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Louisiana Tech University

Office of
Financial Aid

Stafford Loan Glossary

Choose a topic below to learn more information:


Federal Stafford Subsidized Loan

A subsidized loan is awarded on the basis of financial need.

The federal government pays the interest on the loan while the borrower is enrolled in at least a half-time basis and during the repayment grace period.

Students must begin repaying this loan 6 months after you cease to be enrolled at least half-time. The interest rate on subsidized Stafford Loans for undergraduate students that are first disbursed July 1, 2016 - June 30, 2017 is 3.76% and July 1, 2017 - June 30, 2018 is 4.45% for undergraduate students. Graduate students are not eligible for subsidized loans.

Federal Stafford Unsubsidized Loan

The unsubsidized loan is not based on financial need but total need may not exceed the cost of attendance.

The federal government does not pay the interest while the borrower is in school. All interest is the borrower's responsibility. You will be charged interest from the time the loan is disbursed until it is paid in full. Students can either pay the interest while they are in school or let it accrue. If it is not paid, it is added to the principle (capitalized) when the borrower goes into repayment. If your interest is capitalized, it will increase the amount you have to repay. You can choose to pay the interest as it accumulates; if so, you'll repay less in the long run.

Students must begin repaying this loan 6 months after you cease to be enrolled at least half-time. The 2016-2017 award year interest rate is fixed at 3.76% for undergraduate students and 5.31% for graduate students.  The 2017-2018 award year interest rate is fixed at 4.45% for undergraduate students and 6.00% for graduate students.

Annual Loan Limits

You can receive a subsidized loan and an unsubsidized loan for the same enrollment period as long as you don't exceed the annual loan limits or the cost of attendance. If you're a dependent undergraduate student, with sufficient need, each year you can borrow up to:

If you're an independent undergraduate student or a dependent student whose parents have applied for but were denied a PLUS Loan (a parent loan), each year you can borrow up to:

If you're a post-baccalaureate student who is enrolled in coursework necessary for a professional credential or certification from a state required for employment as a teacher or a post-baccalaureate student who is completing preparatory coursework required for enrollment in a graduate or professional program:

If you're a graduate/professional student, with sufficient eligibility, each year you can borrow up to:

These amounts are the maximum yearly amounts you can borrow in both subsidized and unsubsidized Direct Loans, individually or in combination. Because you can't borrow more than your Cost of Attendance (COA) minus the amount of any Federal Pell Grant you're eligible for, minus any other financial aid, you may receive less than the annual maximum amounts.The maximum total debt from Stafford Loans when you graduate cannot exceed:

NOTE:  Students classified as Basic, Pre-Business, Pre-Architecture, Pre-Interior Design, Pre-Engineering, Pre-Nursing, and associate degree programs in General Studies, Health Information Technology, or Nursing are limited to no more than second year loan limits ($6,500 Dependent/$10,500 Independent). 

Federal Stafford Loan Interest Rate

The interest rates for Federal Direct Stafford Loans first disbursed on or after July 1, 2016 are:

Undergraduate Subsidized and Unsubsidized Stafford Loans are 3.76%

Graduate Unsubsidized  Stafford Loans are 5.31%

The interest rates for Federal Direct Stafford Loans first disbursed on or after July 1, 2017 are:

Undergraduate Subsidized and Unsubsidized Stafford Loans are 4.45%

Graduate Unsubsidized  Stafford Loans are 6.00%

You'll pay a fee of up to 2.5 percent of the loan, deducted proportionately from each loan disbursement. A portion of the fee is for insurance used to pay off loan defaults; the rest reduces the cost of the loan to the government. Because of this deduction, you'll receive slightly less than the amount you're borrowing.

For more in-depth information on Stafford Loans, go to http://www.finaid.org/loans/studentloan.phtml.

Below is an example of a beginning freshman's Stafford Loan disbursement:

First year loan amount $ 3,500
Amount available per quarter ($3,500 ÷ 3) 1,167
Less Lender Origination Fee (2.5%) -       29
Net Amount received to pay fees $ 1,138

Rights and Responsibilities of a Student Borrower

As a borrower, you have the right to:

Before your repayment begins the lender must tell you:

As a borrower, you must:

You must notify your lender(s) if you:

Federal Stafford Loan Tips for Success

Read and save copies of all student loan records, letters, and payments. Keep your address current with your lender. We realize that you may be moving to a new address but keeping your lender aware of your address is important!Contact your lender or holder with any questions or problems, to apply for deferment or forbearance, or if you are having any repayment difficulties.

NEVER ignore correspondence or requests for payment. Most students enter repayment within six months after graduation or last attendance. Your lender will usually contact you to arrange a repayment plan. If you do not receive a repayment schedule, take the initiative and contact your lender. Use the Student Loan Calculator to calculate your monthly payments and compare them to your expected starting salary.

