Stafford Loans
A completed FAFSA is the first step in applying for a student or parent loan.
Entrance & Exit Loan Counseling
Additionally, an Entrance Loan Interview (www.mapping-your-future.org) is required prior to filling out the loan application.
Federal regulations also require Student loan borrowers to complete an Exit Interview counseling session (www.mapping-your-future.org) before graduating, leaving their program of study, or dropping below half-time ( less than six credit hours) status. The counseling session provides information about how to manage student loans after college.
Students must list CFCC as the school they are entering/leaving to ensure the Financial Aid office receives confirmation the counseling has been completed.
Federal Loan Programs
Stafford loans are low-interest rate loans backed by the Federal Government and available to students to help pay for college and related college expenses. A separate loan application and completion of the Free Application for Federal Student Aid (FAFSA) is required.
There are two types of Federal Stafford Loans--dependency status and the student's EFC (Expected Family Contribution) help determine the type of Stafford Loan for which an applicant qualifies.
1) Subsidized Stafford Loan - The government pays the interest on the loan while the student is enrolled in school at least half-time (6 credit hours) and up to six months after graduation or termination of the program of study. If the student drops below six credit hours, he/she becomes responsible for the monthly payment of principal and interest.
2) Unsubsidized Stafford Loan - The government does not pay the interest on this loan while the student is enrolled in school or six months after graduation or termination of the program of study.
Eligible parents of dependent students may borrow PLUS (Parent Loans for Undergraduate Students) loans. These loans are in the parent's name and it is the parent's responsibility for repayment. Parents interested in this type of loan need to complete a separate application.
Borrower's Rights and Responsibilities
Students who have obtained federal student loans need to be aware of their borrower's rights and responsibilities.
Repayment
Repayment begins six months after graduation or termination from your program of study (whichever may come first). That six-month period is known as a grace period.
You will receive information about repayment from your lender, including the date on which loan repayment begins, and repayment due dates and amounts. Your monthly payment will depend on the size of your debt and the length of your repayment period; but you will generally have up to 10 years to repay.
There are four types of payment plans offered by most lenders:
1. Standard Repayment Plan - Under this plan, students make fixed monthly payments and repay the loan in full within ten years (not including periods of deferment or forbearance) from the date the loan entered repayment. Minimum monthly payments of $50 (or more if necessary) must be made to repay the loan within the required time period.
2. Graduated Repayment Plan - Students make lower monthly payments in the beginning, and monthly payments gradually increase over time. No single payment will be three times greater than any other payment.
3. Extended Repayment Plan - Students make monthly payments based on a fixed annual repayment amount over time, but not to exceed 25 years.
4. Income-Sensitive Repayment Plan - Students make monthly payments that are adjusted annually, based on total monthly income.
The option of loan consolidation is also available to student loan borrowers. This allows students to consolidate their federal loans into one Consolidation loan and make lower monthly payments over a longer period of time. Student borrowers can only consolidate one time. If interested in this option, please contact your lender for further information.
Loan Default
Student loans are real loans – just as real as car loans or mortgages. We can’t emphasize enough the importance of making your full loan payment on time either monthly (which is usually when you’ll pay) or according to your repayment schedule.
If you don’t, you could end up in default. Default is failure to repay a loan according to the terms agreed upon when you signed the promissory note. For Stafford and PLUS loans, default occurs when borrowers fail to make a payment for 270 days, and the consequences are severe.
The school, the lender or agency that holds the loan, the state and the federal government may all take action to recover the money, including notifying national credit bureaus of the borrower's default. This may affect the borrower's credit rating for as long as seven years. If in default, the borrower may find it difficult to borrow money to buy a car or home.
In addition, the IRS can withhold any individual income tax refund and apply it to the amount the borrower owes or the agency holding the borrower's loan might request employers to deduct payments from the borrower's paychecks. The borrower may also be liable for loan collection expenses.
If the defaulted borrower returns to school, he/she is not eligible for federal financial aid.
Loans already in default cannot be considered for deferment or forbearance. To avoid default the borrower must apply for deferment or forbearance before the loan is defaulted. Borrowers can submit a deferment, forbearance, loan discharge or cancellation by providing the necessary documentation.
Get Your Loan Info
The U. S. Department of Education’s National Student Loan Data System (NSLDS) allows you to access information on loan and/or federal grant amounts, your lender and loan status (including outstanding balances), and disbursements made. Go to www.nslds.ed.gov.Ombudsman
The Office of the Ombudsman is available to resolve any federal student loan disputes and to provide an unbiased and independent viewpoint to the situation at hand. If you find you have not been able to resolve your problem(s) through the normal processes, contact the FSA Ombudsman at 877-557-2575 or www.ombudsman.ed.gov.