The Federal Government offers both Subsidized and Unsubsidized Federal Stafford Loans. These are low interest loans created to help you pay for your education.  The Financial Aid Office will determine your eligibility for loans, based on your financial need as determined from the Free Application for Federal Student Aid.

Subsidized Federal Stafford Loans for undergraduate and graduate students
    These loans are made in the student's name only and can be used for expenses related to higher education (tuition, fees, room and board, books, transportation and personal expenses). Loans are disbursed directly to the school, generally in two disbursements. With a Subsidized Federal Stafford Loan, interest is paid by the government while the student is in school and for six months thereafter.
Unsubsidized Federal Stafford Loans for undergraduate and graduate students
    Students who do not qualify for the Subsidized Federal Stafford Loans or who do not receive the maximum loan amount in subsidized funds, may be eligible for the Unsubsidized Federal Stafford Loan.  The Unsubsidized Federal Stafford Loan carries the same eligibility, disbursement terms and loan amounts as the Subsidized Loan.  However, with the Unsubsidized Federal Stafford Loan, the borrower rather than the government, is responsible for paying the interest.  Full or half-time graduate and independent undergraduate students have higher loan amounts available to them under the additional Unsubsidized Federal Stafford Loan.
Interest Rates-For Subsidized and Unsubsidized Federal Stafford Loans
    The interest rate on these loans is variable, meaning it is set every July by the Federal Government. The government also sets a "cap" or a rate that the loan will not exceed throughout its lifetime. Currently, the interest rate cap on these loans is 8.25%.  The rate is set annually and remains in effect from July 1st through June 30th of the following year.

Step 1:  Submit the 2000-2001 FAFSA.  Check "YES" to question #35 that asks if you are interested in applying for student loans.

Step 2:  The pre-certification step is the most important step in the loan process.  During this step, the Office of Student Financial Aid will determine the student's maximum loan eligibility and type of Stafford Loan (subsidized and/or unsubsidized) based on the student's financial need and grade level.  However, the student loan amount cannot exceed the student's annual loan limit under the Stafford Loan Program (see "Stafford Loan Borrowing Chart" which follows).  In most cases the loan certification process will be completed electronically through the computer system of the Office of Student Financial Aid.

Step 3:  Once the student's loan has been pre-certified the PHEAA Loan Division will mail a Master Promissory Note (MPN) to the student.

Step 4:  The student must then complete the borrower section of the MPN.  Please be sure that all questions are complete and that the student signs and dates the MPN and returns it to the PHEAA Loan Division.  The MPN is valid for ten years.

Step 5:  PHEAA Loan Division as well as East Stroudsburg University will mail an approval notice to the student.  Students will then have the opportunity to cancel or reduce their Stafford Loan by contacting PHEAA or the Office of Student Financial Aid.

Step 6:  PHEAA will authorize the disbursement of loan proceeds (Electronic Funds Transfer [EFT] or check) at the appropriate time to the school.

Repayment -- For  Federal Stafford Loans

Repayment of the Subsidized Federal Stafford Loan begins six months after you graduate, leave school or drop below half-time status. Depending on the amount borrowed, a student may have up to ten years to repay with only a $50 minimum payment required.
 

Student loans are obligations that must be repaid. Making payments on-time will provide a good credit history and a sound credit future.

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