Default is serious business! You are legally required to repay your educational loans. Even if you drop below half-time status, don't finish college, can't find a job right away, or are dissatisfied with the education you received, your education loan must be repaid when your grace period expires. If you don't fulfill your end of the agreement, there are severe consequences. For instance, the entire unpaid amount of the loan, including interest, may be immediately due. Here are some other problems you may face if you default on a student loan:

Federal Stafford Loan Disbursements

Your loan(s) will show as estimated financial aid on your student account and will be ready for the scheduled disbursement day (usually after drop/add has ended) after all of the following steps have been complete:

  1. Loans have been accepted on your award letter - Student.
  2. Stafford Entrance Interview has been completed - Student.
  3. Loans have been sent to the Department of Education - Financial Aid Office.
  4. Notification sent to student to complete MPN - Financial Aid Office.
  5. Master Promissory Note (MPN) has been completed - Student.

Louisiana Tech will disburse your loan in equal amounts for each quarter. You must be enrolled at least half-time (4 undergraduate hours as an undergraduate student or 3 graduate hours as a graduate student) to be eligible for your disbursement for the quarter.

The funds will first be applied to your tuition, fees, room and board, and other school charges on your student account. If any loan funds remain, you'll receive the amount as a check or direct deposit to your checking account. Any remaining loan funds must be used for your education expenses.

NOTE: If you change your mind, a loan can be canceled, even if the MPN agreeing to the loan terms has already been signed. Louisiana Tech will notify you whenever it credits your account with your Stafford Loan funds. You may cancel all or a portion of your loan if you inform Louisiana Tech within14 days after the date Louisiana Tech sends you this notice, or by the first day of your payment period, whichever is later. If you have received funds from the loan by check or direct deposit, you will have to return the funds to the school. 

Federal Stafford Loan Entrance Interview

Once you've accepted a Federal Stafford loan, you must complete loan entrance counseling and learn about the terms and conditions of your loans. Louisiana Tech University students who are borrowing for the academic year will need to complete an Stafford Loan Entrance Counseling if this includes:

The Entrance Counseling must be completed before the loan will be sent to the Department of Education for processing. 

Federal Direct Stafford Loan Master Promissory Note (MPN)

For all Federal Direct Stafford Loans:When you sign the Master Promissory Note, you are confirming that you understand that your school may process new loans on your behalf for the duration of your education (up to 10 years) without having you sign another MPN. You are also agreeing to repay the US Department of Education all loans made to you under the terms of the MPN. Therefore, it is very important that you completely read and understand all of the information on the MPN before you sign it.

  1. You are not required to accept the full amount that your school awards you.
  2. You may notify your school if you want to borrow a lower amount than the school has awarded you.
  3. You can decline the entire loan amount.

Students who need to complete a Master Promissory Note (MPN) will need:

If you have previously completed either a Direct Loan MPN or a Direct PLUS Loan application, some of this information may be populated for you. You should review any populated information carefully for accuracy. 

Loan Proration for Graduating Undergraduate Borrowers

Per federal regulation (FSA 13-14, Chapter 5, 3-107) Louisiana Tech University is required to prorate a dependent or independent undergraduate student's annual Stafford loan limits, when they are enrolled in their final period of study that is shorter than an academic year. This will affect students that will graduate from their program of study at the end of the fall or winter quarter. The maximum loan amount would be determined by the number of credit hours enrolled for the final quarter/s. In some cases, the actual loan amount that a student is eligible to receive (based on costs, EFC, and other aid) may be less than the prorated loan limit.The Financial Aid office will receive an official graduation list from the Registrar’s Office. If you fail to notify the Financial Aid Office of your upcoming graduation prior to the disbursement of your loans for that quarter, your loans may be adjusted which could result in a bill with the university.

Federal Stafford Loan Exit Interview

Any student who borrowed a Stafford Loan at Louisiana Tech is required by law to complete a Stafford Loan Exit Interview if, at any time, the student is not enrolled at least half-time, graduates, or leaves the University (resignation, unofficial withdrawal, transferring to another school, etc).

