Federal Direct Loans (Subsidized and Unsubsidized)

The main source of student loans is the federal government. Kettering College participates in the Federal Direct Student Loan Program. Kettering College disburses your loan funds on behalf of the United States Department of Education. No bank or guarantee agency is involved in the direct lending process. The Federal Direct Loan that you, the student, can borrow in your own name can be either subsidized or unsubsidized or a combination of both. The interest rate on your Federal Direct Subsidized or Unsubsidized Loan is a variable rate that is adjusted each July 1.

After you have applied for financial aid at Kettering College, you will receive an Award Letter, which lists the maximum loan amounts you are eligible to borrow from both the subsidized and/or unsubsidized loan programs. Once a student is awarded a Federal Direct Loan, they must complete a Master Promissory Note (MPN) on the web at www.studentloans.gov and Entrance Counseling on the web at www.studentloans.gov. The Direct Subsidized and Unsubsidized Combined Annual and Aggregate Loan Limits are as follows:

In order to qualify for a Federal Direct Subsidized Loan, you must have financial need. To determine if you have financial need, your Expected Family Contribution from your FAFSA and any additional aid you may have coming to you is subtracted from your "cost of attendance." If you do qualify for a subsidized loan, the federal government pays the interest on the loan, i.e., subsidizes the loan while you are in school, during your six-month grace period prior to repayment, and during any authorized period of deferment.


Students without financial need are eligible for the Federal Direct Unsubsidized Loan. This means that you will be responsible for the interest on the loan from the time you receive the funds until the loan is paid in full. You have the option of allowing the interest to accumulate, or accrue, on the loan while you are in school and during your six-month grace period prior to repayment.

You also have the option of paying the interest on the loan as it accumulates. If you decide to delay interest repayment, the interest that accumulates will be "capitalized," that is, will be added to your loan principal when you begin repayment.

Entrance Counseling

Before you receive your first Federal Direct Loan at Kettering College, the federal government requires you to participate in Entrance Counseling on the web at www.studentloans.gov. The purpose of Entrance Counseling is to educate you about student loans so you will be a well-informed borrower. Entrance Counseling covers such topics as interest rates, repayment options, your rights and responsibilities, the consequences of default, etc.

**According to federal law, no funds can be disbursed to any student until the Entrance Counseling requirement has been met.**

Exit Counseling

If you received a Federal Direct Loan while a student at Kettering College, then you are required to complete Exit Counseling at www.studentloans.gov if one of the following happens:

  • you have applied to graduate at the end of the current semester - OR -
  • you have withdrawn for the current semester - OR -
  • you are not at least half-time for the current semester.

The purpose of Exit Counseling is to select a repayment plan; review deferment, forbearance, and cancellation provisions; discuss loan consolidation; and review the serious consequences of delinquency and default. You will receive a notice when it is time for you to complete the Exit Counseling requirement. 

Federal Direct Loan Repayment

If you think you might have a problem making a scheduled payment on your student loans, you should contact the organization that services your loan. If you do not know who your servicer is, you can look it up at www.nslds.ed.gov.

Default occurs when a Federal Direct Loan borrower becomes 270 days delinquent in making a loan payment. There are numerous adverse consequences that will result if you default on your student loan. These negative consequences include, but are not limited to, the following:

  • You will not be eligible for future federal financial aid.
  • Your account may be turned over to a collection agency.
  • Your credit rating will be damaged.
  • Your federal income tax refund may be withheld from you.
  • Your wages may be garnished.
  • Your car and other possessions may be repossessed.
  • The federal government can sue you.