Federal Stafford Loan
Borrowing Limits
A Federal Stafford Loan (FSL) is a loan given by a private lender (e.g., bank, credit union,
or other financial institution) to students. The 2009-2010 interest rate for subsidized loans is 5.6%. The interest rate for unsubsidized loans is fixed at 6.8%. Fees are 1.5% (.5% origination and 1% default fee).
There are two types of Federal Stafford Loans - subsidized and unsubsidized.
You may borrow up to the following annual loan limits (subsidized and unsubsidized FSL
combined) based upon your year of study: first-year students $3,500; sophomores $4,500; juniors, seniors and fifth-year students $5,500. The maximum is $23,000 for undergraduate study.
Federal Stafford Loan Eligibility
To qualify for a Federal Stafford Loan Program a student must first submit the Free Application
for Federal Student Aid (FASFA) and a Master Promissory Note (MPN). The student must be enrolled
at least half-time in a degree seeking program.
To retain eligibility for future semesters, a student must maintain satisfactory academic
progress. Male students who are at least 18 years of age must be registered with the Selective
Service Commission. Students must be citizens or permanent residents of the United States.
Students cannot be in default of any loan programs nor owe any refunds of federal grants.
Students in default may have their eligibility restored if they have made satisfactory
arrangements with the holder of the loan to repay it. Transfer and graduate students must submit
to The HUB an official Financial Aid Transcript that documents their financial aid record at all
previous institutions attended.
Federal Stafford Loan Levels
The amount a student may borrow per academic year is determined in part by the number of credits
a student has earned. Please refer to this limits chart to determine your possible eligibility.
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Subsidized Federal Stafford Loan
Borrowing Limits
A subsidized Federal Stafford Loan (FSL) is a loan given by a private lender (e.g., bank,
credit union or other financial institution) to students with financial need. You begin
repaying the loan six months after you either graduate or cease to be enrolled at least
half-time (18 units per semester).
The interest on a subsidized FSL is paid by the federal government while you remain enrolled
at least half-time and during your six-month grace period. You have up to 10 years to repay
your loan.
The interest rate is fixed at 6.8%. However, the interest rate on subsidized Stafford Loans for undergraduate study is fixed as follows:
If the first disbursement is on or after July 1, 2008 and before July 1, 2009, the rate is 6.0%
If the first disbursement is on or after July 1, 2009 and before July 1, 2010, the rate is 5.6%
If the first disbursement is on or after July 1, 2010 and before July 1, 2011, the rate is 4.5%
If the first disbursement is on or after July 1, 2011 and before July 1, 2012, the rate is 3.4%
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Unsubsidized Federal Stafford Loan
Borrowing Limits
An unsubsidized Federal Stafford Loan (FSL) is available to students who do not qualify, in
whole or in part, for a subsidized Federal Stafford Loan. It is not based on financial need.
The annual borrowing limits are the same as the subsidized FSL program amounts listed HERE.
Unlike the subsidized FSL, you are required to pay the interest that accumulates on the
unsubsidized FSL every three months while you are in school. It is possible to have the
interest capitalized (instead of paying the interest every three months, it is added back to
the principal). This will increase the amount you have to repay.
We suggest you pay the interest as it accumulates, as you'll repay less in the long run.
You may be eligible for additional unsubsidized FSL funds (beyond the FSL limits stated
above) if your parent(s) apply for a Federal PLUS Loan and are denied.
If this is the case, the maximum you may borrow annually in additional unsubsidized FSL funds
based upon your year of study is as follows: first-year students $4,000; sophomores $4,000;
juniors, seniors and fifth-year students $5,000.
For more information regarding an additional Unsubsidized Stafford Loan, please click HERE.
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Federal Perkins Loan
Borrowing Limits
A Federal Perkins Loan is a low-interest (5 percent) federal loan administered by Carnegie
Mellon. Carnegie Mellon offers this loan to students who have exceptional financial need as
determined by Federal Methodology and Carnegie Mellon. You receive consideration for a
Federal Perkins Loan if you complete a FAFSA and a
Carnegie Mellon Financial Aid Application. There is no separate application for this loan.
Enrollment Services will automatically credit the loan to your student account (one-half in
the fall, one-half in the spring).
If you are offered a Federal Perkins Loan, Enrollment Services will notify you regarding the signing of your Perkins Master Promissory
Note during the Summer.
Repayment of both principal and interest does not begin until nine months after you graduate
or are no longer enrolled at least half-time (18 units per semester). No interest accrues on
the loan until you begin repayment.
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Federal Graduate PLUS Loan
A Federal Graduate PLUS Loan is a non-need based loan given by a private lender (e.g., bank, credit union or other financial institution) to creditworthy
graduate students. The interest rate is fixed at 8.5%. Some lenders have additional borrower benefits, which will result in an interest rate less than 8.5%. Graduate
and professional borrowers who are enrolled at least half-time qualify for an automatic in-school deferment. Interest will accrue during the in-school period.
A 3% origination fee is assessed by the Department of Education.
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Loan Interest Rates
Interest rates on Federal Perkins Loans are fixed at 5%.
The interest rates based on current regulations for 2009-2010 Subsidized Federal Stafford Loans is 5.6%. The interest rate for Unsubsidized Federal Stafford Loans is fixed at 6.8%.
The interest rate for Federal PLUS Loans is fixed at 8.5%. Interest starts to accrue at disbursement, however, full repayment of principal and interest begins
60 days after the last disbursement for the loan period.
Students should contact their lenders to receive current information on
interest rates. In addition to the interest charges, students must pay an "origination fee" and
"insurance premium." The lender deducts
this amount from the value of the loan.
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Loan Repayment
Repayment of the Federal Stafford Loan begins when a student either graduates, withdraws, or
enrolls less than half-time and has used the allowable grace period - usually six consecutive
months (nine months for Federal Perkins Loans).
Graduate PLUS Loans go into repayment 60 days after the loan is fully disbursed. Repayment may be deferred while the student is enrolled at least half-time.
Interest continues to accrue to the borrower during periods of deferment. There is no grace period.
Students are obligated to repay the full amount
of the loan even if they do not graduate, are unable to obtain employment, or are dissatisfied
with the services received at Carnegie Mellon University. You must make payments on your loan
even if you do not receive a bill or repayment notice. Billing statements (or coupon books) are
sent to you as a convenience, but you are obligated to make payments even if you do not receive
any notice.
Repayment Calculator
Stafford and Graduate PLUS Loan Repayment Schedule
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Withdrawal And Refunds
If you withdraw from school before the end
of a semester, a refund calculation will be performed complying with Federal requirements. If you
do not complete a term, you may not be entitled to retain the full amount of aid you received
originally. Student Financial Aid (SFA) programs are refunded in the following order:
Unsubsidized Federal Stafford Loans, Subsidized Federal Stafford Loans, Federal PLUS Loans,
Federal Perkins Loan, Federal Pell Grant, Federal Supplemental Educational Opportunity Grant,
other Title IV Aid Programs, other federal, state, private, or institutional aid, and the
student.
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QUIZ QUESTION:
I will be responsible for repaying my loan even if I do not graduate, am not satisfied with my education, or do not get a bill.
True False
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