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, since 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 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 aid. Below are the detailed descriptions of different loan options available for undergraduate students.
Subsidized Direct Stafford Loans | Unsubsidized Direct Stafford LoansFederal Perkins Loans | Direct PLUS Loans | Private Education Loans
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). For loans first disbursed on or after July 1, 2012, Subsidized Stafford Loans are no longer eligible for this interest subsidy during the 6 month grace period following the student's separation from school. Subsidized 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.
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 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, 2014 and June 30, 2015 is fixed at 4.66%. This rate applies to both Subsidized and Unsubsidized 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.
For 2014-2015 the Treasury Note index is 2.612% plus a 2.05% add-on amount for Direct Subsidized and Unsubsidized Stafford Loans made to undergraduate students. 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.
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 current loan fee for Direct Stafford Loans disbursed on or after December 1, 2013 is 1.072%. The loan fee for Direct Stafford Loans disbursed on or after October 1, 2014 and before October 1, 2015 is 1.073%.
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 Federal 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). Funds are usually disbursed within 3-5 business days, or the beginning 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.
Federal Perkins Loans are low-interest, fixed-rate loans awarded to students demonstrating exceptional need. The funds are very limited, with Colorado Christian University acting as the lender. The government pays the interest on this loan while the student attends school at least half time, and continues until nine months after the student leaves school. Once repayment begins, the student will have minimum payments per month plus interest. Part of the student's Federal Perkins debt may be canceled (repaid for you) for service in the military, law enforcement, or for teaching a subject matter or in a location where there is a shortage of qualified teachers. Payments may also be deferred for specific reasons outlined by the federal government, at which time the government again makes interest payments for the student.
Direct PLUS loans are low-interest loans made to the parent of a dependent 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, 2014 and June 30, 2015 is 7.21%. 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 current loan fee for Direct Stafford PLUS Loans disbursed on or after December 1, 2013 is 4.288%. The loan fee for Direct Stafford PLUS Loans disbursed on or after October 1, 2014 and before October 1, 2015 is 4.292%.
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 researched 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.