Federal Direct Stafford Loan Program

Federal Direct Stafford Loans are made in the student's name and can be either subsidized or unsubsidized.

A subsidized loan is awarded on the basis of financial need. Students will not be charged any interest before they begin repayment or during authorized periods of deferment. The federal government "subsidizes" the interest during these periods. This loan must be repaid.  Graduate students are not eligible for subsidized loans.

An unsubsidized loan is not awarded on the basis of need. Students will be charged interest from the time the loan is disbursed until it is paid in full. Any interest that accumulates will be capitalized-that is, the interest will be added to the principal amount of the loan and additional interest will be based upon the higher amount. This will increase the amount that will have to be repaid.  Both undergraduate and graduate students are eligible for unsubsidized loans.

By completing the Free Application for Federal Student Aid (FAFSA), students will be considered for the Federal Direct Stafford Loan. Our office will determine students’ eligibility and award the maximum amount students’ are eligible to receive. After applications are processed, students will receive an email notification with instructions to view awards online. Having eligibility determined for a Federal Direct Stafford Loan does not commit students to accepting the loan or the amount (students may borrow less than full eligibility).

Students should pay close attention to any additional requirements including Entrance Counseling and Promissory Notes, which are available on line at www.studentloans.gov.

Under federal law, students must complete a Loan Entrance Counseling session before funds may be disbursed. It is important that students know and understand their rights and responsibilities as a student borrower. Students should contact our office if they have any questions.

Further, students must complete a Master Promissory Note (MPN). In most cases, students will sign only one promissory note that will be used for all loans at Georgia College. By signing the MPN, students are confirming their understanding that Georgia College may make new loans for the duration of their education (up to 10 years) without having to sign another MPN. Each academic year, GC will disburse loan proceeds to students’ accounts as indicated on the online Award Letter viewed from the GC Web Student Information System. Students are also agreeing to repay all loans made under the terms of the MPN. Therefore, it is very important to completely read and understand all of the information on the MPN before signing it.

Interest rates are established each year for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans for which the first disbursement is on or after July 1 through the following June 30. The rate is the sum of a uniform “index rate” plus an “add-on” that varies depending on the type of loan and whether the borrower is an undergraduate or a graduate/professional student. Under the new provision, interest rates are the same for Direct Subsidized Loans and Direct Unsubsidized Loans taken out by undergraduate students, with a different rate for Direct Unsubsidized Loans taken out by a graduate/professional student and for PLUS Loans taken out by parent borrowers or graduate/professional student borrowers.

Under the law, the index rate is determined each year as the “high yield of the 10-year Treasury note” auctioned at the final auction held prior to the June 1preceding the July 1 of the year for which the rate will be effective, plus a statutorily defined “add-on”. As noted, the add-on differs depending on the type of loan and the student’s grade level. Each loan type is also subject to a maximum interest rate (or cap).The interest rate for a loan, once established, applies for the life of the loan – that is, the loan is a fixed-rate loan.

Federal Direct Unsubsidized interest rates are fixed at 4.66% for Undergraduate students and 6.21% for Graduate students.   Subsidized Stafford Loans interest rates are fixed at 4.66% effective July 1, 2014 through June 30, 2015.  There are loan fees up to 1.072% (Origination and Default fees) that may be deducted proportionately from each delivery of loan proceeds. This money is passed on to the federal government to help reduce the government’s cost of supporting these low interest loans. Repayment must begin no later than six months following graduation or termination of at least half-time enrollment.

Independent students and dependent students whose parents are denied under the Federal Direct PLUS Loan may borrow additional Unsubsidized Federal Direct Stafford Loan funds. Freshmen and sophomores may borrow an additional $4,000 per year; juniors and seniors may borrow an additional $5,000 per year. Both may not exceed the student's Cost of Attendance (COA). The yearly maximum for the Federal Stafford Loan will cover Fall, Spring and Summer Semesters. If the maximum has been received over Fall and Spring semesters, students will not be eligible to borrow additional funds for the Summer term.

Students must be enrolled at least half-time (6 or more hours for undergraduate students and 5 or more hours for graduate students) in order to have these funds disbursed to their student account. When the loan is approved, the funds will be disbursed directly into the system to go toward paying the balance of the account with the Business Office at the beginning of each semester. Please see the section entitled Disbursement of Financial Aid  for specific details. Students, currently receiving or who have received a loan through Georgia College, who graduate, transfer, drop below half-time enrollment status, or otherwise leave school must arrange for an Exit Interview for the Federal Stafford loan at the GC Financial Aid Office.

Students, currently receiving or who have received a loan through Georgia College, who graduate, transfer, drop below half-time enrollment status, or otherwise leave school must arrange for an Exit Interview for the Federal Direct Stafford loan at the GC Financial Aid Office.