Student Loans FAQ

Federal Direct Subsidized and Unsubsidized Loans

Federal Direct Loans

Federal Direct Loans are federal loans for undergraduate and graduate students. To receive federal student aid, student applicants must meet eligibility requirements as described on the Applying and Eligibility page and satisfactory academic progress. The Federal Direct Loans are either subsidized or unsubsidized aid that must be repaid by the student borrower.

Subsidized vs. Unsubsidized
A subsidized loan is awarded based on financial need. Subsidized loans do not accrue interest while the student is enrolled in school for at least half-time and during your 6 months grace period.

An unsubsidized loan is not awarded based on need. The borrower will be charged interest from the time the loan is disbursed until it is paid in full by the borrower. If the borrower chooses not to make interest payments and allows the interest to accrue (accumulate) while in-school or during other periods of nonpayment, the interest will be capitalized. This means the interest will be added to the principal amount borrowed and additional interest will be based on that higher amount.

Federal Direct Subsidized and Unsubsidized Loans Overview
How to Apply
  1. Student must complete the Free Application for Federal Student Aid (FAFSA).
  2. Once the student receives a Financial Aid Award, the student must accept the Federal Direct Stafford Loan(s) via Banner in accordance with the instructions provided on the Financial Aid Award.
  3. After accepting the Federal Direct Stafford Loan(s), the student must complete Entrance counseling and sign a Master Promissory Note.

Need help? Click here for detailed step-by-step instructions.

Interest Rate

For loans first disbursed on or after July 1, 2023 and before to July 1, 2024:

  • Direct Subsidized Loans and Direct Unsubsidized Loans for Undergraduate Students: 5.50% fixed
  • Direct Unsubsidized Loans for Graduate and Professional Students: 7.05% fixed

For loans first disbursed on or after July 1, 2022 and before to July 1, 2023:

  • Direct Subsidized Loans and Direct Unsubsidized Loans for Undergraduate Students: 4.99% fixed
  • Direct Unsubsidized Loans for Graduate and Professional Students: 6.54% fixed
Additional Loan Fees

For loans first disbursed on or after October 1, 2020 and before October 1, 2024:

  • Origination Fee: 1.057%

For loans first disbursed on or after October 1, 2019 and before October 1, 2020:

  • Origination Fee: 1.059%
Credit Requirements None
Annual Loan Maximums See Federal Direct Loan Annual Limits.
Aggregate Loan Maximum See Federal Direct Loan Aggregate Limits.
Enrollment Requirement Student must be enrolled at least half-time (at least 6 undergraduate credit hours for undergraduates and at least 3 graduate credit hours for graduate students).
Disbursement For a given term, loan funds are disbursed beginning on the first day of the first week of classes (provided all requirements are complete). Funds are applied directly to the student’s account. If the student’s account is paid in full and any Federal Direct Loan funds remain, a refund will be issued to the student. Contact the Business Office for Students at businessoffice@otterbein.edu or 614-823-1151 for questions.
Grace Period Six months.
Minimum Monthly Payment $50
Maximum Repayment Period 10 to 25 years depending upon your repayment plan. Visit the U.S. Department of Education’s Federal Direct Loans website for more information.
Deferment/Forbearance A Federal Direct Loan borrower may receive a deferment while he or she is enrolled on at least a half-time basis. Deferment/forbearance may be available under other circumstances.*
Federal Loan Consolidation Available under certain circumstances. Visit the Federal Direct Loan Consolidation website for more information.
Contact Direct Loan Borrower Services at (800) 848-0979 or visit the https://studentaid.gov/

Federal Direct Loan Annual Limits

Undergraduate Students
Student Classification Dependent Students Independent Students (and dependent students whose parents have been declined a Federal Direct Parent PLUS Loan due to adverse credit history)
Freshmen (0 to 30 undergraduate credit hours earned/transferred) $5,500 (No more than $3,500 of this amount may be in subsidized loans.) $9,500 (No more than $3,500 of this amount may be in subsidized loans.)
Sophomore (30 to 60 undergraduate credit hours earned/transferred) $6,500 (No more than $4,500 of this amount may be in subsidized loans.) $10,500 (No more than $4,500 of this amount may be in subsidized loans.)
Junior/Senior (60 or more undergraduate credit hours earned/transferred) $7,500 (No more than $5,500 of this amount may be in subsidized loans.) $12,500 (No more than $5,500 of this amount may be in subsidized loans.)
Certification Students
$12,500 (No more than $5,500 of this amount may be in subsidized loans.)
Graduate Students
$20,500 each year in direct unsubsidized Stafford loans.

