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Federal
Direct Stafford Loans
For the Direct
Stafford Loan Program, the student borrows funds directly
from the U.S. Department of Education. There are two kinds
of Stafford Loans-- Subsidized and Unsubsidized. The
interest rate on the Stafford loans is fixed at 6.8%.
Stafford Loan rates will not exceed 8.25%. Repayment of the
loan starts six months after you stop attending school at
least half-time. (Click
here for interest rate
information for Stafford loans prior to 2006-2007 school
year)
Subsidized Stafford Loan.
"Subsidized" means that the federal government pays the
interest on this loan while you are enrolled in school at
least half-time, during the grace period, or during periods
or authorized deferment. You must show financial need to
receive this type of loan.
Unsubsidized Stafford Loan.
This loan is not based on financial need. "Unsubsidized"
means that the federal government does not pay the loan
interest at any time--you will be charged interest from the
time that the loan is disbursed until it is paid in full. If
you allow the interest to accumulate, it will be
capitalized--that is, the accrued interest will be added to
the principal amount of the loan and the subsequent interest
accruals will be based on the higher principal amount. This,
of course, will increase the total amount you have to repay.
If you chose to pay the interest as it accumulates, you'll
repay less in the long run.
Applying For Stafford Loans
1. As
with other types of financial aid, a student applies for
a loan by filing a Free Application for Federal Student
Aid (FAFSA).
2. When
the Financial Aid Office receives the FAFSA results and
any other supporting documents requested, an award is
posted in STARPORT that includes the amount that the
student may borrow under the Direct Stafford Loan
program.
3. The
student indicates on a LCC Direct Loan Application how
much he or she wants to borrow, and returns it to
the Financial Aid Office.
4. Financial
Aid Office adjusts the amount of the loan as requested
by the student and continues to process the loan.
5. Prior
to the start of classes (late July, early August for the
fall semester) promissory notes are prepared. Students
will be required to sign a Master Promissory Note at
http://dlnote.ed,gov
with their Federal PIN before loan funds will be
disbursed. Note: A Federal PIN may be
obtained at
http://www.pin.ed.gov
6. First-time
borrowers under the Direct Stafford Loan Program at LCC
are required to complete Stafford Entrance counseling at
www.mapping-your-future.org . Loan funds will not
be credited to a student's account until both a
promissory note is received and entrance counseling has
been completed.
**Click
Here for Alternative Loan Information
News:
Direct Loan Program Interest Rates For July 1 Through June
30, 2008
The Direct Loan Program includes loans with variable
interest rates and loans with fixed interest rates. Most
loans made under the Direct Loan Program have variable
interest rates that change each year. The variable interest
rate formula that applies to a particular loan depends on
the date of the first disbursement of the loan. The variable
rates are determined annually and are effective for each
12-month period beginning July 1 of one year and ending June
30 of the following year.
FFELP Interest Rates For July 1 through June 30, 2008
Most loans made to student and parent borrowers under the
FFEL Program have variable interest rates. The interest
rates on variable-rate loans are determined annually and
apply to the following 12-month period beginning July 1 and
ending June 30. FFEL interest rate formulas use the bond
equivalent rate of 91-day Treasury bills auctioned at the
final auction held before June 1 of each year plus a
statutorily established add-on. The weekly average of the
1-year constant maturity Treasury yield for the last
calendar week ending on or before June 26, 2007 is 4.95
percent.
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