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Direct Loans are low-interest loans for students to help pay for the cost of a student's education. The lender is the U.S. Department of Education rather than a bank or other financial institution. With Direct Loans, you borrow directly from the federal government and have a single contact for everything related to the repayment of your loans, even if you receive Direct Loans at different schools.

Loans are assigned to a loan servicer by the U.S. Department of Education after the loan is disbursed (paid out). The loan servicer is the company which handles the billing and other services including repayment plans and loan consolidation for the federal student loans.

Types of Direct Stafford Loans

  • Subsidized Loan: This type of loan is based on financial need. While the borrower remains in school, the interest on the loan is paid by the federal government. The interest rate for a subsidized loan at Highland Community College is fixed at 3.86% for the 2013-2014 academic year and 4.66% for the 2014-2015 academic year for undergraduate students. The financial aid office will do a calculation to determine whether or not a student is eligible to receive a subsidized loan once the student has completed the loan application process.
  • Unsubsidized Loan: This loan is not based on financial need. Interest accrues from the date of disbursement until the final payment. The borrower can choose to pay the interest periodically while in school and during the grace period or can have the interest capitalized and added to the principal amount of the loan. The interest rate for an unsubsidized loan is fixed at 3.86% for the 2013-2014 academic year and 4.66% for the 2014-2015 academic year for undergraduate students.


  • Repayment begins 6 months after graduating, dropping below half-time, or withdrawing from your academic program.
  • The Standard Repayment Plan is 10 years.
  • There are other payment options for borrowers who may need more time to repay or who need to make lower payments at the beginning of the repayment period.
  • If you have multiple federal education loans, you can consolidate them into a single Direct Consolidation Loan.
  • There may be a .25% interest rate reduction for auto debit.

By law, the total origination fee is 1.072% with the first loan disbursement after December 1, 2013 for the 2013-2014 academic year.  The total origination fee is 1.072% for loans with the first loan disbursement prior to October 1, 2014 and 1.073% for loans with the first loan disbursement after October 1, 2014 for the 2014-2015 academic year.


Loan proceeds will be applied to all outstanding charges on the student account before a refund will be processed.


Application Process

Students must be enrolled at least half-time (6 credits for fall and spring semesters), in a financial aid eligible degree program and in 'good standing' according to the Standards of Academic Progress at Highland. Students on Financial Aid Termination are not eligible for a student loan.

  • Check with Highland's financial aid office 815.599.3519 to see what other forms and documents you may need to complete in order to finish your financial aid file.
  • Complete the Loan Entrance Counseling online. ALL first-time direct loan borrowers must complete this online counseling.
  • Complete the Master Promissory Note online. ALL first-time direct loan borrowers must complete this online MPN.
  • If you are a returning student who has taken out a loan while at Highland Community College within the last two years you may turn in your Stafford Request Form to the Financial Aid Office once all of the preceding steps have been completed.
  • If it is your first time borrowing at Highland Community College you MUST make an appointment with the Loan Advisor at 815.599.3519. We will answer questions and determine eligibility at that time. 

More Information

  • General information regarding Direct Student Loans



Loan Servicer Contact Information

  • Nelnet  or  1-888-486-4722


Update Regarding Limitation on Direct Subsidized Loan Eligibility

As of July 1, 2013, the U.S. Department of Education introduced a maximum period of time limitation (measured in academic years) on Direct Subsidized loan eligibility for first-time borrowers.  A first time borrower is a borrower who did not have an outstanding balance of principal or interest on a Direct Loan or FFEL loan on July 1, 2013.   In general, a first-time borrower may not receive Direct Subsidized Loans for more than 150% of the published length of the borrower’s educational program.  Only first-time borrowers on or after July 1, 2013 are subject to this new provision.




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