Federal Direct Stafford Loan Program
Interest rates are established each year for Direct Unsubsidized Loans and Direct Grad 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 a graduate/professional student. Under the new provision, interest rates are different for Direct Unsubsidized Loans taken out by a graduate/professional student and for Grad 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 Stafford Loan interest rates are fixed at 5.31%. There are also loan fees up to 1.068% (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.
Loan Limits Yearly and Aggregate
Graduate Students
|
|
Yearly: $20,500
|
|
Aggregate Loan Limits: $138,500
Aggregate limits for graduate students are inclusive of all undergraduate loans received.
Direct Grad PLUS
Direct Grad PLUS Loans enable graduate students with good credit histories to borrow monies after they have exhausted all of their Stafford Loan eligibility. These funds are designated to help pay the educational expenses of the graduate student enrolled at least half-time (5 semester hours). The yearly limit on a Grad PLUS loan is equal to the student's Cost of Attendance (COA) minus any other financial aid the student is receiving. Effective July 1, 2016 through June 30, 2017, Federal Direct Grad PLUS loan interest rates are fixed at 6.31%. There are also loan fees up to 4.272% (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 usually begins within 60 days after the final loan disbursement for the period of enrollment for which the funds are borrowed. Application for the Grad PLUS loan is accessed electronically at www.studentloans.gov. Students must have completed the Free Application for Federal Student Aid (FAFSA) for eligibility to be determined. PLUS applications must be completed annually from the studentloans.gov website in conjunction with the FAFSA application process.
Federal Direct Grad PLUS Loans will be disbursed after a Master Promissory Note has been electronically signed with the Direct Loan Servicing Center. The PLUS MPN has a multi-year feature. This multi-year feature allows the student borrower to only have to sign one promissory note for the Grad PLUS loans that can be used for up to 10 years. However, a valid and successful credit check is required every year for additional Grad PLUS loans.
Funds will first be used toward the student's bill at the Business Office. Any funds remaining can be used to purchase books at the Barnes and Noble at Georgia College approximately three days prior to the first day of classes through the end of the drop/add period. Students must complete the electronic authorization via their PAWS account prior to visiting the bookstore. Any remaining funds will be disbursed in a check or direct deposit made payable to student approximately seven days after the end of the drop/add period each semester.