Loans
1. What is a FFELP loan?
The Federal Stafford and PLUS Loans are offered through the Federal Family Educational Loan Program (FFELP). Private lenders fund the loan. The federal government guarantees the loan against default, which allows lenders to offer loans at very attractive interest rates. These loans are sometimes referred to as Federal government guaranteed student loans.
2. What is the difference between the Subsidized and Unsubsidized Stafford Loan?
A Stafford Loan is a government-guaranteed loan available to students. There are two types of Stafford loans; subsidized and unsubsidized. With a subsidized Stafford, the government pays the interest while you’re in school. With an unsubsidized Stafford, you are responsible for the interest while you are in school. You can either elect to pay the interest while you are in school or defer it until after graduation. You should note that if you defer the interest, it will be capitalized upon graduation and will raise the overall cost of your loan.
3. What are some benefits of the Stafford Loan?
- The interest rate is capped at 8.25% for the life of the loan
- It carries low origination and guarantee fees
- There is no credit check
- Repayment of the loan does not begin until you graduate or drop below half-time status
- The loan is forgiven in case of permanent disability or death
4. How much can I borrow with a Stafford?
Your eligibility is determined by the Office of Financial Aid. You will be notified of the exact amount you can borrow in the Financial Aid Award Notification. You can never borrow more than the cost of education, less other financial aid received. Below are the maximum amounts you may borrow.
Combined subsidized and unsubsidized Stafford annual eligibility is as follows:
Annual Stafford Loan Limits for Dependent Students
| Grade Level | Base Amount | Additional Unsubsidized | Total |
| Freshman | $3,500 | $2,000 | $5,500 ($3,500 Maximum Subsidized) |
| Sophomore | $4,500 | $2,000 | $6,500 ($4,500 Maximum Subsidized) |
| Junior/Senior | $5,500 | $2,000 | $7,500 ($5,500 Maximum Subsidized) |
Annual Stafford Loan Limits for Independent Students
| Grade Level | Base Amount | Additional Unsubsidized | Total |
| Freshman | $3,500 | $6,000 | $9,500 ($3,500 Maximum Subsidized) |
| Sophomore | $4,500 | $6,000 | $10,500 ($4,500 Maximum Subsidized) |
| Junior/Senior | $5,500 | $7,000 | $12,500 ($5,500 Maximum Subsidized) |
| Graduate | $8,500 | $12,000 | $20,500 ($8,500 Maximum Subsidized) |
5. What is the interest rate on a Stafford Loan?
For all unsubsidized Stafford loans first disbursed on or after July 1, 2006, the interest rate is fixed at 6.8 percent. The interest rate for subsidized Stafford loans first disbursed on or after July 1, 2008 is fixed at 6.0 percent. This change from a variable to a fixed interest rate does not affect a borrower’s variable interest rate on loans made before July 1, 2006.
Over a four-year period beginning July 1, 2008, the interest rate on subsidized Stafford Loans made to undergraduate students will be reduced. The applicable interest rates for loans made during this period are as follows:
| First disbursement of a loan: | ||
| Made on or after | And made before | Interest rate on the unpaid balance |
| July 1, 2008 | July 1, 2009 | 6.0 percent |
| July 1, 2009 | July 1, 2010 | 5.6 percent |
| July 1, 2010 | July 1, 2011 | 4.5 percent |
| July 1, 2011 | July 1, 2012 | 3.4 percent |
These changes apply to subsidized Stafford loans first disbursed on or after July 1 of each year through June 30 of the next year. This change does not affect any prior loans made to borrowers; the terms and interest rates of those loans remain the same. These reduced interest rates apply only to subsidized loans; any unsubsidized Stafford Loan for the same undergraduate borrower would continue to be made at the current fixed interest rate of 6.8 percent.
6. If I do not graduate, do I have to repay my Stafford Loan?
Yes. The Stafford Loan, like any other loan, must be repaid. After you graduate, leave school, or drop below half-time enrollment, you will have a six-month “grace period” before you begin repayment. During this period, you’ll receive repayment information, and you’ll be notified of your first payment due date. You’re responsible for beginning repayment on time, even if you don’t receive this information. Payments are usually due monthly.
During the grace period on a subsidized loan, you don’t have to pay any principal, and you won’t be charged interest. During the grace period on an unsubsidized loan, you don’t have to pay any principal, but you will be charged interest. You can either pay the interest or it will be capitalized (added to your principal loan balance, thus increasing the amount you’ll repay).
7. Who is my lender?
The “lender” is the lending institution (bank, credit union, etc.) that makes your student loan funds available to you. Students should refer to their award notification, promissory note, or notice of guarantee to find the name of their lending institution.
8. What is loan counseling and why must I complete this process?
Loan counseling is required by federal regulations for all first-time borrowers at a school. The session gives an overview of the Federal loan program, discussing the types of loans, interest rates, borrower rights and responsibilities, etc. This obligation is fulfilled on our Web site.
9. What are some of the benefits of the PLUS Loan?
- The interest rate is capped at 9% for the life of the loan
- It has no prepayment penalty
- It has lenient credit criteria, often more lenient than with other types of loans
- It allows you to keep other assets, such as savings, retirement, and home equity intact.
- It protects your family in case of permanent disability or death. In this case, the loan would be forgiven.
10. How much can my parent borrow with a PLUS Loan?
You can borrow up to the cost of attendance, minus any other financial aid your child receives. The cost of attendance is determined by the school’s financial aid office, and usually includes tuition, room and board, books, living costs and transportation expenses.
11. What is the interest rate on a PLUS Loan?
For PLUS Loans disbursed on or after July 1, 2006, the interest rate is fixed at 8.50 percent. For PLUS Loans disbursed between July 1, 1998 and June 30, 2006, the interest rate is variable and is determined on July 1 of every year. For 2008-2009, the variable rate for these PLUS Loans is 5.01percent. Interest is charged on a PLUS Loan from the date of the first disbursement until the loan is paid in full.
12. What if my parent is turned down for a PLUS Loan?
If your parent is denied, you may be eligible to borrow a Federal Unsubsidized Stafford Loan. You must request the Federal Unsubsidized Stafford Loan. Contact our office for specific details.
13. How can I get an In-school Deferment on repayment of my loan?
Request the deferment form from your bank and have our Registrar’s Office complete it, and return it to the bank. Continue to make all payments until the bank sends you confirmation of your deferment.
14. If I am in default on a previous loan, what documents are needed to clear the default?
A letter is required from the agency, or holder of the defaulted loan, stating that the default has been cleared.