Once you and your student have completed the Funding steps, first-time applicants will receive an award letter from a school’s financial aid office. Review the award letters from different schools to compare amounts and types of aid being offered.
|Loan||Interest Rate||When Repayment Begins||Who Pays Interest During College|
|Subsidized Stafford||4.5%* fixed||6 months after graduation, below half-time, dropout||Government|
|Unsubsidized Stafford||6.8%* fixed||6 months after graduation, below half-time, dropout||Student|
|Parent (PLUS)||7.9%* fixed||60 days from last disbursement||Parent|
|Graduate/Professional (PLUS)||6.8%* fixed||60 days from last disbursement||Student|
*Rates and Fees are effective on or after July 1. (See FAFSA for full disclosures.)
Before you receive your loan funds, you or your student must sign a promissory note, depending on what type of loan you have. In past years, borrowers completed a separate promissory note for each new loan borrowed. Now, if you attend a four-year school or graduate school, in most cases, you will sign only one promissory note that will be used for all of your loans at a single school. This new note is called a Master Promissory Note (MPN).
When you sign the Master Promissory Note, you are confirming your understanding that your school may make new loans for you for the duration of your education (up to 10 years) without having you sign another promissory note. You are also agreeing to repay the holder of your loan, the U.S. Department of Education, all loans made to you under the terms of the MPN. Therefore, it is very important that you completely read and understand all of the information on the MPN before you sign it.
You are not required to accept the amount that your school awards you. You should notify your school if you want to borrow a lower amount than the school has awarded you.
Your school must notify you in writing or electronically whenever it makes a loan disbursement. The notice must tell you the date and the amount of the loan disbursement, which loan funds are subsidized and which are unsubsidized, information about your right to cancel all or a portion of the loan, including the current loan disbursement, and procedures for canceling the loan.
Q: What is the difference between a dependent and independent undergraduate student?
A: Dependent students must report their parents’ income and assets on the FAFSA as well as their own. If the student is considered a dependent student, that student’s parents are expected to contribute toward the cost of education. Federal student aid programs are based on the concept that a dependent student’s parents have the primary responsibility of paying for education.
Your student is an independent student IF at least one of the following applies to you:
- Your student was born before January 1, 1992. (FORMULA: CURRENT YEAR MINUS 18 YEARS)
- Your student is or will be enrolled in a master’s or doctoral degree program (beyond a bachelor’s degree) at the beginning of the 2007-08 academic year.
- Your student is married on the day you apply (even if they are separated but not divorced)
- Your student has children who receive more than half their support from your student
- Your student has dependents (other than their children or spouse) who live with them and who receive more than half their support from them at the time they apply and through July 2, 20XX
- Both the student’s parents are deceased, and they are (or were until age 18) a ward of or dependent of the court
- Your student is a veteran of the U.S. Armed Forces. (A “veteran” includes students who attended a U.S. service academy and were released under a condition other than dishonorable. (For more details on who is considered a veteran, see the explanatory notes on the FAFSA.)
If none of these criteria apply to you, your student is a dependent student.
Q: What is cost of attendance (COA) and where do I obtain this figure?
A: Cost of attendance (COA) is the total amount it will cost your student to go to school—usually expressed as a yearly figure. However, COA may be figured on a semester bases. COA is detrained using rules established by law. The financial aid director at the school your student is attending will provide the cost of attendance.
COA includes tuition and fees; on-campus room and board (or housing and food allowance for off-campus students); and allowances for books, supplies, transportation, loan fees, and if applicable, dependent care. It also includes miscellaneous and personal expenses, including an allowance for the rental or purchase of a personal computer. Costs related to a disability are also covered. The COA includes reasonable cost for eligible study-abroad programs as well.
For students attending less than half-time, the COA includes only tuition and fees and an allowance for books, supplies, transportation and dependent care expenses. Talk to the financial aid director at the school your student is planning to attend if you have any unusual expenses that might affect cost of attendance
Q: How much aid can my student receive?
A: Because the Expected Family Contribution (EFC) formula must be applied to each family’s financial information, we cannot tell you whether you will be eligible for federal student aid or estimate how much aid you might receive. You must apply for financial aid to find out what you qualify for.
Again, after you get your SAR letter, contact the financial aid office at the school(s) you are considering or the school you’ll be attending for more information on your student aid financial aid eligibility. However, here’s the way it will be figured:
Q: Does the money go to the student or the parent? (PLUS Loans)
- The school receives the loan funds not you or your student and the school your student is attending might require that you, as a parent, endorse a disbursement check and send it back to the school.
- Your student’s school applies the PLUS Loan funds to tuition, fees, room and board, and other school charges.
- If any loan funds remain, you as a parent will receive the money by check or in cash, unless the school authorizes the amount to be released to your student or put into your student’s school account.
- Any remaining loan funds must be used for education expenses. You and/or your student will be required to keep records of these expenses.
Q: Can I, as a parent, cancel a Parent (PLUS) Loan if my student changes their mind, even after I’ve signed the promissory note agreeing to the terms of the loan?
A: Yes. You, as a parent, can cancel a (PLUS) Loan.
Q: As a parent, what are the borrowing requirements that I have to meet to get a Parent (PLUS) Loan?
A: Generally, as a parent you must pass a credit check. If you don’t pass, you still might be able to receive a loan if you can demonstrate that extenuating circumstances exist, or if someone you know can pass the credit check and will agree to endorse the loan and promise to repay it if you fail to do so.