Federal Direct Loan Aggregate Limits

Aggregate Direct Loan Limit by Student Type
Undergraduate, Dependent Students $31,000 (No more than $23,000 of this amount may be in subsidized loans.)
Undergraduate, Independent Students (and undergraduate, dependent students whose parents have been declined a Federal Direct Parent PLUS Loan due to adverse credit history) $57,500 (No more than $23,000 of this amount may be in subsidized loans.)
Graduate Students $138,500 (No more than $65,500 of this amount may be in subsidized loans.)

Federal Direct PLUS Loans

Federal Direct Parent PLUS Loan

The Federal Direct Parent Loan for Undergraduate Students is a federal loan that credit-worthy parents of dependent undergraduate students can borrow for their child’s educational expenses. Both parent applicants and students must meet eligibility requirements to receive federal student aid, and students must meet satisfactory academic progress requirements. The Federal Direct Parent PLUS Loan is a form of aid that must be repaid by the parent borrower.

Federal Direct Parent PLUS Loan Overview
How to Apply
Interest Rate

For loans first disbursed on or after July 1, 2023 and before to July 1, 2024: 8.05% fixed

For loans first disbursed on or after July 1, 2022 and before to July 1, 2023: 7.54% fixed

Additional Loan Fees

For loans first disbursed on or after October 1, 2020 and before October 1, 2024:

  • Origination Fee: 4.228%

For loans first disbursed on or after October 1, 2019 and before October 1, 2020:

  • Origination Fee: 4.236%
Credit Requirements The borrower must be credit-worthy. If the credit decision status is declined, the parent borrower has the option to resolve the denial by contacting Direct Loan Applicant Services at 1 (800) 557-7394 or apply for the Federal Direct Parent PLUS Loan with a credit-worthy endorser (co-borrower). The endorser is required to complete an Endorser Addendum and the parent must complete Plus Credit Counseling. NOTE: If the credit status is declined, the student can receive additional Federal Direct Unsubsidized Loan funds. Parents can complete a Parent PLUS Preapproval Form to determine creditworthiness. If any parent applicant is credit approved, the student will not be eligible for additional Federal Direct Unsubsidized Loan. Credit decisions are valid for only 90 days; therefore, a credit check should be completed no sooner than 90 days prior to the student’s start date. For more information, see Credit Checks.
Annual Loan Maximums Cost less aid. Cost information can be viewed through Banner.
Aggregate Loan Maximum None
Enrollment Requirement Student must be enrolled at least half-time (at least 6 undergraduate credit hours).
Disbursement Loan funds are disbursed beginning on the first day of the first week of classes (provided all requirements are complete). Funds are applied directly to the student’s account. If the student’s account is paid in full, any remaining Federal Direct PLUS Loan funds will be refunded to the parent. For additional information, contact the Business Office for Students at businessoffice@otterbein.edu or 614-823-1151 for questions.
Minimum Monthly Payment $50
Maximum Repayment Period 10 to 25 years depending upon your repayment plan. Visit the U.S. Department of Education’s Federal Direct Loans website for more information.
Deferment/Forbearance A Federal Direct Parent PLUS Loan borrower may receive a deferment while the student is enrolled on at least a half-time basis. The borrower must indicate this on the PLUS application. Deferment/forbearance may be available under other circumstances.*

Credit Checks

Credit decisions are only valid for 180 days. To best ensure a valid credit decision, the Office of Student Financial Services will accept credit decisions 90 days prior to the student’s start date.

Federal Direct Graduate PLUS Loans

Federal Direct Graduate PLUS Loan

The Federal Direct Graduate PLUS Loan is a federal loan that credit-worthy graduate students can borrow for themselves. Student applicants must meet eligibility requirements to receive federal student aid and satisfactory academic progress. The Federal Direct Graduate PLUS Loan is a form of aid that must be repaid by the student borrower.

Federal Direct Graduate PLUS Loan Overview
How to Apply
Interest Rate

For loans first disbursed on or after July 1, 2023 and before to July 1, 2024: 8.05% fixed

For loans first disbursed on or after July 1, 2022 and before to July 1, 2023: 7.54% fixed

Additional Loan Fees

For loans first disbursed on or after October 1, 2020 and before October 1, 2024:

  • Origination Fee: 4.228%

For loans first disbursed on or after October 1, 2019 and before October 1, 2020:

