What Are Loans?
Federal Direct Loans are a form of financial aid available to assist undergraduate students attending college at least half-time. Students may use the funds to pay for tuition, books, and living expenses. Loans must be repaid at a low fixed-rate.
Interest Rates for New Direct Loans
Under the Higher Education Act of 1965, as amended, interest rates are determined each spring for new Direct Loans being made for the upcoming award year, which runs from July 1 to the following June 30. Each loan has a fixed interest rate for the life of the loan.
Temporary 0% Interest as a Result of the COVID-19 National Emergency
To provide relief to student loan borrowers during the COVID-19 national emergency, interest on most federal student loans has been temporarily set at 0%. The 0% interest will last from until the Department of Education announces that interest rates have been reinstated.
Have questions? Find out what loans qualify, and get additional information about the 0% interest period and other student loan flexibilities due to the COVID-19 national emergency.
The following table provides the fixed interest rates for new Direct Loans first disbursed on or after for July 1, 2021 to July 1, 2022. These rates will apply to new Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans made during this time.
| Loan Type |
Borrower Type |
Fixed Interest Rate |
| Direct Subsidized Loans and Direct Unsubsidized Loans |
Undergraduate |
3.73% |
| Unsubsidized Loans |
Graduate/Professional |
5.28% |
| Direct PLUS Loans |
Parents and Graduate/Professional Students |
6.28% |
Learn about interest rates and fees associated with federal student loans
- Federal Direct Loan Eligibility
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To be eligible for Federal Direct Loans you must :
- be a U.S. citizen or an eligible noncitizen;
- be enrolled or accepted for enrollment as a regular student in an eligible degree or certificate program;
- be enrolled at least half-time to be eligible for Direct Loan Program funds;
- maintain satisfactory academic progress in college or career school;
- sign statements on the Free Application for Federal Student Aid (FAFSA) stating that you are not in default on a federal student loan and do not owe money on a federal student grant and you will use federal student aid only for educational purposes; and show you’re qualified to obtain a college or career school education by having a high school diploma or a recognized equivalent such as a General Educational Development (GED) certificate or completing a high school education in a homeschool setting approved under state law
- Federal Direct Subsidized Loan
-
A Federal Direct Loan based on financial need for which the federal government pays the interest that accrues while the borrower is in an in-school, grace, or deferment status. For Direct Subsidized Loans first disbursed between July 1, 2012 and July 1, 2014, the borrower will be responsible for paying any interest that accrues during the grace period. If the interest is not paid during the grace period, the interest will be added to the loan's principle balance.
- Federal Direct Unsubsidized Loan
-
A Federal Direct Loan for which the borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues through the life of the loan.
- Federal Direct Parent Loan for the Undergraduate Student (PLUS)
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Direct Parent PLUS Loans are available to credit-worthy parents of dependent students who enroll at least half time (six credit hours per semester) and are meeting Satisfactory Academic Progress (SAP) standards with Lone Star College (LSC).
To apply for a Parent PLUS Loan, the parent must visit www.studentaid.gov and click the Parent tab to access the Apply for a PLUS Loan link. The parent’s credit history will be checked by the U.S. Department of Education when the parent applies for the loan to determine eligibility.
If approved, the maximum amount of a PLUS loan will be determined by the total cost of attendance minus any other financial aid awards. The parent is responsible for repaying the loan to the Department of Education, plus any interest. Parent borrowers may be required to complete PLUS Loan entrance counseling.
To receive the PLUS loan at Lone Star College, the parent must submit a Parent PLUS Request and Parent Borrower Authorization Form.
If a parent is denied the Parent PLUS Loan, the dependent student can borrow additional Direct Unsubsidized Loan funds. To receive the additional Unsubsidized funds, the student or parent should submit the denial letter provided by the Department of Education to the Financial Aid Office.
Cohort Default Rate
A cohort default rate (CDR) is the percentage of a school's borrowers in the US who enter repayment on certain loans during a federal fiscal year (October 1 to September 30) and default prior to the end of the next one to two fiscal years.
Lone Star College's CDR for Fiscal Year 2018 (the most recent date available) is 12.3% compared to the national rate of 7.3%.
Lone Star College's Cohort Default Information
| |
FY 2018 |
| Default Rate |
12.3% |
| Number in Default |
951 |
| Number in Repayment |
7,709 |
| Enrollment Figures |
110,542 |
| Percentage Calculation |
6.9% |
For more informtaion on Cohort Default Rates, see the Department of Education's Cohort Default Rate Guide.
