Federal Direct Student Loans
New Federal Financial Aid ChangesThe One Big Beautiful Act (OBBB) was signed into law on July 4, 2025 and makes significant changes to federal financial aid programs, including new loan limits, new loan repayment options, and updated eligibility requirements, for both current and future students. H.R. 1 - One Big Beautiful Bill Act (Full Text). What's Changing: Reduced Annual Loan Limits for Less than Full-Time Enrollment
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WHAT IS A STUDENT LOAN?
A student loan is money borrowed from the federal government to help pay for college costs, such as tuition, supplies, books, housing expenses, or other fees. Unlike scholarships or grants, which are gifts that do not need to be paid back, a loan accumulates interest and has to be paid back.
WHO QUALIFIES?
Eligibility is determined by the GCC Financial Aid office, based on the results of your Free Application for Federal Student Aid (FAFSA), your estimated cost of attendance, and other financial aid you are receiving. To borrow a Federal Direct Student Loan, you must be enrolled at least half-time (6 credits) in an aid-eligible academic program. All enrolled students must also meet GCC’s Satisfactory Academic Progress Policy.
TYPES OF LOANS
Federal Direct Subsidized Loans are loans for undergraduate students with financial need, as determined by your cost of attendance minus expected family contribution and other financial aid (such as grants or scholarships). Federal Direct Subsidized Loans do not accrue interest while you are in school at least half-time or during deferment periods.
Federal Direct Unsubsidized Loans are not based on financial need. Eligibility is determined by your cost of attendance minus other financial aid (such as grants or scholarships). Interest is charged during in-school, deferment, and grace periods. Unlike a Federal Direct Subsidized Loan, you are responsible for the interest from the time the Federal Direct Unsubsidized Loan is disbursed until it’s paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will increase the amount you have to repay. What is interest capitalization on a student loan?
HOW MUCH CAN I BORROW?
The maximum amount you can borrow each academic year depends on your grade level dependency status and hours of enrollment. See the chart below for annual and aggregate (lifetime) borrowing limits. You may not be eligible to borrow the full annual loan amount because of your expected family contribution or the amount of other financial aid you are receiving. To see examples of how your Federal Direct Subsidized or Unsubsidized award amount will be determined. Direct loan eligibility and loan request amount must be greater than $200 for a loan to be processed.
If you are a first-time borrower on or after July 1, 2013 and before July 1, 2021, there is a limit on the maximum period of time (measured in academic years) that you can receive Federal Direct Subsidized Loans. This time limit does not apply to Federal Direct Unsubsidized Loans or Federal Direct PLUS Loans. If this limit applies to you, you may not receive Federal Direct Subsidized Loans for more than 150 percent of the published length of your program.
FEDERAL DIRECT AND INDIRECT LOAN LIMITS
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Undergraduate Annual Loan Limits |
Dependent Student |
Independent Student |
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First Year (0-28 credits) |
$5,500 (Up to $3,500 Subsidized) |
$9,500 (Up to $3,500 Subsidized) |
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Second Year (29 -63 credits) |
$6,500 (Up to $4,500 Subsidized) |
$10,500 (Up to $4,500 Subsidized) |
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Aggregate (Lifetime) Borrowing Limit |
$31,000; No more than $23,000 may be in subsidized loans |
$57,500; No more than $23,000 may be in subsidized loans |
INTEREST RATES AND FEES
Click here for information on interest rates and fees associated with the Federal Direct Loan program.
APPLYING FOR FEDERAL DIRECT LOANS
When you complete the Free Application for Federal Student Aid you are applying for all of the aid programs for which you may be eligible, including federal direct loans.
If a Federal Direct Stafford Loan (subsidized or not subsidized) has been offered to you as part of your aid offer it will post on the Aid Award Summary section of My GCC.
To ACCEPT your Federal Direct Loan, complete each of the required steps below:
- Complete the Federal Direct Loan Request Form
- Complete Loan Entrance Counseling Entrance Counseling is usually required only once while enrolled at GCC. If you have not previously completed Entrance Counseling for a Federal Direct Subsidized or Unsubsidized Loan at GCCComplete Your Student Loan Entrance Counseling .