  • Origination Fee: 4.236%
Credit Requirements Yes, borrower must be deemed credit-worthy. Credit denied applicants who would like to attempt to resolve the denial or apply for the Federal Direct Graduate PLUS Loan with a credit-worthy endorser (co-borrower) can contact Direct Loan Applicant Services by calling (800) 557-7394.
Annual Loan Maximums Cost less aid.
Aggregate Loan Maximum None
Enrollment Requirement Student must be enrolled at least half-time (at least 3 graduate credit hours).
Disbursement Loan funds are disbursed beginning on the first day of the first week of classes (provided all requirements are complete). Funds are applied directly to the student’s account. If the student’s account is paid in full, any remaining Federal Direct PLUS Loan funds will be refunded to the student. For additional information, contact the Business Office for Students at businessoffice@otterbein.edu or 614-823-1151 for questions.
Grace Period None. Repayment begins within 60 days after the loan is fully disbursed.
Minimum Monthly Payment $50
Maximum Repayment Period 10 to 25 years depending upon your repayment plan. Visit the U.S. Department of Education’s Federal Direct Loans website for more information.
Deferment/Forbearance A Federal Direct Graduate PLUS Loan borrower may receive a deferment while he or she is enrolled on a at least a half-time basis. Deferment/forbearance may be available under other circumstances.*
Federal Loan Consolidation Available under certain circumstances. Visit the Federal Direct Loan Consolidation website for more information.
*Contact Direct Loan Borrower Services at (800) 848-0979 or visit the https://studentaid.gov/.

Private Student Loans

Private loan programs are designed to bridge the funding gap when savings, grants, federal loans, and other resources are not enough or simply not available. Students have the option to borrow private loans directly from a lender. There are many options available to you. It is important to note that all loans are not equal. Pay special attention to interest rates, fees, credit scoring and co-signing. An online lender comparison list is provided to assist you in reviewing your loan options. Please contact the Office of Student Financial Services if you choose not to utilize a lender from the list so that we are made aware of your loan application.

Before you look at private loans, make sure that you have exhausted all possibilities for federal and state financial aid programs. Exploring your options now may save you time and money in the future. If you have specific questions or concerns regarding private loans, we suggest you contact the lender directly.

New Federal Regulations as of February 14, 2010 require students to complete a Private Education Loan Self-Certification Form in addition to a loan application. Students are required to return this form to their lenders prior to disbursement of the loan. In order to complete this form you will need to know your Cost of Attendance and Estimated Financial Assistance. You can find this information in your Self-Service Banner account under the Financial Aid tab, on the Financial Aid Status screen.

Helpful Tips for Choosing a Private Loan

  • Welcome to FASTChoice.  FASTChoice helps you request the loan you determine is right for you by providing detailed information for various loans, as well as the terms and benefits offered by different lenders.
  • Private loans are educational loans through a lending institution and not part of federal government programs.
  • Private loans are more expensive than federal government guaranteed loans and should only be used when all other options have been exhausted.
  • Be sure you have applied for all available scholarships, grants, work-study and federal loan programs offered by Otterbein University before borrowing from a private loan program.
  • Eligibility for most of these Private loan programs is based on the credit-worthiness of the borrower. If you have not yet established credit in your own name you may be required to obtain a credit-worthy co-signer. Once a complete application has been received, the lender will perform a credit check and will let you know if your application has been approved.

NOTE: The inclusion of a loan program or lender on this site does not imply endorsement. Although the list is narrowed to certain lenders, Otterbein does not endorse any private loan programs or lenders. You are not required to use these tools to obtain a private loan; they are available for you to explore private education loan offerings. Note that information is subject to change at any time, and we are not responsible for the content of lender websites. Contact lenders directly to confirm details or obtain current information.

What to Look for in a Private Loan

  • Annual Percentage Rate (APR)

    The APR is the annual cost of your loan including the effect of any fees and charges in addition to interest. The APR is determined based on the terms of the loan. APRs will differ based on the terms and loan amount. Make sure you are comparing like loan amounts when comparing APRs to receive a true comparison. Note: if the rate is variable, the APR may be increased after consummation of the loan. Take these terms and APRs into consideration when borrowing a private loan.

  • Repayment Incentives

    Does the private loan reward borrowers who make payments on-time? For example, after 48 consecutive on-time payments will you receive an interest rate reduction?

  • Loan Limits

    Does the loan have an annual or aggregate limit? Can you afford to borrow within these limits? It’s a good idea to borrow from the same lender each year, so make sure the loan can cover your costs throughout your entire education.

  • Pre-approval

    Do you need to know quickly if you qualify? Does the lender offer loan pre-approval over the phone or internet?

