What is the difference between federal loans and private loans? Watch this video and related Financial Aid TV videos to learn more.
Undergraduate and graduate student loans can be an important financial resource for students who need help getting through school and are willing to pay for their education with future earnings. As a result of the Health Care and Education Reconciliation Act, beginning July, 2010, federal student loans are no longer made by private lenders under the Federal Family Education Loan (FFEL) Program. Instead all new federal student loans come directly from the U.S. Department of Education under the Direct Loan Program. This change does not impact the process of applying for federal loans, or the amount of federal aid that students are eligible to receive.
Students in CCU's College of Adult and Graduate Studies (CAGS) who are interested in receiving federal student aid should continue to complete a Free Application for Federal Student Aid (FAFSA) for each school year that they wish to be considered for graduate or undergraduate student loans. Below are the detailed descriptions of different loan options available for CAGS students.
A Subsidized Direct Stafford Loan is a low-interest loan made to the undergraduate student for education-related expenses. The student must demonstrate financial need for Subsidized Stafford Loan eligibility. The federal government pays the interest on the loan while the student is enrolled at least half time (six credit hours per semester), and during a 6 month grace period following the student’s separation from school. Subsidized Direct Stafford Loans have a standard repayment term of 10 years, and repayment does not begin until 6 months after graduation or dropping below half time status.
Graduate and professional degree students are no longer eligible for Subsidized Stafford loans. Loans made on or after July 1, 2012 will be Unsubsidized Stafford only.
Undergraduate students who are new Subsidized Stafford loans borrowers on or after July 1, 2013 have subsidized loan eligibility limited to 150 percent of the length of their academic program. The 150 percent limit means students in a four-year program will be eligible for subsidized student loans for an equivalent of six years, and students in a two-year program are eligible for subsidized student loans for an equivalent of three years. Students who reach this limitation could continue to receive Unsubsidized Stafford loans provided they meet all other eligibility requirements. Once borrowers reach the 150 percent limitation, eligibility for an interest subsidy also ends for all outstanding subsidized loans that were disbursed on or after July 1, 2013. At that point, interest on those previously borrowed loans would begin to accrue and would be payable in the same manner as interest on unsubsidized loans.
Unsubsidized Direct Stafford Loans are available for education related expenses to undergraduate and graduate students; there is no requirement to demonstrate financial need. The Unsubsidized Stafford Loan amount is determined by the amount the student can borrow based on cost of attendance and other financial aid awarded.
Unsubsidized Direct Stafford loans have the same terms as the Subsidized Direct Stafford Loan except that the student, rather than the government, pays the interest while the student is still in school. For students who choose not to pay the interest while in school, the interest will accrue and be capitalized. In other words, the interest will be added to the principal amount of the loan and that amount will also be assessed interest.
The interest rate for undergraduate Stafford loans first disbursed between July 1, 2015 and June 30, 2016 is fixed at 4.29%. This rate applies to both Subsidized and Unsubsidized Stafford Loans.
The interest rate for Stafford loans first disbursed to graduate and professional students between July 1, 2015 and June 30, 2016 is fixed at 5.84%. This rate applies to Unsubsidized Stafford Loans only as graduate and professional students are no longer eligible for Subsidized Stafford Loans.
Interest rates on federal student loans are set by Congress, and are calculated using a base 10-year Treasury Note index with an add-on amount for each loan program. All Stafford Direct Loans are variable-fixed. The interest rate can change from year to year, but the rate for each new loan is fixed for the life of the loan. Please see below for a detailed table of 2015-2016 Direct Loan interest rates.
Effective for loans with a first disbursement on or after July 1, 2015 through June 30, 2016.
Most federal student loans have loan fees that are deducted proportionately from each loan disbursement. This means the money received will be less than the amount actually borrowed. Students are responsible for repaying the entire amount borrowed, not just the amount received.
The loan fee for Direct Stafford Loans disbursed on or after October 1, 2014 and before October 1, 2015 is 1.073%. The loan fee for Direct Stafford Loans disbursed on or after October 1, 2015 and before October 1, 2016 is 1.068%.
For more detailed information about the Direct Stafford Loan programs visit the U.S. Department of Education web page for Direct Stafford Loans.
If students are eligible for a Direct Stafford loan (Subsidized or Unsubsidized), they need to complete an Entrance Counseling session. This session covers the rights and responsibilities of a Direct Stafford Loan borrower and is a federal requirement prior to obtaining the loan funds.
