Loans are obtained through the William D. Ford Direct Loan Program.
Federal Subsidized Stafford Loan
These are low-interest loans currently offering a fixed rate of 5.6 percent for first-time borrowers. The interest is "subsidized" or paid by the federal government while the student is in college and during a six month grace period after graduation. For each academic year, dependent students may be eligible to borrow up to $3,500 as freshmen, $4,500 as sophomores and $5,500 for all other undergraduate levels. The subsidized loan is need based and eligibility will depend on the federal need analysis of the information supplied on your FAFSA. The actual amount of the subsidized loan will be affected by several factors, including the number of hours enrolled, the number of terms attending, and other financial aid but may not exceed the maximums mentioned above.
Federal Unsubsidized Stafford Loan
Students who are ineligible or who have limited eligibility for the subsidized loan may apply for the unsubsidized loan. With the unsubsidized loan, 6.8 percent interest is charged to you from the time the funds are disbursed to your account - the government doesn't pay the interest while you're in school. The interest may be paid while in school and during the grace period, or may be added to the principal of the loan (capitalized). If additional funds are needed beyond these base amounts, parents of dependent students may borrow through the PLUS program, and independent students may borrow additional funds through the unsubsidized loan.
Federal PLUS Loans
Either parent of a dependent student may borrow up to the student's unmet costs (cost minus aid). As of July 1, 2006, all new PLUS loans have a fixed interest rate of 7.9 percent. The federal government will deduct a 4 percent fee from the loan before the borrower receives any loan money; therefore, the loan funds received by the borrower will be less than the amount they will repay.
A credit check will be done on the parent to establish creditworthiness. Loan funds are sent to the school and applied to the student's account. Parent borrowers begin repayment within 60 days after the loan is fully disbursed. Deferment options are available.
Federal Grad PLUS Loans
A graduate student may borrow up to a Grad PLUS loan to cover any unmet costs (cost minus aid). As of July 1, 2006, all new Grad PLUS loans have a fixed interest rate of 7.9 percent. The federal government will deduct a 4 percent fee from the loan before the borrower receives any loan money; therefore, the loan funds received by the borrower will be less than the amount they will repay.
A credit check will be performed on the graduate student to establish creditworthiness. Loan funds are sent to the school and applied to the student’s account. Students qualify for an in-school determent, which postpones principal payments until the student graduates or drops below half-time enrollment.