Federal Direct Stafford Loan
Stafford Loans are regulated by the federal government and are offered at a low-interest rate.
Purchase College is a Direct Loan school. This means that the Stafford and Parent PLUS Loan Funds come directly to the College from the Federal Government.
Subsidized Stafford Loans (4.29% interest- effective July 1st, 2015) - The government pays the interest on the loan while the student is in school. These loans are offered to enrolled students with demonstrated financial need. Funds are sent directly to the college. The origination fee for the Subsidized Stafford Loan is 1.073% for loans first disbursed on or after July 1st, 2015 and 1.068% for loans first disbursed on or after October 1st, 2015.
Unsubsidized Loans (4.29% interest for Undergraduate Students, 5.84% interest for Graduate students- effective July 1st, 2015) - The interest begins to accrue immediately when the loan funds are disbursed. The student has the option of paying the interest while in school or deferring payment until they graduate or leave school for six months. Funds are sent directly to the college. Students who are determined by the Federal government to not demonstrate "financial need" are eligible. Also, if a student's parent is denied a PLUS Loan, a student may be eligible to apply for additional Unsubsidized Loan funds. The origination fee for the Subsidized Stafford Loan is 1.073% for loans first disbursed on or after July 1st, 2015 and 1.068% for loans first disbursed on or after October 1st, 2015.
***Recent changes by the federal government in the Budget Control Act of 2011 did away with eligibility for the Subsidized Stafford Loan for graduate students and elimination of any repayment incentives to Direct Loan borrowers to encourage on-time repayment of loans, including any reduction in the interest rate or origination fee.***
Purchase College's policy towards helping to reduce federal student/parent loan debt includes trying to reduce student's (or parent's) indebtedness when a student becomes overawarded after loan disbursements have been made. This is based on guidance from the Federal Student Aid Handbook (2015-16): Although a school isn't required to return Direct Loan, or nonfederal education loan funds that were disbursed to the borrower (either directly or by applying them to the student account) before the overaward situation occurred, the law doesn't prevent your school from returning funds that were applied to the student account if you choose to do so.
All Federal Direct Loan funding requests, reductions, or cancellations must be completed (with all required steps) prior to the last day of the academic year; or if the student leaves the school before the last day of the academic year, then prior to the last date of the student's attendance.
It is our school's policy that we do not process any federal loan funding: requests, adjustments, or cancellations after:
- The last day of the academic year in which the loan funding is for
- The last day of a student's attendance within the academic year if it is before the scheduled end date of the academic year
STAFFORD LOAN LINKS:
STAFFORD LOAN MASTER PROMISSORY NOTE (www.studentloans.gov):
It is a requirement for students receiving the Federal Direct Stafford Subsidized or Unsubsidized Loan to sign a MPN. Please complete the MPN online by using your PIN number.
ENTRANCE/EXIT COUNSELING (www.studentloans.gov):
Please follow the instructions on the Federal Direct Loan Entrance (or Exit, if you are graduating or will be leaving the school for six months or more) Counseling page to complete your required counseling session. This session will satisfy our requirements for the entrance counseling.
If you need information on your Student Loans, please go online to www.nslds.ed.gov , this website will enable students to view any Federal Aid or Federal Student Loans that you have taken out.
FEDERAL STAFFORD LOAN ANNUAL LIMITS
BORROWER'S ACADEMIC LEVEL
|Subsidized + Unsubsidized = Total Amount||Subsidized + Unsubsidized = Total Amount|
1st Year Undergrad
|$3,500 + $2,000 = $5,500||$3,500 + $6,000 = $9,500|
2nd Year Undergrad
|$4,500 + $2,000 = $6,500||$4,500 + $6,000 = $10,500|
Remaining Years as Undergrad
|$5,500 + $2,000 = $7,500||$5,500 + $7,000 = $12,500|
|$8,500 + $12,000 = $20,500|
FEDERAL STAFFORD LOAN AGGREGATE LIMITS
|BORROWER'S STATUS||Subsidized + Unsubsidized = Total Amount|
|DEPDENDENT UNDEGRAD||$23,000 + $8,000 = $31,000|
|INDEPENDENT UNDERGRAD||$23,000 + $34,500 = $57,500|
|GRADUATE||$65,000 + $76,500 = $138,500|
Did you know that for Direct Stafford Loan repayment, that the Income-Based Repayment(IBR) Plan is available?
The Income-Based Repayment (IBR) Plan bases your monthly payment on your yearly income and you must have a partial financial hardship to enroll. This plan is an alternative to the Income Contingent Repayment (ICR) Plan and is designed to make repaying education loans easier for students who intend to pursue jobs with lower salaries, such as careers in public service. It does this by capping the monthly payments at a percentage of your discretionary income (the difference between your Adjusted Gross Income and 150% of the poverty guideline for your family size and state of residence). If you are married AND file taxes separately, only your income will be considered when calculating your IBR payment amount. Like ICR, after 25 years of qualifying repayment, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven.
The IBR Plan is NOT available for repayment of your Direct PLUS Loan(s) made to parent borrowers and/or Direct Consolidation Loan(s) that repaid PLUS Loans made to parent borrowers. If you choose to include any ineligible loans, the resulting new Consolidation Loan cannot be repaid under the IBR Plan.
To participate in the IBR Plan, you must authorize the U.S. Internal Revenue Service (IRS) to inform the U.S. Department of Education (the Department) of the amount of your income.
Note: If you choose to leave the IBR Plan at any time, your account will be placed on the Standard Repayment Plan. You cannot change to any plan other than Standard at any time after being on the IBR repayment plan.
Students can get the Income-Based Repayment application from Direct Loan Borrower Services at 800-848-0979 or online at https://loanconsolidation.ed.gov/AppEntry/apply-online/appindex.jsp