Frequently Asked Questions
- What is a Federal Perkins loan?
- What are Stafford loans?
- Do I need good credit to get a Stafford loan? Are credit checks done to get one?
- What is a Federal PLUS Loan?
- When will my loan proceeds arrive?
- How do I keep my loan from going into repayment when I switch colleges?
- Can I use student loan money for other expenses such as a computer, books, or even rent?
- I am having trouble making my student loan payments. What can I do?
- When do I need a cosigner on a loan and how do I decide who that should be?
A Federal Perkins Loan is a low-interest (5%) loan for undergraduate and graduate students with financial need. Your school is your lender. The loan is made with government funds, and your school contributes a share. You must repay this loan to your school.
Direct and FFELP Stafford loans are either subsidized or unsubsidized. You can receive a subsidized loan and an unsubsidized loan for the same enrollment period.
A subsidized loan is awarded on the basis of financial need. You won't 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 not awarded on the basis of need. You'll be charged interest from the time the loan is disbursed until it's paid in full. If you don't pay the interest that accrues (accumulates) while you're in school or during other periods of nonpayment, it will be capitalized—that is, the interest will be added to the principal amount of your loan, and additional interest will then begin to accrue on that higher amount.
No. Eligibility for Stafford loans is not dependent on your credit history.
Federal PLUS Loans allow parents to borrow for each dependent undergraduate student who is enrolled in college at least half time. Graduate or professional students are also eligible to borrow PLUS loans. The loan limit is the full cost of the student's education each academic year, less grants and other financial aid the student receives. Any PLUS Loan applicant determined to have an adverse credit history is required to have an endorser who is obligated to pay the loan if the borrower does not. PLUS borrowers of loans first disbursed on or after July 1, 2008, have the option to start making payments within 60 days after full disbursement of funds or wait until 6 months after the student's enrollment at least half time ends.
Generally loan proceeds are applied to your account the first day of classes each semester if your level of enrollment and eligibility for funds have been verified. If your file is not completed by the beginning of the semester, your proceeds will be delayed. Also, most schools are required to delay delivering first disbursements to first-year, first-time Stafford loan borrowers until 30 days after the first day of classes. For more detailed information, ask the financial aid office at your college or contact your lender directly.
Generally, there is a six-month grace period from the time you stop attending school and until your Stafford loan enters repayment and payments become due. Your financial aid office should be able to help because most colleges do regular enrollment reporting that provides loan holders with information on your status. Also, contacting your lender will make sure you understand when payments will be due and let you tell them that you are still attending school.
Yes, you can usually borrow more than the exact amount of your tuition. Leftover funds can be used to cover additional expenses. Talk to your financial aid office for details and only borrow what you absolutely need.
There are options for borrowers who need payment relief. The most important first step is to contact your lender as soon as possible. You can work with your lender to adjust your monthly payments or, if needed, request deferment or apply for forbearance. Do your research and discuss the options with your lender to be sure you understand each option and its consequences.
Cosigners can be used to help secure a private loan, but are not always necessary. If you do not have a long credit history or do not have good credit, having a cosigner may help you get approved for a private loan or get a better interest rate. If you do decide that you need a cosigner, make sure that person(s) understands and accepts his/her responsibility as one. Cosigners are as responsible for paying the loan as the borrower is. Talk to your financial aid office and lender for more information.