up to the amount of the students’ borrowing limit but the amount cannot exceed the educational cost of attendance minus other financial aid.

Interest begins accruing as soon as the loan is disbursed. Borrowers may choose to pay the interest while enrolled or allow it to accrue and be capitalized.

Interest Rates and Loan Fees

Interest rates and loan fees are determined each year by federal law. The interest rate for Federal Direct Subsidized and Unsubsidized loans is fixed for the life of that loan but may differ from rates offered in previous or future academic years.

All Direct Subsidized Loans and Direct Unsubsidized Loans have a loan fee. The loan fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement. The percentage for all Direct Subsidized and Unsubsidized loans first disbursed on or after Oct. 1, 2020, is 1.057%. Loans first disbursed before that date had different loan fees. This fee is subject to change.

Information on origination fees and current interest rates is found on Federal Student Loans under Loan Interest Rates and Fees.

Steps to Accept a Loan

If your financial aid offer in MY COTC includes a federal direct student loan and you wish to borrow any portion of the amount offered, you must first accept the loan. If you are not offered a federal direct student loan  and you wish to borrow a loan or wish to request more than you were offered (up to borrowing limits) you must complete an Additional Loan Request Form available on myCOTC under Form Links.

If it is your first time receiving a Direct Loan, you are required to:

• complete entrance counseling, a tool to ensure you understand your obligation to repay the loan; and
• sign a loan contract called a Master Promissory Note, agreeing to the terms of the loan.

Students who graduate, withdraw or drop below half-time enrollment are required to complete Exit Counseling.

Repayment

Repayment generally begins six months after a student graduates, leaves school, or drops below half-time enrollment for Federal Direct Subsidized and Unsubsidized Loans.

Borrowers experiencing financial difficulty should contact their loan servicer to discuss available options, including deferment, forbearance, or alternative repayment plans.

Annual Federal Direct Loan Limits

(Maximum combined subsidized and unsubsidized) ​ ​

Student type	Freshman and students in certificate programs	Sophomore in an associate aegree program	Junior and senior in bachelor’s degree program
Dependent Undergraduate	$5,500 (up to $3,500 may be subsidized)	$6,500 (up to $4,500 may be subsidized)	$7,500 (up to $5,500 may be subsidized)
Independent Undergraduate	$9,500 (up to $3,500 may be subsidized)	$10,500 (up to $4,500 may be subsidized)	$12,500 (up to $5,500 may be subsidized)

• 0-30 credit hours must be completed for Freshman status
• 31-60 credit hours must be completed for Sophomore status
• 61-90 credit hours must be completed for Junior status
• 91-120 credit hours must be completed for Senior status

NOTE: The maximum annual amount a student may borrow under the Federal Direct Loan Program must be reduced if:

• The student is in a program of study less than an academic year (2 semesters)
• The student is in the final period of study, which is shorter than an academic year (2 semesters)
• The student has borrowed student loan funds from another institution within the academic year
• The student has reached their annual and/or aggregate loan limits.
• COTC’s policy is not to award more than ½ of the student’s annual loan limits in one semester.

Remember, planning for tomorrow is important, so please borrow conservatively. Keep track of how much money is borrowed and how much Federal Loan payments will be after graduation. Review your student loan debt at studentaid.gov.  It is important to repay your loans.  Allowing your student loan to become delinquent or to go into default can have negative consequences, such as:

• lose eligibility for additional federal student aid,
• lose eligibility for loan deferment, forbearance and repayment plans,
• not eligible for certain types of employment,
• denial of a professional license (medical, engineering, etc.),
• additional charges, late fees and collection costs if turned over to a collection agency,
• wage garnishment,
• federal and state income tax refunds withheld and applied to your debt,
• you credit scored will be damaged and you will have difficulty qualifying for credit cards, car loans, and mortgages,
• difficulty signing up for utilities, getting car or homeowner’s insurance, or getting a cell phone plan, and
• difficulty getting approval to rent an apartment.

