Federal Loan Programs
The federal loan programs described here allow you to borrow funds at low interest rates to help pay education costs. Each requires you to sign a promissory note. Repayment of these loans can be deferred until you graduate or drop below half-time enrollment. Depending on the amount borrowed, you may have up to 10 years to repay loan funds.
During the summer, we will send you information about how to obtain these loans. We expect that you will follow these instructions within the timeframes designated. If you have not fulfilled requirements for your student loans by the end of September, we will assume that you do not intend to borrow the loan(s) and we will place the loan in a forfeited status.
Types of Federal Loans
Federal Direct Stafford Loan
The Federal Direct Stafford Loan program provides low-interest loan funds for students. There are two types of Federal Direct Stafford Loans, subsidized and unsubsidized. Both versions accrue interest while you are enrolled. For subsidized loans, the interest is paid by the federal government until you are no longer enrolled at least half time. With the unsubsidized version, the interest accrued is your responsibility. You have the option of either paying the interest while you are enrolled or deferring it. If you choose deferment, the interest is capitalized (added to the principal) when repayment begins.
According to current regulations, the interest rate is scheduled to be 6.8 percent for subsidized and unsubsidized Stafford Loans (starting on July 1, 2013). The federal government limits the amount you can borrow each academic year. Freshmen can borrow $3,500, sophomores can borrow $4,500, and juniors and seniors can borrow $5,500. Repayment begins six months after you graduate or drop below half-time enrollment. There is a default fee (currently 1.05%) deducted from the loan prior to disbursement. Therefore, the amount of the loan included on your award letter represents the gross amount and you will actually receive 98.95% of that total.
If you have sufficient financial need, we have offered you a subsidized Stafford Loan. If you do not have financial need, or your need is met by other sources, we have offered you an unsubsidized Stafford Loan only. All students, regardless of need and grade level, are eligible for an additional $2,000 unsubsidized Stafford Loan which is likely included in your award. Please think carefully before accepting the unsubsidized Stafford Loan, since the cost of borrowing this loan is more expensive overall due to the lack of a subsidy.
Federal Perkins Loan
The Federal Perkins Loan program provides funds at a low, fixed interest rate of 5 percent. This loan does not accrue interest until repayment begins, which is nine months after you graduate or drop below half-time enrollment. Funds are limited and awards are targeted toward applicants with considerable financial need. Annual loan amounts generally range from $300 to $3,000. Instructions for completing your promissory note will be mailed to you during the summer after all application materials have been received and reviewed, and your financial need is confirmed.
The Office of Financial Assistance will send you instructions on how to complete the promissory notes and loan entrance counseling for your federal loans. If you want to learn more about Federal Stafford Loan requirements and repayment options, visit the StudentLoans.gov website.