What is the purpose of a student loan?
Stafford loans are a major form of self-help aid. Federal law requires student loan funds to be used for educational purposes, which include tuition, books, supplies, room, board, and transportation. The student’s Cost of Attendance budgets do not include the purchase of automobiles, pay on existing loans, pay court fines, pay for vacations or other non-educational purposes. Stafford loans are available through the Federal Family Education Loan (FFEL) Program. This money must be paid back.
What kinds of FFEL Stafford loans are available?
FFEL Stafford Loans are either subsidized or unsubsidized. A subsidized loan is awarded on the basis of financial need. You will not be charged any interest before you begin repayment or during authorized periods of deferment. The federal government “subsidizes” the interest during these periods.
An unsubsidized loan is awarded on the basis of need. An unsubsidized loan is awarded based on the student’s Cost of Attendance budget along with any other financial aid awarded. This is a loan for students who may not qualify, in whole or in part, for the “subsidized” Stafford loan based on a need as determined by the Free Application for Federal Student Aid. Eligibility for the “subsidized” Stafford Loan must be determined before a student can apply for an “unsubsidized” Stafford Loan. The terms and conditions are generally the same as the “subsidized” Stafford Loan, except the borrower is responsible for interest that accrues from the time the loan is disbursed until it is paid in full. If you allow the interest to accumulate, it will be capitalized –that is, the interest will be added to the principal amount of your loan and additional interest will be based upon the higher amount.
Who can get a FFEL Stafford loan?
If you are a regular student enrolled in an eligible program of study at least half-time (6 hours), you may receive a FFEL Stafford Loan. You must also meet other general eligibility requirements, such as, complete the Free Application for Federal Student Aid (FAFSA), www.fafsa.ed.gov and make satisfactory academic progress toward your program of study. IF YOU ARE ON FINANCIAL AID PROBATION OR SUSPENSION, YOU ARE NOT ELIGIBLE TO APPLY FOR A STUDENT LOAN.
How much can I borrow?
A student classified as a freshman (completed less than 24 hours) is eligible to borrow up to $3500 per school year. A student classified as a sophomore (completed 24 hours or more) is eligible to borrow up to $4500 per school year. The total financial aid package (Pell grant, scholarships, loans, etc.) for a freshman or sophomore can not exceed the student’s Cost of Attendance. An independent student can borrow additional unsubsidized loans not to exceed the student’s Cost of Attendance.
How will I receive my FFEL Stafford Loan?
The lender will send your loan funds to the school. Loan funds are not sent to the school until thirty (30) days after the first day of your enrollment period. Student tuition, fees, and room and board are deducted from the first financial assistance – loan, grant, scholarship, etc. – received by the college. After your loan money has been credited to your account in the Business Office and once all fees you owe the College have been deducted, any loan refund due you will be mailed to you from the Business Office to the address you have on record with the Registrar’s Office.
What is the interest rate?
For loans that were first disbursed on or after July 1, 1994, the interest rate has been subject to change each year, but by law, it has never exceeded 8.25 percent. For information on the current interest rate for a FFEL Stafford Loan, check with your lender or school loan officer. You will be notified of interest rate changes throughout the life of your loan by your lender.
If you have subsidized loans, you will not be charged interest while you are in school, during grace periods, or during authorized deferment periods. Interest will begin to accrue (accumulate) when you enter repayment.
If you have unsubsidized loans, you will be charged interest from the day the loan is disbursed until it is repaid in full, including in-school, grace, and deferment periods. You may choose to pay the interest during these periods, or it can be capitalized.
When do I pay back my loan?
After you graduate, leave school, or drop below half-time enrollment, you have six months before you begin repayment. This is called a “grace period.”
During the grace period on a subsidized loan, you don’t have to pay any principal, and no interest will be charged. During the grace period on an unsubsidized loan, you don’t have to pay any principal, but interest will be charged. You can either pay the interest or it will be capitalized.
After you leave school or drop below half-time enrollment, you will receive information about repayment and will be notified of the date repayment begins. However, you are responsible for beginning repayment on time, even if you do not receive this information.
How do I apply for a student loan at Northwest?
- You will need to have a current FAFSA application file in the Financial Aid Office whether you are eligible to receive funds or not.
- You will need to go to the Financial Aid Office at the Northwest campus you will attend to complete a Federal Stafford Loan Application and Master Promissory Note (MPN). You can choose a lender from our Participating Lender List. You are not limited to this list of lenders, therefore, contact the Financial Aid office on the campus you attend, if your lender of choice is not on this list. You will need to bring a valid Driver’s License and Social Security Card.
- A first time borrower at Northwest Mississippi Community College will have an entrance interview with a loan officer at the time you complete your loan application. Please remember you must also complete the loan exit interview upon leaving Northwest for any reason.
Please note that Northwest Mississippi Community College does not complete loan applications or Master Promissory Notes on-line. All loans are initiated by the student as stated above.
