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Financial Aid Office

Questions About Federal Direct (Stafford) Loans

1. Disbursements

NEW THIS YEAR: Loan funds will be disbursed in two separate installments per semester.  First disbursement will be applied 30 days after the start of the semester.  The second disbursement will be applied after the mid-point of the semester.  Any remaining balance of loan funds, after tuition, fee, book and supply charges are paid, will be mailed to your address on file with the College.

2. Interest Rate

The following interest rates are effective for all Direct Loans with a first disbursement on or after July 1, 2013.

The Federal Direct Loan interest rate for Direct Subsidized Loans and Direct Unsubsidized Loans for undergraduate students is 3.86%.

The Federal Direct Loan interest rate for Parent Plus loans is 6.41%.

The new interest rates as of July 1, 2013, will be a “variable-fixed” rate.  This means that students will receive a new rate with each new loan, but the rate will be fixed for the life of the loan.  New interest rates will be set each July 1 through the following June 30 by the Department of Education.

3. Loan Fees

As of December 1, 2013, Federal Direct loans require a 1.072 percent origination fee that students must pay at the time of disbursement.

As of December 1, 2013, the Parent Plus Loan Program requires a 4.288 percent origination fee to be paid at the time of disbursement.

4. Grace Period

Students have one 6-month grace period for every loan. If a student leaves school and returns, they can have their loans deferred again. However, a student only gets one grace period. Students should contact Direct Loans or go to www.StudentLoans.gov for more specific information. (See "Repayment" below.)

5. Enrollment Status

Students must be at least half-time (6 - 8 credits) to be eligible for a Federal Direct loan. If a student drops below half time before the funds are fully disbursed, the loan will be removed or reduced depending on the situation. There are no exceptions to this rule.

6. Repayment

The interest rate in repayment is capped at 8.25%. Typically, if students consolidate their Federal Stafford Loans, Direct Loans will take the average of all their interest rates and calculate one monthly loan payment based on that calculation. Therefore, because the in-school interest rate is lower, it is more beneficial to consolidate while in school or during the grace period. WARNING: Consolidating loans before the grace period or during the grace period can force a student to have a shorter grace period or lose the grace period all together. Students should contact Direct Loans or go to www.StudentLoans.gov for more specific information (on this site students can estimate their repayment amounts for all of their Direct Loans). Students can also log on to www.nslds.ed.gov/nslds_SA/ to view all the Federal Student Loans they have taken out and to determine their aggregate loan amount (total amount borrowed).

7. Loan Counseling

Students must complete entrance loan counseling before a loan is disbursed. This is available at www.StudentLoans.gov. Students typically need to complete this only one time at a school, but loan counseling may be required again if there has been a lapse in attendance.

8. Master Promissory Note

Students must complete a master promissory note before a loan will be processed and disbursed. Students typically need to complete this only one time at a school, but a new master promissory note may be required if there has been a lapse in attendance.

9. First-Time Borrowers

First-time borrowers must have a first-disbursement date 30 days after the semester begins. No excess loan funds can be disbursed until this time.

10. Loan Limits

Federal Direct loans are regulated by yearly and aggregate (total) loan limits. These are as follows:

Yearly Maximums beginning 2008-2009

Student Level
& Dependency Status

Maximum Stafford
(subsidized and unsubsidized)

Maximum Subsidized

Dependent freshman

$5,500

$3,500

Dependent sophomore

$6,500

$4,500

Independent freshman

$9,500

$3,500

Independent sophomore

$10,500

$4,500

Lifetime limits (beginning 2008-2009)

Student Level
& Dependency Status

Maximum Stafford
(subsidized and unsubsidized)

Maximum Subsidized

Dependent undergraduate

$31,000

$23,000

Independent undergraduate

$57,500

$23,000

 


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