- Signing the Master Promissory Note A Master Promissory Note (MPN) is usually required only once while enrolled at GCC. The MPN is a legal document whereby students promise to repay their loans and any accrued interest and fees to the U.S. Department of Education. If you have not previously completed the MPN for a Subsidized / Unsubsidized Loan at GCC, or it has been more than 10 years since you previously completed the MPN, see Complete Master Promissory Note (MPN).
- Annual Student Loan Acknowledgement Complete the Annual Student Loan Acknowledgment (ASLA) each year that you accept a new federal student loan. ASLA helps you to understand your responsibilities to repay your loan, how much you have borrowed and how much more you can borrow. If you borrow a Federal Direct Subsidized, Unsubsidized, or Parent PLUS loan it is optional tocomplete this acknowledgment see Complete an Annual Student Loan Acknowledgement for Federal Student Loans.
RIGHT TO CANCEL
Federal regulations allow student loan borrowers up to 14 days after disbursement of funds to cancel or reduce the loans. The following describes the process to request a cancellation or reduction of student loans. To request changes to your loan(s), please complete a Financial Aid Revision Form and return it to the Financial Aid Office. If the cancellation results in a balance due on your student account, payment will be required immediately.
INFORMATION DISCLOURSE
Once a student completes the process for a Federal Direct Loan and funds are disbursed, the student’s information regarding the loan is reported to the National Student Loan Database System (NSLDS) by the federal processor. The information on NSLDS is accessible by any institutional or governmental entity that has legal access to NSLDS. The information is updated as needed with regards to enrollment status, graduation dates, and additional loans taken.
National Student Loan Database System (NSLDS)- Students may also get access online and set up an account.
National Student Clearinghouse
DISBURSEMENT TIMING
Federal regulations require loans be disbursed in a minimum of two payments per loan period
- Academic-year loans (fall and spring semesters)- divided into two payments over the
academic year:
- 1st disbursement after loan origination in fall semester, and
- 2nd disbursement at the beginning of spring semester.
- Single-semester loans (fall or spring) – divided into two payments over the semester:
- Exact disbursement dates depend on timing of origination
- 1st disbursement after loan origination, and
- 2nd disbursement approximate midpoint between 1st disbursement and end of semester.
- Exact disbursement dates depend on timing of origination
Please Note the following details regarding loan disbursements:
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- Students must maintain at least half-time enrollment (6 credits) to receive loan disbursement.
- First time student borrowers with no prior Federal Direct Loan are required by law to complete 30 days of their program of study before receiving their first loan disbursement.
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FEDERAL DIRECT LOAN – SAMPLE REPAYMENT CHART
This table provides an estimated monthly payment amount using a Standard Repayment Plan. The payments are at a fixed monthly payment amount with 10 years to repay the loan in full. The current interest rate for a Federal Direct Loan (subsidized and unsubsidized) is 6.39 percent*. It was assumed that the maximum amount of subsidized Federal Direct Loans was borrowed and the remaining amount was in unsubsidized Federal Direct Loans.
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Loan Amount |
Fixed Interest Rate |
Estimated Monthly Payments |
Total Estimated Amount Paid (Principal and Interest) |
Repayment Period |
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$3,500 |
6.39% |
$50 |
$4,391 |
89 months |
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$4,500 |
6.39% |
$51 |
$6,101 |
120 months/10years |
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$5,500 |
6.39% |
$62 |
$7,457 |
120 months/10years |
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$6,500 |
6.39% |
$73 |
$8,813 |
120 months/10years |
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$9,500 |
6.39% |
$107 |
$12,881 |
120 months/10years |
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$10,500 |
6.39% |
$119 |
$14,237 |
120 months/10years |
* Interest rate applies to loans first disbursed on or after July 1, 2025 and by June 30, 2026.
Go to Federal Student Aid Loan Repayment Plans to learn about the various repayment plans and use the Loan Simulator to see your monthly payment estimates.
Log in to your account at student aid.gov to view all your outstanding federal student loans and loan servicer information.
STUDENT LOAN EXIT COUNSELING
Once you graduate, stop attending, or are no longer enrolled in at least 6 credit hours, you will be required to complete Exit Counseling, even if you plan to transfer to another school or return to GCC in a future semester. Exit Counseling explains your responsibilities for repayment of your Direct Loan and provides information on how to manage your student loans. To complete Exit Counseling, click here.
