Students with a large EFC number may not be eligible for need-based financial aid. Federal stafford loans are considered financial aid and are available to help students meet educational costs.Students may accept or decline any loan, or accept a portion of loans offered.
The FAFSA is used to determine eligibility for federal student loans.Federal loans have several advantages over non-federal loans.
- Repayment is deferred until after graduation or if the student drops below half-time enrollment status in school.
- The interest rate is fixed. (3.4% during repayment for subsidized loans disbursed between July 1, 2011 and June 30, 2012, and 6.8% for unsubsidized loans--definitely lower than credit card rates).
- No credit check is required. To qualify, students must be U.S. Citizens or eligible non-citizens, in good standing on any previous student loans, and enrolled at least half-time in a degree-seeking program.
- Some student loan interest is tax deductible.
- Federal student loan debt may be discharged in the event of death or disability.
A federal subsidized student loan is considered need-based financial aid, as determined by the FAFSA. The student must have need in the financial aid package to qualify for a subsidized loan. The interest on a subsidized loan is paid by the government while the student is enrolled in school, at least half-time.
An unsubsidized student loan begins accruing interest from the time the loan is disbursed.Students may pay the interest on the unsubsidized loan or let it accumulate.
Federal student loan limits, for each academic year, are established by congress to help students manage loan debt.
- Freshmen may borrow up to $5,500 ($9,500 for independent students and students whose parents are denied the PLUS Loan)
- Sophomores may borrow up to $6,500 ($10,500 for independent students and students whose parents are denied PLUS Loans)
- Juniors and seniors may borrow up to $7,500 ($12,500 for independent students and students whose parents are denied PLUS Loans)
Why do I have to complete a Master Promissory Note (MPN) to receive my loans?
A Master Promissory Note is a promise to repay the loan you have been given to help with the cost of your education.An MPN is usually signed on-line, using the 4-digit FAFSA PIN number as the signature.The MPN is valid for ten years.
The U.S. Department of Education requires that students complete an on-line loan entrance counseling session before loan funds can be disbursed.Loan entrance counseling provides students with information regarding their rights and responsibilities in regard to their federal student loans.