  • Cosigner Requirement

    Does the private loan require you to have a cosigner? Sometimes cosigners reduce the costs of the loan, but if you can’t find a cosigner, you’ll need to find a private loan you may borrow on your own. Does the loan offer a cosigner Release option? Some loans will release your cosigner after 24 consecutive on-time payments, with an approved credit check.

  • Interest Capitalization

    If you choose not to pay the interest on your loan while you are in school, the interest may be capitalized (added to your principal balance). When is the interest capitalized? Annually? At repayment? If the interest is capitalized annually the loan is more expensive than if it is capitalized only once at repayment. Some loans now require monthly interest payments while in school.

  • Repayment

    Does repayment begin immediately or after you graduate or leave school? Make payments whenever you can afford to, but if you can’t make regular payments while you’re in school, you’ll need to find a loan that doesn’t require immediate repayment. Some loans now require monthly interest payments while in school.

  • Repayment Period

    How long is the repayment period in which you repay the loan? If your educational costs require you to borrow large amounts, you may need a longer time to repay the loans.

  • Give Yourself Credit!

    Lenders use credit scores to make fast and objective decisions on which applicants are likely to repay their loans on time. Credit scoring is calculated using many pieces of your past bill payment history (number and types of accounts, late payments, outstanding debt, and the age of your accounts). The way you have handled credit in the past is often a good indication of how you will manage credit in the future. Therefore, your credit score is like a snapshot of your level of credit risk at a particular point-in-time; when your credit information changes, so does your credit score. Give yourself the credit you deserve. Pay your bills on time, pay down any outstanding debt and avoid taking on new debt or applying for too many new credit cards

United Methodist Student Loan

The United Methodist Loan Program is a church-wide educational service providing scholarships and loans to help supplement the financial needs of today’s students. An applicant must be an active, full member of a United Methodist Church for at least one year prior to applying, a citizen or permanent resident of the U.S., admitted to a degree program and maintain at least a C average.

Loans of up to $5,000 are made per calendar year (January 1 – December 31) at 5% interest. Students taking at least one half the required number of hours for full-time status may borrow up to one-half the amount available to full-time students. Additional information is available at www.gbhem.org.

Exit Counseling

Federal Direct Loan Exit Counseling

Federal Direct Loan borrowers must complete exit counseling if they are leaving the university before completing their degree, enrolled for less than half-time (less than 6 credit hours), or graduating from the university.
Exit Counseling is designed to help you understand your rights and responsibilities as a borrower and takes about 20 to 30 minutes to complete online. The Student Financial Services office also offers Exit Counseling workshops to assist you with completing the online counseling and answer any questions you may have. minutes to complete.

Start your online exit counseling session now.

For additional information on exit counseling, go to the Exit Counseling Guide for Direct Loan Borrowers provided by the U.S. Department of Education.

Federal Perkins Loan Exit Counseling

Federal Perkins Loan borrowers are required by Federal Regulation to complete an Exit Interview upon graduation, withdrawal from Otterbein University, transfer to another school, or if your enrollment drops below half-time (6 hours per quarter).

You may click here to complete the Exit Interview online. If you have difficulty completing your exit, please contact Office of Student Financial Services at 614-823-1151 or ECSI at 1-888-549-3274.

Institutional Loan Exit Counseling

IMPORTANT: this exit interview requirement is only for those students who received money from one or more of the following loan types while attending Otterbein:

  • Henry Strong Loan
  • Otterbein Loan
  • Pifer Loan
  • Schell Loan
  • Hoyt Loan
  • Dunlap Loan

As a loan borrower of one of the above loan programs you must complete an Exit interview upon graduation, withdrawal from Otterbein University, transfer to another school, or if your enrollment drops below half-time (6 hours per semester). Otterbein has all of these loans serviced by ECSI, Inc. (Educational Computer Systems, Inc). Please contact Office of Student Financial Services to request your online exit counseling session:

Office of Student Financial Services
88 Cochran Alley
Westerville, OH 43081
Phone: 614-823-1151
fax: 614-823-1588

Frequently Asked Questions About Loans

  • How do I apply?

    ​For Federal Direct Stafford Loans and Federal PLUS Loans, the student must file the Free Application for Federal Student Aid (FAFSA). Students must accept their Federal Direct Stafford Loans on their Self-Service Banner account. Private educational loans do not require a filed FAFSA, and are applied through banks and credit unions.

  • Do I have to complete Loan Entrance Counseling and a Master Promissory Note (MPN)?

    For federal loans, entrance counseling and a MPN are required. To complete these requirements go to https://studentaid.gov/.