After you have completed the Entrance Counseling session, you will complete and sign the Master Promissory Note (MPN). Financial aid disbursements begin after the add/drop deadline of your first enrolled course of the semester. Course participation and attendance will be determined before financial aid is disbursed. For all CAGS students, any financial aid credit balance that remains after tuition and fees are covered will be refunded in week four of the first enrolled course of the semester.
Students who have previously received Stafford loan funds from CCU are not required to complete the Entrance Counseling Session. However, because all CCU student loans are now required to go through the Direct Loan program, students who have previously received Stafford loan funds must complete a new MPN.
Direct PLUS loans are low-interest loans made to the parent of a dependent undergraduate student attending at least half time (six credit hours per semester). A Direct PLUS loan is subject to credit approval. A parent may borrow up to the cost of education as determined by CCU’s Director of Financial Aid, minus any other aid received. Students must complete the FAFSA to be eligible to receive a Parent PLUS loan.
The interest rate for Parent PLUS loans disbursed between July 1, 2015 and June 30, 2016 is 6.84%. The Direct Parent PLUS loan is variable-fixed. The interest rate can change from year to year, but the rate for each new loan is fixed for the life of the loan. Direct Parent PLUS loan interest rates are set by Congress and tied to a base 10-year Treasury Note with a 4.60% add-on, calculated annually.
A Parent PLUS loan is disbursed in two equal disbursements – the first in the fall semester, and the second scheduled for the spring semester. Payments may be deferred while the student is enrolled at least half-time at CCU. Because of the Health Care and Education Reconciliation Act, beginning July, 2010, all Parent PLUS loans come directly from the U.S. Department of Education under the Direct Loan Program. Parents can visit the U.S. Department of Education site to complete the PLUS request process.
Federal Direct PLUS loans have loan fees that are deducted proportionately from each loan disbursement. This means the money received will be less than the amount actually borrowed. Parents are responsible for repaying the entire amount borrowed, not just the amount received.
The loan fee for Direct Stafford PLUS Loans disbursed on or after October 1, 2014 and before October 1, 2015 is 4.292%. The loan fee for Direct Stafford PLUS Loans disbursed on or after October 1, 2015 and before October 1, 2016 is 4.272%.
Many lending institutions offer education loans to students enrolled in a degree seeking program to assist them in meeting the costs of higher education. For those students whose eligibility for Federal Loan programs do not meet their financial needs, it may be necessary to look to Private Credit loans for additional assistance. These loan programs are credit based and some students may require a co-borrower to qualify. All freshman students are required to have a co-borrower, regardless of previous credit history. Interest rates and repayment terms vary by lender. If students chose an Alternative loan, we do recommend that they borrow conservatively.
Choosing a lender for your Alternative Loan is a personal decision and it is important students research available interest rates as well as repayment options and borrower benefits. CCU advises students to select a lender through ELMSelect. On this site we have recommended lenders based on the quality of products and services they provide to CCU students and families. You may evaluate each lender, and make a selection based on the benefits provided to you the borrower.
After you have research and chosen a lender, you will begin the loan application process. After the Alternative loan has been approved and the promissory note has been signed, CCU will certify the loan. Funds are usually disbursed within 3-5 business days, or the beginning of the semester.
When a student withdraws, ceases attending, or is administratively withdrawn during a semester, CCU is required by Federal regulation to determine the amount of Title IV grant or loan assistance (Federal Pell, FSEOG, TEACH Grant, Federal Direct Stafford Loan, Federal Direct Parent PLUS Loan) that the student earned as of the student's withdrawal date. Based on the withdrawal date, CCU determines the percentage of the payment period completed. The payment period is the total number of calendar days that a student is scheduled to complete prior to ceasing attendance. The unearned portion of the Title IV aid must be returned to the appropriate Title IV program(s).
Determining enrollment status for Return of Title IV funds
If prior to ceasing attendance, a student drops modules that have not yet started, the dropped modules will NOT be included when determining the student's payment period, however the student's eligibility for Title IV funds may need to be recalculated.
If a student drops modules that have not yet started after ceasing attendance in all courses, the dropped modules will be included in determining the student’s payment period. Any adjustments to a student's enrollment status made after the student ceases attendance have no bearing on the Return of Title IV requirements.
The student's withdrawal date will be one of the following:
Withdrawal date for students enrolled in modules
Earned and Unearned Title IV financial aid
The percentage of the payment period the student attended is used to calculate the amount of the student's earned versus unearned federal aid funds.