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Stafford Loan FAQs

 Frequently Asked Questions about Federal Stafford Loans

What is a Federal Stafford Loan? This is a loan offered by the federal government to assist you with educational expenses. A lender issues the loan after processing by Capitol College. The loan comes in two types: subsidized and unsubsidized. Applicants must be U.S. citizens or permanent legal residents.

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What is the difference between a subsidized and an unsubsidized Federal Stafford Loan? A subsidized loan is interest-free until you begin repayment, which starts six months after you graduate or drop your enrollment to below half-time. For an unsubsidized loan, interest starts to accumulate immediately, and you are responsible for paying the interest, even while enrolled.

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What are the options for paying the interest on an unsubsidized Stafford Loan? You can start to make interest payments on the loan while you are still in school. This will significantly reduce the overall cost of the loan. You may also postpone payment on the loan interest until you enter the repayment period on the initial amount borrowed.

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How do I apply for a Federal Stafford Loan at Capitol College? To apply for a loan at Capitol College, you must first complete the FAFSA. You must also submit to the Financial Aid Office a completed Federal Stafford Loan Master Promissory Note. First-time Stafford Loan borrowers must participate in a loan entrance counseling session.

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What is a loan entrance counseling session? Loan entrance counseling explains your rights and responsibilities when borrowing a Federal Stafford Loan. Federal law mandates that loan counseling be completed before an initial Stafford Loan is processed and your funds are disbursed. You must fulfill this requirement online at https://www.dl.ed.gov/borrower.

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How long does it take for my loan to be processed? The entire loan process, including the FAFSA review, eligibility review and approval from the lender can take nine to 10 weeks.

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How much can I borrow? Your individual eligibility will determine the amount of loan you may borrow. Your loan awards cannot exceed your cost of education. The following chart lists the maximum awards. (Not all students are be eligible to borrow the maximum amount).

Student Status Dependent Students Independent Students

Freshman (0-29 credits)

$5,500

($3,500 Subsidized + $2,000 Unsubsidized)

$9,500

($3,500 Subsidized + $6,000 Unsubsidized)

Sophomore (30-65 credits)

$6,500

($4,500 Subsidized + $2,000 Unsubsidized)

$10,500

($4,500 Subsidized + $6,000 Unsubsidized)

Junior or Senior (66+ credits)

$7,500

($5,500 Subsidized + $2,000 Unsubsidized)

$12,500

($5,500 Subsidized + $7,000 Unsubsidized)

Graduate Student

$20,500

( $8,500 Subsidized + $12,000 Unsubsidized)

  $20,500

( $8,500 Subsidized + $12,000 Unsubsidized)

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How much should I borrow? Determine the total cost of all your education-related expenses, which include tuition and fees, books and supplies, transportation, housing and personal expenses. Subtract the amount of financial aid you have already been awarded from your total expenses. The balance is what you should borrow through a Stafford Loan.

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How will I receive the money from my loan? The lender you select will send your funds to the college in at least two payments; no payment will exceed half of your total loan amount. The lender and guarantor will deduct the allowed origination fee (3 percent), the guarantee fees (up to 1 percent), or both, before the funds are released to the college. The college will credit the funds to your student account to pay any outstanding charges and then give you a check for any remaining money. First-year students do not have their first disbursement made until 30 days after the start of the semester, as required by federal regulations. All students are notified when their loan funds arrive at the college.

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How many credits are required to receive a Stafford Loan? A student must be enrolled in at least six credits to be considered for a loan. If you withdraw from the college or drop below the six credits (half-time status) and you have already received your first, second or both disbursements, you must begin repaying your loan within six months. If you re-enroll at least half-time before the six-month grace period ends, you can request a deferment from your lender.

If you have not received both your first and second disbursement, your loan will be cancelled and returned to your lender. If your loan is cancelled and you do not receive any portion of the paid-out funds, then you may owe a bill to the college.

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What is a deferment? Deferment is temporarily postponing a repayment. Contact your lender to receive the appropriate form and other information.

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