  • What are the benefits of the Federal Direct Loan Program?
    • A guaranteed source of funding.
    • A lower interest rate on PLUS Loans.
    • A single point of service for repayment.
    • Additional repayment options for students and interest rate reductions for on-time payment.
  • What happens to the Direct Loans I borrowed in previous years?

    Direct Subsidized and Unsubsidized Loans from previous aid years should remain in deferment if the student is enrolled at least half-time. PLUS loan borrowers may request deferment on the PLUS loan application or with the loan servicer if the student is enrolled at least half-time.

  • How will repayment be handled if I have Direct loans?

    Payments on Direct Loans are made by the borrower to their federal loan servicer. Borrowers that have multiple loan servicers for their loans will have multiple payments to make. Borrowers can opt to consolidate all their federal student loans into one loan. For more information about Federal Consolidation Loans, visit the Federal Direct Consolidation Loan Website.

  • Where can I find information about who services my federal student loans?

    Borrowers can find detailed information about their federal student loans, including their loan servicers, on the National Student Loan Database System (NSLDS). Borrowers will need their Federal Student Aid ID and password to access their federal student loan records.

  • Will I still be able to borrow private loans through a lender of my choice?

    Yes. Students may continue to pursue private loans with a lender of their choice; however, it is strongly recommended that students apply for federal student aid first. For more information, see our Private Loans information above.

  • How do I get uneven disbursements on my loan?

    The Federal Direct loans cannot have uneven disbursements. They will be divided evenly over the terms of enrollment for the specific academic year. For private loans we will need the request in writing/email, BEFORE the loan is certified. The request should include your name, Student ID number, type of loan, and the amount of the loan for each term, with a signature. Requests can be emailed to financialaid@otterbein.edu, or faxed to 614-823-1588.

  • I am taking a Senior Year Experience class with a trip, how can I include the additional charges in my loan?

    You will need to complete the Special Circumstance Form to ask for additional charges be included into your COA. If uneven disbursements are required, please follow the guidelines set forth above.

  • When would I need to complete Exit Counseling?

    Anytime that you are enrolled less than half-time, withdraw or graduate, exit counseling will need to be completed. Half-time status is 6 hours for undergraduate students and 3 hours for graduate students. You can complete exit counseling here.

  • How do I get the credit balance on my student account?

    Students will need to set up an eRefund account through ePay. If this is already set up, your refund will be processed within 14 days of the term disbursement date. Credits with Parent PLUS loans are refunded to the parent borrower by paper check to the address on the loan application.

  • What is included in the Cost of Attendance?

    Cost of Attendance (COA) is an estimate of expenses to attend Otterbein University. These items include direct billed costs such as tuition, fees, room and board (on-campus living only). All other items are non-billed, estimated expenses. Your COA budget is viewable in Self-Service Banner.

    NOTE: Greek housing is considered as ‘OFF campus’ housing.

  • How can I use my financial aid to purchase books?

    If you have a credit balance on your student account, you can have that money moved to your Cardinal Card to be used in the book store. Please contact the Business Office at 614-823-1150.

  • What is a Master Promissory Note?

    The MPN is a loan contract between the borrower and the U.S. Department of Education. It is a promise to repay the student loan. The MPN contains the terms and conditions of the student loan and must be signed before loan funds will be disbursed to Otterbein.

  • What is a Private Student Loan?

    A private student loan is used to assist students in covering the remaining balance due. These loans are in addition to the federal Direct Stafford loans already included in the student’s financial aid award. The interest rate will vary with each lender and is credit based; interest will accrue from the first date of disbursement. This loan is in the student’s name and often requires a credit-worthy co-signer in order for the loan application to be approved. Generally, repayment begins after the student graduates or drops below half-time.

  • What is a Federal Parent PLUS Loan?

    The Parent PLUS loan program is available to parents of dependent students. The parent is the borrower on the loan and a credit check is performed. The parent may apply for deferment during the application process if the student is enrolled at least half-time. The parent will need to apply for this loan every year.

    If a parent applicant feels they might be denied the Direct PLUS loan, please complete the PLUS Loan Pre-Approval Form and submit it to our office. Our fax number is 614-823-1588. If a parent applicant is credit denied, the student can receive additional Federal Direct Stafford Unsubsidized loan funds in place of the Direct PLUS loan.

  • What is a Federal Grad PLUS Loan?

    The Grad PLUS loan program is available to students who are working on their graduate degree and already have their bachelor’s degree. The student is the borrower on this loan and a credit check is performed.

  • What are the credit criteria for the PLUS loan?

    Eligibility for the PLUS loan depends on a modest credit check that determines whether the applicant has an adverse credit history. To check out what is adverse credit, visit the U.S. Department of Education page here.