A federal loan program is available to all students.
Federal Direct Loans are available to eligible students who complete the Free Application for Federal Student Aid (FAFSA). This federal student aid is made available through the William D. Ford Federal Direct Loan Program to help pay for educational expenses. The Financial Aid Office offers a Direct Subsidized or Direct Unsubsidized Loan, or a combination of both loans, based on financial need.
The information you report on your FAFSA is used to determine your Expected Family Contribution (EFC), which is a calculated formula established by law. Your EFC is not equal to the amount you and your family must pay, but rather an index that allows colleges to determine financial need. To determine your financial need, your EFC is subtracted from your cost of attendance.
- Federal Direct Subsidized Loan
A Federal Direct Subsidized Loan is offered based on your demonstrated financial need. The federal government pays interest on a subsidized loan, while you are enrolled in school at least half-time and during grace and other deferment periods. The interest rate for Federal Direct Subsidized loans disbursed on or after July 1, 2021 until June 30, 2022 is fixed at 3.73%.
- Federal Direct Unsubsidized Loans
A Federal Direct Unsubsidized Loan is not based on your financial need. The interest rate for Federal Direct Unsubsidized Loans disbursed on or after July 1, 2021 until June 30, 2022 is fixed at 3.73%. You are not required to pay the interest on this loan while in school, but we recommend that you do. You will be charged interest, starting at disbursement until the loan is paid in full. If the interest accumulates, it will be added to the principal amount of the loan and increase the amount to be repaid.
- Additional loans and grants may be available to you. We recommend visiting the following sites:
Annual Subsidized Limits
- First year undergraduates = $3,500
- Second year undergraduates = $4,500
- Remaining undergraduate years = $5,500
- Preparatory coursework needed to enroll in graduate program if student has a baccalaureate = $5,500
Annual Unsubsidized Limits
- Dependent undergraduates whose parents can borrow PLUS = $2,000
- First and second year undergraduate dependent students whose parents cannot borrow PLUS and independent students = $6,000
- Remaining undergraduate years for dependent students whose parents cannot borrow PLUS and independent students = $7,000
- Preparatory coursework needed to enroll in graduate program if student has baccalaureate = $7,000
- Undergraduate dependent students = $31,000 (up to $23,000 may be subsidized)
- Undergraduate independent students and dependent students whose parents cannot borrow PLUS = $57,500 (up to $23,000 may be subsidized)
Student Loan Repayment and Disputes
Students and parents who borrow Federal Direct Loans will repay their loans to a Federal Loan Servicer. Students are required to participate in Entrance Loan Counseling prior to their first disbursement of a federal student loan, and will be notified of the requirement to complete Exit Loan Counseling at the time of withdrawal or graduation. Exit Loan Counseling will inform students of their Federal Loan Servicer. This information is also available to students and parents at any point during their education on the National Student Loan Data System.
Detailed information about federal student loans, repayment and deferment is found at studentloans.gov. Students are also encouraged to contact their LBC Financial Aid Advisor with any questions.
If issues arise during student loan repayment that cannot be resolved with the Federal Loan Servicer, students or parents may contact the FSA Student Loan Ombudsman Group. The Federal Student Aid Ombudsman Group of the U.S. Department of Education is dedicated to helping resolve disputes related to Direct Loans, Federal Family Education Loan (FFEL) Program loans, Guaranteed Student Loans, and Perkins Loans. The Ombudsman Group is a neutral, informal, and confidential resource to help resolve disputes about your federal student loans.
FSA Student Loan Ombudsman Group Contact Information:
877.557.2575 | 606.396.4821
FSA Ombudsman Group
PO Box 1843, Monticello, KY 42633