Consolidation Loans

A consolidation loan allows you (or your parents if they have a PLUS loan) to combine several types of federal student loans with various repayment schedules into one loan with one monthly repayment. Your monthly payments might be significantly lower than they would be under the 10-year Standard Repayment Plan. You might receive a lower interest rate than you're currently paying on one or more of your loans. It may be possible to obtain lower interest rates by consolidating while still in school.You can get a consolidation loan during your grace period, once you've entered repayment, or during periods of deferment or forbearance. PLUS loans are eligible for consolidation once they are fully disbursed. Contact the consolidation department of a participating lender for an application and more information. If the same loan holder holds all the loans you want to consolidate, you must obtain your consolidation loan from that holder, unless you haven't been able to get a loan with income-sensitive repayment terms acceptable to you.Take time to study your consolidation options carefully before you apply because there can be disadvantages when you consolidate. It can significantly increase the total cost of repaying your loans. Because you can have a longer period of time to repay, you'll make more payments and pay more interest. Consider whether you lose any borrower benefits if you consolidate, such as interest rate discounts, principal rebates, or any discharge (cancellation) benefits if you include a Federal Perkins Loan.

Consolidating All Prior Loans

Under provisions of the Ensuring Continued Access to Student Loans Act ("ECASLA") , lenders have the option to "PUT" (sell) loans to the U.S. Department of Education (DOE).  Lenders must notify borrowers if their loans have been sold to the Department of Education. 

Consolidation Loan allows you to combine all the federal student loans you received to finance your college education into a single loan. Borrowers will be able to consolidate all of their prior Stafford, Grad PLUS or PLUS Loans through the Federal Direct Consolidation Program.

Related Sites:

Federal Loan Deferment Options

Deferment is a postponement of repayment under various, specific circumstances. In most cases, deferments aren't granted automatically; you must formally request one through the procedures your loan holder has established. Often, you need to complete a deferment form. You’ll need to provide documentation showing you’re qualified for the deferment you’re applying for. Make sure all your paperwork is in order and make sure the loan holder receives it.

Here’s one of the most important things to remember: You must continue to make payments on the loan until you’ve been notified the deferment has been approved. Sometimes borrowers apply for deferment and don’t hear anything back and assume things are fine. Or, as soon as they submit a deferment form and their paperwork, they think they can immediately stop payment. Even if the paperwork is received without any problem, it takes a while to process. So, don’t skip the next payment when it’s due. First, check with the loan holder. If your deferment has not been processed, make your payment! You might go into default otherwise. You can’t get a deferment on a defaulted loan.Students receiving Federal education loans may obtain various deferments:

Federal Loan Discharge (Cancellation) Provisions

It is possible to have your student loan debt discharged (canceled) or reduced, but only under certain specific circumstances:

For FFEL and Direct Stafford Loans only:

Discharge provisions differ depending on whether you have a Federal Perkins Loan, a Federal Stafford Loan, or a Federal PLUS Loan. For more specifics on discharges, click here.

Loan cancellation and forgiveness forms may be obtained on the USAFunds website.

Federal Loan Forbearance Options

If you find you can’t meet your repayment schedule but you’re not eligible for a deferment, you might be granted forbearance for a limited and specified period. During forbearance, your payments are temporarily postponed or reduced. Forbearance can also be an extension of the time you have to repay your loan. Unlike deferment, whether your loans are subsidized or unsubsidized, you’ll be charged interest during forbearance. If you don’t pay the interest as it accrues, it will be capitalized.As is true with deferment, you aren’t just granted forbearance automatically; you must formally request one from your loan holder. You might have to provide documentation to support your request. You might be granted forbearance if you are:

This is not a complete list of conditions that might qualify you for forbearance. For more information, contact your loan holder.Unlike deferment, which you’re entitled to receive, the loan holder does not have to grant forbearance except in certain mandatory circumstances (check with your loan holder for details). In most cases, however, lenders are willing to work with you if you show you’re willing but temporarily unable to repay your debt.Forbearance forms may be obtained on USAFunds website.

Repaying Your Student Loan Debt by Enlistment into the Military

Enlistment into the U.S. Army can guarantee loan repayment of up to $65,000 of qualified loans. In addition, as a college graduate, you qualify for over 200 jobs in numerous job fields. This a great opportunity to completely pay off your loans in as little as three years, gain valuable work experience, and serve your country. For more information contact the U.S. Army Recruiting Center on 300 West California Avenue, Ruston, Louisiana 71270 or (318) 255-6863.

Repaying Your Student Loan Debt

After you graduate, leave school, or drop below half-time enrollment, you will need to complete aPerkins Exit Interview and/or Stafford Exit Interview. You will then receive information about repayment and your loan provider will notify you of the date your loan repayment begins. We cannot emphasize enough the importance of making your full loan payment on time either monthly (which is the usual pay cycle) or according to your repayment schedule. If you do not make your regular payments, you could end up in default, which has serious consequences. Student loans are real loans—just as real as car loans or mortgages. You must pay back your student loans.Each type of loan has its own requirements regarding grace periods (amount of time until your first payment), repayment options, and repayment periods:Federal Perkins Loans

Federal Stafford Loans

Federal PLUS Loans