Federal Direct Loan Program Information

Federal Direct loans are available to classified students who are enrolled at least half-time (6 credits) to help pay the cost of their educational expenses. Students may be eligible to receive subsidized and unsubsidized loans based on their financial needs.

There are two types of Federal Direct loans


Awarded to students who demonstrate financial need as determined by the Financial Aid Office.  Interest is paid by the U.S. Department of Education while you are enrolled at least half-time, for the first six months after you leave school (grace period), and during any approved deferment periods.


Typically awarded to students who do not demonstrate financial need or may be used to supplement a Federal Direct Subsidized loan.  You are responsible for interest that accrues on the loan, which starts after the loan is disbursed. Although principal payments can be postponed; interest will be capitalized, meaning the servicer will add the accrued interest to the principal balance you owe.

Interest Rate

** Effective July 1, 2013 the interest rate on Federal Direct SUBSIDIZED and UNSUBSIDIZED Loans are variable/fixed rates. Each year the interest rate will be calculated based on the 10-year US Treasury-Bill + 2.05% capped at 8.25%. Once calculated it will be fixed for the life of that loan.

School Year (July 1 – June 30) Interest Rate
2022-23 4.99%
2021-22 3.73%
2020-21 2.75%
2019-20 4.53%

Note: In response to the COVID-19 emergency, the U.S. Department of Education paused loan payments and set interest rates to 0% for eligible federal student loans. The Student Loan Payment Pause has been extended through August 31, 2022.

The pause is for loans held by the Department of Education and includes the following relief measures:

  • a suspension of loan payments.
  • a 0% interest rate
  • stopped collections on defaulted loans

Loan Fees

There is a loan fee on all Direct Subsidized and Direct Unsubsidized Loans. The loan fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement. The percentage varies depending on when the loan is first disbursed.

  • 1.057% deducted proportionately from each loan disbursement effective for loans first disbursed 10/01/2020 – 09/30/2023

The fee goes to the government to help reduce the cost of the loans. Repayment begins six months from the date of graduation, withdrawal, or enrollment of less than half-time. There is no prepayment penalty.

The Master Promissory Note

If you accept a Federal Direct Loan, you must complete a Master Promissory Note (MPN) confirming that you will repay funds that you borrow under this loan program.

The first year you borrow at Kapi‘olani CC, you will need to complete the MPN. The MPN covers all Federal Direct loans borrowed and continues to borrow. The MPN eliminates the need to complete a promissory note every year to receive additional loans (in most cases). You will confirm the amount of loan funds requested for each academic year through acceptance of the Federal Direct Loans within your Financial Aid Offer (https://myuh.hawaii.edu).

Entrance Counseling:

All students are required to know the terms of the Federal Direct Loan, including completion of the Entrance Counseling requirement. The entrance counseling assists students in learning and understanding their rights, responsibilities, loan repayment, terms, etc.

Annual Loan Limits

Class Level Dependent Student Independent Student
Base Loan Eligibility
(Subsidized and Unsubsidized)
$ 3,500 $ 3,500
Additional Unsubsidized Loan Eligibility $ 2,000 $ 6,000
Maximum Freshmen Eligibility $ 5,500 $ 9,500
Base Loan Eligibility
(Subsidized and Unsubsidized)
$ 4,500 $ 4,500
Additional Unsubsidized Loan Eligibility $ 2,000 $ 6,000
Maximum Sophomore Eligibility $ 6,500 $ 10,500


Apply for a Federal Loan

If you are interested in borrowing a Federal Direct Loan, you will need to go online to complete the following steps:

Kapi‘olani Community College x