Student Loan FAQs

Stafford Loans

How much can I borrow in Stafford Loans?
The amount of money you can borrow depends on your year in school and whether you are classified as an independent or dependent student. 2009-10 borrowing limits are listed below:

	Freshman	Sophomore	Junior or Senior	Undergraduate Cumulative Limit	Graduate Students	Cumulative Limit (Undergraduate + Graduate)
Stafford - Dependent Students	5,500	6,500	7,500	23,000	20,500*	65,500
Stafford - Independent Students	9,500	10,500	12,500	23,000	20,500*	65,500

Note: These limits are based on a full academic year and your qualifications as a full or part-time student. Rates are effective as of July 1, 2009.
* Higher Stafford loan limits are available to students in some graduate medical programs.

When do I have to begin repaying a Stafford Loan?
After you graduate, leave school, or drop below half-time, there is a six-month grace period before you have to make a payment on your Stafford Loan(s). During this time, you will receive information about repayment and your first payment due date. You are responsible for repaying your loan(s) 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 make any payments, and you won’t be charged interest. During the grace period on an unsubsidized loan, you don’t have to make any payments, but you will be charged interest. You can choose to pay the interest during the grace period, or, if you defer all payments until after the grace period, the interest on an unsubsidized loan will be capitalized, or added to your principal loan balance, increasing the total amount you owe.

When do I need to fill out the FAFSA? Is there a deadline?
You should fill out the FAFSA as soon as you can after January 1st of each year. Because the FAFSA asks for tax information from the previous calendar year, you may want to wait until your family has all of the necessary paperwork or has filed their income taxes. You can file the FAFSA before filing your income taxes using estimates, but you will need to go back later and correct any discrepancies.

The only deadline for filling out the FAFSA is June 30th at the end of the school year for which you are filing. In other words, for the 2009-2010 school year, the FAFSA will be available on January 1, 2009. You can file the FAFSA anytime between then and June 30, 2010. However, many states and schools allocate funds on a first-come, first-served basis, and some states have deadlines for filing the FAFSA to be eligible for certain kinds of aid. Please visit the Department of Education’s Student Aid on the Web for more information.

How long does it take for the FAFSA application to be processed?
In order to be eligible for federal financial aid and federal student loans, you must fill out the FAFSA each year. The FAFSA for each school year is available in January preceding the start of the school year.

How long the FAFSA takes to be process depends on how it is submitted – and if it is complete and correct when submitted. If it's done online with an e-signature, it can take 3-5 days to see its status; if it's done on paper via mail, it can take 7-10 days. The status will indicate if you completed the application properly or if more information is necessary (and then it goes to the school). Please visit the Department of Education’s Student Aid on the Web for more information.

Keep in mind that the most common federal student loan – the Stafford Loan – is available regardless of need or income, but you MUST complete the FAFSA to qualify. It is worth the effort to complete the FAFSA.

What makes a person ineligible to receive FAFSA monies?
It is a common misconception that someone can be "ineligible" for financial aid because they make too much money. Everyone qualifies for unsubsidized federal loans, regardless of income.

People who do not qualify for federal aid include those without a high school diploma or GED, who are not U.S. citizens or eligible non-citizens, do not have a SSN, are not registered with the Selective Service (and are male), are not enrolled in an eligible program, or who are in default on a federal loan. Please visit the Department of Education’s Student Aid on the Web for more information.

What are the different types of student loans for undergraduate students?
There are three types of student loans for undergraduate students.

Federal Perkins Loans:

• Fixed 5% interest rate.
• Maximum award of $4,000 per undergraduate year.
• School-awarded.
• Very limited availability.

Federal Stafford Loans:

• Are usually borrowed through private lenders.
• You must be enrolled at least half-time.
• Interest rate is fixed at 6.8% for unsubsidized Stafford loans; 5.6% for subsidized Stafford loans for the 2009-2010 academic year.
• Award limits are based on your year in school and your dependency status.
• Repayment normally starts six months after leaving school (or attending less than half-time).
• There are two types of Stafford Loans - subsidized (for which you must demonstrate financial need and the interest is paid by the federal government while you are in school) and unsubsidized (which is not based on need, but you are responsible for all the interest that accrues).

Private Loans:

• Are borrowed through private entities, banks, credit unions or lending companies
• Interest rates can vary
• Can borrow up to the total cost of attendance, less other financial aid
• Interest can be capitalized more often (meaning, added to the loan principal), increasing the amount of money you ultimately are charged for borrowing.
• Approval and terms for private loans are based on credit history. If your rating is bad or non-existent, you might need a co-signer to qualify. Poor or minimal credit may also result in a higher interest rate on your loan.