LOAN REPAYMENT
Repayment Estimator is a tool that Federal Direct Loan (Direct Loan) and Federal Family Education Loan (FFEL) program borrowers can use to obtain preliminary repayment plan eligibility information and estimated repayment amounts. This easy-to-use tool offers borrowers the opportunity to obtain preliminary repayment information across all of the repayment plans. Its advantage over repayment plan-specific calculators is that it provides side-by-side results for all plans and information about the total cost of a loan over time. The new repayment estimator is available for borrower use on Loan Simulator.
The US Department of Education offers different repayment plans. The student borrower should select the plan that best fits their individual situation. The Repayment Estimator If the student does not select a repayment plan prior to entering repayment than the loan will be under the Standard Repayment Plan (payments are a fixed amount that ensures your loans are paid off within 10 years).
Borrowers can change their repayment plan at any time for free by contacting their loan servicer. For more information on repayment plans please review: Federal Student Loan Repayment Plans.
Who’s My Student Loan Servicer?
COHORT DEFAULT RATES
The U.S. Department of Education annually produces federal student loan cohort default rates. This rate is the percentage of Federal Direct Loan (Direct Loan) borrowers in repayment, who during a federal fiscal year entered default on their loan(s).
Gogebic Community College - College Cohort Default Rates
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Year |
GCC Cohort Default Rate |
Borrowers in Repayment |
Borrowers in Default |
National Average Cohort Default |
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2022 |
0% |
0 |
0 |
0% |
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2021 |
0% |
0 |
0 |
0% |
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2020 |
0% |
0 |
0 |
0% |
Please note that all 2020, all of 2021, and all of 2022 cohort default rate years are impacted by the pause on federal student loan payments. During the pause, borrowers with Department of Education-held (ED-held) student loans were not required to make any payments, and no borrowers with Ed-held loans entered default. Fewer than 200 borrowers with non-ED-held loans entered default because those loans were not eligible for the payment pause. Some schools have a small number of student loan borrowers entering repayment. At other schools, only a small portion of the student body takes out student loans. In such cases, the cohort default rate should be interpreted with caution.
WHAT IS THE COHORT DEFAULT RATE
The Cohort Default Rate (CDR) is used by the U.S. Department of Education to determine whether colleges are eligible to receive federal student financial aid. The Department of Education can issue sanctions to schools with default rates above 40 percent in a single year or above 30 percent for three consecutive years. For students and families, the CDR can potentially indicate a college's value and institutional commitment in helping students avoid loan debt. A low default rate can also indicate that a college's graduates find employment that provides adequate income to manage their debt. The CDR is used as a component by many college ranking systems as an important item of consideration for prospective students.
WHAT IS DEFAULT
Default is the failure to repay a loan according to the terms agreed to in the Master Promissory Note (MPN). For most federal student loans, you will default if you have not made a payment in more than 270 days. If you default on a federal student loan, you lose eligibility to receive federal student aid and you may experience serious legal consequences.
What is the difference between default, deferral, and delinquency?
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- Default is when no payments have been made on the loan in 270 days.
- Deferral is when loan repayment is paused. Deferral must be applied for directly with the loan servicer. Subsidized loans will not accrue interest during this time; however, unsubsidized loans will continue to accumulate interest.
- Delinquency occurs when a payment is missed and lasts until payment is resolved or when the loan has entered a default status. If a loan is delinquent for 90 days or more, the loan servicer will report the delinquency to the three major national credit bureaus.
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CONSEQUENCES OF DEFAULT
After a student's loan has defaulted, the entire balance becomes due, and the student is no longer eligible for any Title IV financial aid.
Other consequences of default may include:
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- Reporting the default to all national credit bureaus.
- Withholding of a percentage of your wages until the debt is paid in full.
- Adding collection and attorney’s fees to the balance of your loan(s).
- Seizure of your IRS tax refund by the guarantor or U.S. Department of Education.
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STUDENT LOAN CODE OF CONDUCT
View the GCC Student Loan Code of Conduct
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STUDENT LOAN OMBUDSMAN |
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Student Loan Ombudsman: |
The Federal Student Aid Ombudsman of the Department of Education helps resolve disputes and solve other problems with federal student loans. |
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On-line assistance: |
Click here for online assistance| Resolving Disputes with Federal Student Aid |
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Contact Information for the FSA Student Loan Ombudsman's Office: |
Telephone: (877) 557-2575 (toll free) |
