Loans

What Students Need to Know About Changes to Federal Direct Loans

The federal government has made changes to federal student loans. These changes begin with loans first borrowed for the 2026–2027 school year.

Students may see changes to:

• How much they can borrow
• How enrollment affects their loan amount
• Which repayment plans are available

The Financial Aid Office is here to help you understand these changes.

Important: Your Class Schedule Can Affect Your Loan

Beginning July 1, 2026, students who attend less than full-time may receive a reduced federal student loan amount.

Your loan amount may depend on how many classes you take.

How Enrollment Affects Your Loan

• Full time (12+ credits per semester): You may receive your full annual loan eligibility.
• 9-11 credits: Your loan may be reduced.
• 6-8 credits: Your loan may be reduced.
• Less than 6 credits: You cannot receive a Direct Loan.

Remember: You must still be enrolled at least half-time to receive a federal Direct Loan.

Before you drop a class:

Dropping a class can affect your financial aid. Before you:

• Drop a class
• Withdraw from school
• Change your schedule

Contact the Financial Aid Office first. A change in your enrollment may affect:

• Your federal loans
• Your financial aid eligibility
• Your bill with the college

Send your loan questions to: mctcloans@kctcs.edu

Frequently Asked Questions (FAQ)

Q: Will these changes affect my current loan?
A: These changes apply to new federal Direct Loans beginning with the 2026–2027 academic year. Your Financial Aid Office can help you understand how the rules apply to you.

Q: Can I still get a student loan if I go part-time?
A: Maybe. You must be enrolled at least half-time to receive a federal Direct Loan, which is 6 credit hours or more. However, students who are not full-time may receive a smaller loan amount.

Q: What does half-time mean?
A: Half-time enrollment means taking at least 6 credit hours during a semester. MCTC determines your enrollment status.

Q: Does this change my Pell Grant?
A: No. Federal student loans and Pell Grants follow different rules. Your Pell Grant eligibility is based on separate federal requirements.

Q: What if I need more money for school?
A: Talk with the Financial Aid Office about your options. You may want to:

• Apply for scholarships
• Look at payment plan options
• Review your budget
• Meet with an advisor about your class schedule

Other Federal Loan Changes

Beginning July 1, 2026, some students may also see changes to:

• Parent PLUS loan limits
• Repayment plan options
• Rules for new borrowers

Loan Forbearance

Currently loan forbearance is allowed for up to 12 months at a time with a cumulative limit of 3 years. For loans originated on or after July 1, 2027, forbearance is allowed for up to nine months in any two-year period.

Loan Deferment Options

Economic hardship and unemployment deferments will be phased out. Borrowers with loans made on or before July 1, 2027 may still utilize economic hardship and unemployment deferment options until those loans are paid in full.

Loan Rehabilitation Terms

Borrowers may now rehabilitate a defaulted loan twice (currently only one rehabilitation is allowed). The minimum rehabilitation payment for direct loans changes to $10.

The Financial Aid Office will provide updates as more information becomes available.

Your Financial Aid Office is here to help. Student loans are an important decision. Before borrowing, know how much you are borrowing, understand your repayment options, borrow only what you need.

Questions? Contact the Financial Aid Specialist at your campus.

 

Payments are made to the U.S. Department of Education. Students do not have to start repayment until six months after they graduate or they fall below half-time status. However, you can make payments at any time towards your loan.

The U.S. Department of Education pays (subsidizes) the interest while the borrower is in school and during grace and deferment periods on subsidized Direct Loans. The borrower is responsible for paying the interest that accrues on unsubsidized Direct Loans.

You have a grace period of 6 months after you graduate, leave school or drop below half-time status before you must begin repayment on a loan. During the grace period on a subsidized loan you don't have to pay any principal and you won't be charged interest. On an unsubsidized loan you don't have to pay any principal, but you will be charged interest. You can either pay the interest as you go along or it will be capitalized (i.e., added to the principal loan balance) later.

Common Rules

There are also some rules that apply to all student borrowers. They include:

• All students must complete the FAFSA (this must also be completed for Parent PLUS Direct Loans)
• All students must meet the general eligibility requirements for financial aid
• All students will go to KCTCS Student Services Center and enter their e-ID and password to accept their Direct Loan(s) (Exception Parent PLUS Direct Loans are noted below)

Student Borrowers

Because this is the first year for KCTCS to participate in the Federal Direct Loan Program, all students wishing to apply for a Subsidized Direct Loan and/or Unsubsidized Direct Loan need to complete the following :

1. Direct Loan Master Promissory Note www.studentaid.gov/mpn
2. Entrance Loan Counseling www.studentaid.gov/entrance-counseling
3. Accept your student Loan in KCTCS Student Services Center

Parent Borrowers

Parent borrowers wishing to apply for a Direct Parent PLUS Direct Loan are required to complete the following:

1. Complete a Direct Loan PLUS loan request form from your respective college.
2. Direct Loan Master Promissory Note www.studentaid.gov/mpn

 

• One lender one choice.
• Direct Loans are never sold by the federal government, so student borrowers always know who holds their loans and the terms of their loans. FFELP (i.e., Stafford) loans are frequently sold, with promised benefits not honored by the new loan holder(s).
• Borrowers will be able to consolidate their previous FFELP loans with their direct loans for free through the Federal Direct Consolidation Program
• Loans are able to be processed quickly with only one lender involved resulting in a smoother student loan delivery process.
• Federal Direct Loans offer a true, income contingent loan repayment option with loan forgiveness after 25 years of repayment. Borrowers with a desire to work in relatively low-paying, community service jobs can do so while minimizing the fear of defaulting on the repayment of their student loans.
• Direct Lending has the new Public Service Loan Forgiveness program that will forgive remaining debt after 10 years of eligible employment and qualifying loan payments for people working in key public service professions such as teaching, government, social work, law enforcement, and non-profit 501(c)(3) organizations.
• Under the Direct Loan Program the Parent PLUS Interest Rate is 7.9%. Under FFELP the Parent PLUS Interest Rate was 8.5%.

The Department of Education is the new lender; therefore, you must complete the required forms with them in order to receive your loan funds.

Federal Student Direct loans can be consolidated along with outstanding student loan debt from FFELP (i.e., Stafford Loans). After graduation you have a choice. You may either make individual payments to your previous lender(s) for FFELP and the Department of Education for Direct Loans. However, if you do not want to consolidate your FFELP and Direct Loans, you will have to make separate payments to the different loan servicers. For information on consolidation or an application to consolidate go to the Federal Direct Consolidation website.

Yes, the eligibility requirements and loan amounts are the same. The Department of Education acts as a lender, providing funds for Direct Loans and Parent or Grad PLUS loans in the same amounts as the Stafford and Parent or Grad PLUS loans offered through the Federal Family Education Loan Program. (In FFELP banks and other private lenders provide these loans.)

No, you will not be able to choose a private lender for receiving a new loan, as the Department of Education is the only student loan lender after July 1, 2010.  

Changing from FFELP to Direct Lending will not affect your loan eligibility because Direct Loans are subject to many of the same regulations as FFELP loans. For instance, students must meet satisfactory academic progress and be within their aggregate loan limits to receive any kind of federal loans.

The National Student Loan Data System has information about your federal student loans. It is important that you keep track of your student loan debt. To review your loan information, you can log in to NSLDS. You will need your PIN number from your FAFSA.