Home  |  Web Sites & Contact Information  |  Site Map  |  State Agencies  |  Other Publications
The Student Guide: 2005-2006
Federal Student Aid at a Glance Loan Repayment
The Student Guide: 2005-2006 The Student Guide: 2005-2006
Free Student Aid Information and Sources Deferment and Forbearance
The Student Guide: 2005-2006 The Student Guide: 2005-2006
Frauds and Scams Loan Discharge
The Student Guide: 2005-2006 The Student Guide: 2005-2006
Student Eligibility Loan Consolidation
The Student Guide: 2005-2006 The Student Guide: 2005-2006
Dependency Status Information for Borrowers
The Student Guide: 2005-2006 The Student Guide: 2005-2006
Applying for Federal Student Aid State Higher Education Agency Numbers
The Student Guide: 2005-2006 The Student Guide: 2005-2006
Types of Federal Student Aid Important Terms
The Student Guide: 2005-2006
 
The Student Guide




The Student Guide
Grants

Federal Work-Study

Loans
    - Perkins Loans

    - Stafford Loans

    - PLUS Loans

The Student Guide

Types of Federal Student Aid


Federal Perkins Loans and Stafford Loans


How do I apply for a Perkins or Stafford Loan?

The same way you do for other federal student aid—by completing the Free Application for Federal Student Aid (FAFSA). You don't need a separate loan application. But, you will need to sign a promissory note, a binding legal document that states you agree to repay your loan according to the terms of the note. Read this note carefully and save it.


How much can I borrow?

Perkins Loans

The Student Loan Comparison Chart shows the maximum Perkins Loan funds you can receive, depending on whether you're an undergraduate student or a graduate or professional student. But, the amount you can borrow might be less than the maximums given. Unlike for Stafford Loans, we provide each school participating in the Federal Perkins Loan program a certain amount of Perkins Loan funds each year. When all funds are used for that award year, no more awards can be made for that year. So, submit your Free Application for Federal Student Aid (FAFSA) as early as you can so you can be considered for these funds.

Stafford Loans (Direct and FFEL)

See the amounts in the chart here. You'll see that your loan limits depend on what year you are in school, whether you're a dependent student , and whether you receive "subsidized" or "unsubsidized" Stafford Loans.

Subsidized Stafford Loan
If you demonstrate financial need (see here), you can borrow a "subsidized" FFEL or Direct Loan to cover some or all of that need. For a subsidized loan, the U.S. Department of Education pays the interest while you're in school at least half time, for the first six months after you leave school, and during a period of deferment—a postponement of loan payments. (Click here for information on deferment.)

The amount of your subsidized loan cannot exceed your financial need.

Unsubsidized Stafford Loan
You might be able to receive loan funds beyond your subsidized loan limit or even if you don't have demonstrated financial need. In that case, you'd receive an unsubsidized loan.

To determine the amount of your unsubsidized loan, your school will use this equation:

Unsubsidized Loan equation

For an unsubsidized loan, you're responsible for the interest from the time the loan is disbursed until it's paid in full. You can pay the interest as you go along. Or, you can allow the interest to accrue (accumulate)—for example, while you're in school—and have the interest added to the principal amount of your loan later. This means the interest will be "capitalized." Note that if interest accumulates, the total amount you repay will be higher than if you paid the interest all along.

You can receive a subsidized loan and an unsubsidized loan for the same enrollment period as long as the combination doesn't exceed the annual loan limit.


Maximum Annual Loan Limits for Subsidized and Unsubsidized Direct and FFEL (Federal) Stafford Loans

       Dependent Undergraduate Student Independent Undergraduate Student Graduate or Professional Student
1st Year $2,625 $6,625—No more than $2,625 of this amount may be in subsidized loans. $18,500 for each year of study—No more than $8,500 of the annual amount may be in subsidized loans.
2nd Year $3,500 $7,500—No more than $3,500 of this amount may be in subsidized loans.
3rd and 4th Years (each) $5,500 $10,500—No more than $5,500 of this amount may be in subsidized loans.
Maximum Total Debt from Stafford Loans When You Graduate $23,000 $46,000—No more than $23,000 of this amount may be in subsidized loans.

$138,500—No more than $65,500 of this amount may be in subsidized loans.
The graduate debt limit includes Stafford Loans received for undergraduate study.



NOTE: For periods of study shorter than an academic year, the amounts you can borrow will be less than those listed. Remember that you might receive less if you receive other financial aid that's used to cover a portion of your cost of attendance.

Your school can refuse to certify your loan application or can certify a loan for an amount less than you would otherwise be eligible for if the school documents the reason for its action and explains the reason to you in writing. The school's decision is final and cannot be appealed to us.


Other than interest, is there any other charge involved with these loans?

  • Federal Perkins Loans—No.

  • Direct and FFEL Stafford Loans—Yes, you'll pay a fee of up to 4 percent of the loan, deducted proportionately from each loan disbursement. Because of this deduction, you'll receive slightly less than the amount you're borrowing.


How will I be paid?

Perkins Loan—Your school will either pay you directly (usually by check) or credit your account. Generally, you'll receive the loan in at least two payments during the academic year.

Stafford Loan—Your school will disburse your loan in at least two installments; no installment will be greater than half the amount of your loan. If you're a first-year undergraduate student and a first-time borrower, your first disbursement can't be made until 30 days after the first day of your enrollment period.

Whatever your loan type, your loan money must first be used to pay for your tuition, fees, and room and board. If loan funds remain, you'll receive them by check or in cash, unless you give the school written permission to hold the funds until later in the enrollment period.


Can I cancel my student loan if I change my mind, even if I've signed the promissory note agreeing to the loan's terms?

Yes. Your school must notify you in writing whenever it credits your account with your loan funds. You may cancel all or a portion of your loan if you inform your school within 14 days after the date your school sends you this notice, or by the first day of the payment period, whichever is later. (Your school can tell you the first day of your payment period.) If you receive your loan funds directly by check, you may refuse the funds by returning the check to the school.





previous  next