Federal Direct Stafford Loan
As of July 2010, all Stafford Loan dollars come from the federal government through the William D. Ford Federal Direct Loan Program. The Federal Stafford Direct Loan is a loan that must be repaid after graduation or withdrawal. A student must be enrolled at least half time to be eligible for a Stafford Loan.
The two types of Stafford Loans are subsidized and unsubsidized.
A subsidized Stafford Loan is need-based and the federal government pays the interest while the student is enrolled in college. The interest rate for the subsidized Stafford Loan disbursed on or after July 1, 2013 is 3.86%.
A new federal regulation places a limit on Direct Subsidized Loan eligibility for first time borrowers on or after July 1, 2013. There is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans. In general, you many not receive Direct Subsidized Loans for more than 150% of the published length of your program. Here at Centre College, you would have six years of eligibility to receive Direct Subsidized Stafford Loans. If you exceed the six years and are still in the program, you would no longer be eligible for Subsidized Loans and the government would stop paying the interest on the Subsidized Loans you received previously.
An unsubsidized Stafford Loan is not need-based; therefore, the student is responsible for paying the interest while he/she is in school. The interest can either be paid quarterly or deferred until the student is out of school. If the student does not pay interest while in school, the interest will accrue and be capitalized. This means that the interest will be added to the principal amount of your loan. The interest rate on the unsubsidized Stafford loan is 3.86%.
Maximum Loan Eligibility
The maximum loan eligibility (amount that can be borrowed) depends upon class standing.
- Freshman - $5,500 ($3,500 can be subsidized)
- Sophomore - $6,500 ($4,500 can be subsidized)
- Junior - $7,500 ($5,500 can be subsidized)
- Senior - $7,500 ($5,500 can be subsidized)
How to Apply
To apply for a Stafford loan you must complete a FAFSA and a Centre Aid Form. The Student Financial Planning Office will determine if you are eligible for a subsidized Stafford Loan. If you meet eligibility requirements, the subsidized Stafford loan will be included in your online financial aid award package. If you do not see a Stafford loan on your online award, please contact Centre’s Student Financial Planning Office at email@example.com. You must accept your loan before the loan can be processed and disbursed.
First Time Stafford Loan Borrowers
To receive your loan you must complete the following 3 steps:
- 1. Accept your loan on your Centre College online financial aid award.
- 2. Complete online entrance loan counseling. The federal government requires all first time Stafford loan borrowers to complete entrance counseling before the loan can be disbursed. (To complete entrance counseling, visit www.StudentLoans.gov. Select Entrance Counseling from the Manage My Direct Loan menu box. The government will send us electronic notification when entrance counseling is completed.)
- 3. Complete a Master Promissory Note (MPN). Your loan will not disburse until this step has been completed. You may complete the MPN electronically by using the federally issued US Department of Education PIN number as your signature. You will sign the MPN one time because the MPN is good for ten years. Borrowing in future years does not require additional notes to be signed. To complete your MPN, click here.
How to Receive Funds
The federal government will send the loan funds electronically to Centre. Centre’s Finance Office will notify you when your loan funds arrive. The loan, in most cases, will be disbursed in two installments, one in September and one in January. If you are a first-year student and a first-time borrower your first payment may be delayed until mid- September. A 1.051% origination fee will be deducted from each loan disbursement. Repayment begins six months after graduation. Payment deferment is available for graduate school. Your loan money must first be used to pay for your comprehensive fee which includes room and board, and other school charges. If a credit balance remains on your account, you will receive the funds by check.
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