Loans Based on Enrollment for the Academic Year

Please note the following important information regarding NEW loan eligibility for the 2026-27 academic year:

Loans Based on Enrollment

• Federal Student Loans are now subject to required proration
• Loan eligibility depends on credit hours enrolled that are required for your current program
• Enrolling in less than full-time (12+ credits per term) reduces loan eligibility
• Students must be enrolled in at least 6 credit hours to qualify for federal student loans
• Full-time enrollment requires 24 credit hours per academic year, or 36 credit hours if the program requires year-round enrollment

Enrollment Verification

Enrollment is verified on the loan disbursement date.

• If you enroll in fewer credits than originally certified, the loan amount will be reduced.
• If your enrollment is reduced after a loan disburses, any remaining disbursements for that academic year will be reduced.

Example

The student is enrolled in a total of 15 credit hours for the academic year (9 in autumn and 6 in spring). Since full-time enrollment is 24 credit hours, the student is enrolled at 63% intensity (15 ÷ 24).

Because of this enrollment level, the student is eligible for 63% of the maximum annual loan amounts:

• Subsidized loan: $3,500 × 63% = $2,205
• Unsubsidized loan: $2,000 × 63% = $1,260

These adjusted loan amounts are then divided over autumn and spring semesters.

Autumn:

• Subsidized Loan: $1103
• Unsubsidized Loan: $630

Spring

• Subsidized Loan: $1102
• Unsubsidized Loan: $630

In short, the student’s loans are reduced based on less-than-full-time enrollment and then split between semesters. If the student reduces hours in autumn AFTER the loan disburses, the spring loan amounts will be reduced based upon the total annual credit hours.

Federal Loan Repayment

For details, see the U.S. Department of Education’s Repayment Plans. You may access the loan simulator to help you make decisions about your student loans. 

The Federal Direct Parent Loan for Undergraduate Students (PLUS)

The Federal Direct Parent Loan for Undergraduate Students (PLUS) provides low-interest loans to help eligible families cover educational expenses for dependent students. Eligibility for a Direct PLUS Loan requires completion of the Free Application for Federal Student Aid (FAFSA®), student enrollment in an eligible program of study and meeting all federal student eligibility requirements.  In addition, PLUS applicants must be  U.S. citizens or eligible non-citizens  will be subject to a credit check. Borrowers who are denied due to adverse credit may have options to appeal the decision or apply with an eligible endorser.

The maximum a parent may borrow is $20,000 annually (new starting the 2026-2027 award year) or up to the students Cost of Attendance minus all other financial assistance received. Interest begins accruing when the loan is first disbursed, and borrowers are responsible for all accrued interest.

Direct PLUS Loans have a fixed interest rate that is established annually by federal law for loans disbursed between July 1 and June 30. Borrowers are also charged a federal loan origination fee that is deducted proportionately from each loan disbursement.

Application Process

For COTC to originate/certify a PLUS loan, the student must have filed the Free Application for Federal Student Aid (FAFSA®) and file complete. The parent may apply for a PLUS loan by going to https://studentloans.gov  and completing the Parent PLUS application. Parents will use their FSA ID (same FSA ID used to sign the FAFSA) to login and request the Parent PLUS Loan and sign the MPN. COTC will receive notification of all approved PLUS Loan applications and will finalize the origination/certification process for the PLUS loan.

Repayment

Repayment generally begins once the loan is fully disbursed. Parent PLUS borrowers may request a deferment while the student is enrolled at least half-time and for an additional six months after the student ceases half-time enrollment.

Borrowers are encouraged to carefully consider their ability to repay before borrowing and should borrow only the amount needed to meet educational expenses. Additional information about Direct PLUS Loans, current interest rates, origination fees, and repayment options is available through the U.S. Department of Education at Federal Student Loans.

Scheduled Disbursements for Federal Direct Loans

Borrowers receiving either a Federal Direct Subsidized/Unsubsidized Loan or Federal Direct PLUS Loan should be aware of their scheduled disbursement dates and amounts that are stated on the disclosure statements which the servicer will mail once the loan has been originated. (The scheduled disbursement dates are not the same as the COTC refund dates.)  

A student with a loan for only one semester will receive the loan funds in two disbursements within the semester. The first half will be disbursed on the regular disbursement date for the semester and the second half of the loan will be disbursed at the mid-point of the semester. The student must maintain half-time enrollment to be eligible for each disbursement.