Federal Direct Stafford/Ford Loans
The Federal
Direct Stafford/Ford Loan is a low-interest
loan available to students for post secondary
educational expenses. Most matriculated
students are eligible for a Subsidized
and/or Unsubsidized Direct Stafford Loan
each academic year. The loan is made to
the student who is responsible for repayment. The
interest rate for all Stafford loans disbursed
on or after July 1, 2006 is a fixed rate
of 6.8%.
Students must
demonstrate financial need as defined by
federal formulas to qualify for subsidized
loans. Financial need is determined by a
federally legislated analysis of family
financial information provided on the Free
Application for Federal Student Aid (FAFSA)
which must be completed for either loan.
Students who do not qualify for the full
Subsidized Direct Loan may be approved for
the difference in an Unsubsidized Direct
Loan. The combination of the Subsidized
and Unsubsidized Direct Loans may not exceed
the annual and aggregate limits for loans
under the Federal Direct Stafford/Ford Loan
Program. Provisions for the Subsidized Loan
and Unsubsidized Loan are the same with
the exception of those noted below.
Subsidized
Direct Loan
You will not
be charged interest until you begin repayment.
Repayment begins six months after you cease
to be enrolled at least half-time (including
leaves of absence).
Unsubsidized
Direct Loan
The government
will not pay interest while a student is
in school as it does for the Subsidized
Direct Loan. Interest accrues, and must
be paid or capitalized, during periods of
in-school enrollment and/or deferment.
Who is
eligible to apply?
Students are
eligible to participate in the Federal Direct
Loan Program if they: (1) are U.S. citizens
or permanent residents; (2) are enrolled
in a degree program on at least a half-time
basis; and (3) are making satisfactory academic
progress. This requires graduate students
to have a cumulative GPA of at least 2.7
(grades of I and C+ or lower are interpreted
as failures).
How much
may I borrow?
Graduate and
professional students are eligible to
borrow up to $8,500 in a Subsidized Direct
Loan; and beginning in 2007/2008, up to
an additional $12,000 in an Unsubsidized
Direct Loan. The cumulative maximum for
the Federal Direct Stafford/Ford Loan Program
is $23,000 for undergraduates, and $138,500
for graduate and professional students,
including any amount borrowed for undergraduate
study.
How do
I apply for a Federal Direct Stafford Loan?
- Complete a free
application for Federal Student Aid (FAFSA).
The form is available online at www.fafsa.ed.gov.
- Complete a Loan
Request form (download
PDF) and return to the Graduate School
Financial Aid Office at 705 Commonwealth
Avenue, Room 112.
- Complete a Direct
Loan Master Promissory Note if
this is your first year to borrow
a federal direct loan since the 1999/2000
academic year. Go to www.bu.edu/finaid,
and select from the sidebar menu.
- Since the Master Promissory
Note does not list loan amounts and since
a previous borrower may not receive a
Master Promissory Note, the Graduate School
will send all students a notification
letter, which will list their
approved loan amounts. This notification
will be mailed to students once the FAFSA
and Loan Request Form are complete, usually
in early July. Students can also check
on the status of loan funds by accessing
the Student
Link.
- If you are a first time
borrower, federal regulations require
you to complete entrance counselling
prior to crediting your loan funds to
your student account. You must fulfill
this requirement on-line by accessing
www.bu.edu/finaid.
Students who have borrowed a Federal
Stafford Loan previously at another institution
can have this requirement waived by submitting
documentation of previous Federal Stafford
Loan borrowing. Note that federal loan
funds will not be disbursed until this
requirement is completed; therefore it
is advised that entrance counseling be
completed as early as possible.
When will the loan
funds be available to me?
Once the loan servicer has
approved your loan, funds will be electronically
credited to your student account within
five to ten business days. An origination
fee of 2.5% of the total loan will be assessed
and an up-front rebate of 1.5% will automatically
be awarded. To keep this up-front rebate,
you must make your first 12 payments on
time once you go into repayment status.
The net disbursement will then have 1%
of the total loan deducted from the Subsidized & Unsubsidized
Direct Loans prior to disbursement; therefore,
the amount available will be less than
the loan amount approved. This fee is determined
by the U.S. Department of Education. Funds
cannot be disbursed until the ENTRANCE
COUNSELING requirement has been fulfilled,
until students have signed a Master Promissory
Note (if necessary), and until students
are registered for the semester.
If there
is a credit on your account after the loan
funds have disbursed (this does not include
pending credits since this means the loan
funds have not yet arrived), you may obtain
a refund by completing a Credit
Release Form (download
PDF).
Federal legislation requires
that all Federal Direct Stafford
Loans (both subsidized & unsubsidized)
be disbursed in two equal installments.
The second disbursement cannot be made available
until halfway through the loan period. This
means that for students who are
attending both semesters of the academic
year, half the loan amount is available
in the fall and the other half is available
in the spring. For students borrowing
for one semester only (January graduates
or students beginning their studies in January),
the loan is disbursed in one lump sum.
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