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Home » Admissions » Stafford Loans and the Federal Direct Student Loan Program

Stafford Loans and the Federal Direct Student Loan Program

EFFECTIVE 2010-11,   VTC is pleased to announce that we will be participating in the Federal Direct Loan Program (DL) for all new students beginning January 1, 2010.

Why did we make this change to DL?  VTC is committed to having access to a stable source of educational loans.  With the DL Program, VTC is able to assess funds directly from the US Government so that our students will not have delays in receiving their federal loan funds.

Federal Direct Loans (William D. Ford Direct Student Loans)
TWO (2) STEPS ARE REQUIRED:  Students are required to complete:

         1.  ENTRANCE COUNSELING SESSION

         2.  MASTER PROMISSORY NOTE (MPN)
Student loans are the major form of self-help aid available to VTC students with at least half-time enrollment in a degree seeking program (6 credits per semester for undergraduates) Loans are available through the Federal Direct Loan Program.

As part of the changes to the student loan programs made by the Higher Education Reconciliation Act of 2005 (the HERA), Pub. L. 109-171, the origination fee for Direct Subsidized Loans and Direct Unsubsidized Loans will again be reduced as explained below.  The up-front interest rebate will also be reduced.  In this announcement and its attachment, we provide operational guidance for schools and third party software providers on implementing these latest reductions in the origination fee and the up-front interest rebate.  In summary—

  • For all Direct Subsidized Loans and Direct Unsubsidized Loans for which the earliest disbursement date is on or after July 1, 2010, the origination fee is changing from 1.5 percent to 1.0 percent.

  • For all Direct Subsidized Loans and Direct Unsubsidized Loans for which the earliest disbursement date is on or after July 1, 2010, the up-front interest rebate is changing from 1.0 percent to 0.5 percent.

  • Beginning with implementation of the COD System for the 2010-2011 Award Year (scheduled to occur during the period March 26-27, 2010), the COD System will process awards with a 1.0 percent origination fee and a 0.5 percent interest rebate, as appropriate, based on the earliest disbursement date.  The COD System will continue to accept awards with a 1.5 percent, 2.0 percent, 2.5 percent, or 3.0 percent origination fee, as appropriate, based on the earliest disbursement date.  The COD system will continue to accept awards with a 1.5 percent or 1.0 percent interest rebate, as appropriate, based on the earliest disbursement date.

Note: The Direct PLUS Loan origination fee is not changing and will remain at 4.0 percent for Direct PLUS Loans made to both parent borrowers and graduate/professional student borrowers.  In addition, the up-front interest rebate amount is not changing and will remain at 1.5 percent for all Direct PLUS Loans.

The U.S. government is the lender under this Direct Loan program. All repayments will also be made back to the U.S. government through myedaccount.com

Not sure how much your monthly payments will be? Use one of our repayment calculators to help you plan - www.finaid.org or www.ed.gov

Note: The longer your loan is in repayment, the more interest you will pay. Calculations are estimates. Values may not reflect the actual amount computer by the Direct Loan Servicing Center.

Federal Direct Parent Loans for Undergraduate Students (PLUS) are also available for parents of dependent students and information on Direct Consolidation Loans is available once students graduate.

Beginning with the 2010-2011 academic year, ALL students borrowing from the Federal Direct Loan Program must sign a Master Promissory Note (MPN) for their Direct Loan.  This Direct Loan MPN is valid for ten years.

The online Master Promissory Note (MPN)  must be completed before funds can be credited to your term bill generated by VTC's Student Account Office. This MPN can be signed with your federal PIN. To retrieve or apply for your federal pin, go to http://www.pin.ed.gov.

The on-line Entrance Counseling session assures that you understand your rights and responsibilities in using federal loans.   Before DL funds are credited to your term bill generated by VTC’s Student Account’s Office, this Entrance Counseling must be completed at studentloans.gov.

The Federal Direct loan awarded may be subsidized and/or unsubsidized, as described below:

A subsidized Federal Direct loan is awarded on the basis of financial need.  Interest is are not charged  until you begin repayment or during deferment periods.

An unsubsidized Federal Direct loan is not awarded on the basis of need. You will be charged interest from the time the loan is disbursed until it is paid in full. If you allow the interest to accrue (accumulate) while you’re in school, or during other periods of non-payment, it will be capitalized. This means the interest will be added to the principal amount of your loan, and additional interest will be based on that higher amount.


If your class level changes during the year, you may be eligible for an increase in your Federal Direct Loan. If you wish to request an increase in your loan amount, please contact us via email or stop by our office to present the request in writing. For example, a second year student might begin the fall semester with 19 credits and have a Federal Direct Loan of $3,500. During the fall semester, the student earns 12 credits, for a total of 31 credits by the beginning of the spring semester. The spring loan award could then be increased from $1,750 to $2,250 upon request.

The Federal Student Aid Ombudsman of the Department of Education helps resolve disputes and solve other problems with federal student loans.

You may access your prior loan information on the National Student Loan Data System (NSLDS) website at: www.nslds.ed.gov. This site contains all of your federal Title IV aid history.





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