ALL ABOUT FEDERAL STUDENT LOANS

 What is a federal student loan?

A loan is borrowed money you must repay with interest. A student loan is borrowed money available for educational expenses. No payments on the loan principal are expected until the student leaves school or drops below half time (6 credits a semester).  Student loans must be repaid (principal and interest) but repayment can be over an extended period of time.  The federal student loan program is called the Federal Family Education Loan (FFELP).

The Federal Family Education Loan program actually consists of the following:

• Stafford Loan (subsidized and unsubsidized)
• Parent Loan for Undergraduate Student (PLUS)

There are two basic types of Stafford loans: subsidized and unsubsidized.

Subsidized Stafford Loan - The federal government pays the interest on your loan while you are in school (attending at least six credits) and during your six month grace period.   You must have demonstrated financial need in order to qualify for a subsidized loan.

 Unsubsidized Stafford Loan - You, the student, are responsible to pay the interest on the loan while in school (attending at least six credits) and during the six month grace period.  You can pay the interest as you go on a monthly basis or you can allow it to accumulate and be added to the principal amount of your loan. 

How much can I borrow?

 The maximum amount a student can borrow for a full academic year depends on the number of credit hours you have earned at Middlesex Community College.  This credit total includes transfer credits that have been accepted from another school.

 Earned Credit Hours                                 Maximum Year Loan

 0 - 30 Credits                                                                       $3,500.00

31 - > Credits                                                                        $4,500.00

You may qualify for additional loan funding if you filed your FAFSA as an independent student.  Independent students may be eligible for an additional $4,000 unsubsidized Stafford loan (up to $2000 per semester).

 The maximum amount a student can borrow for their undergraduate career (referred to as Aggregate Amount) is as follows:

 Dependent Students                                                           $23,000

 Independent Students                                                        $46,000**

** no more than $23,000 may be in subsidized loans.

 How do I know if I am eligible for a student loan?

 To receive a student loan, you must meet all eligibility requirements for federal student aid as well as the ones listed below:

 Enrolled in a minimum of six credits each semester (and remain enrolled. through the term) in an eligible program of study.

1. Demonstrate financial need for the subsidized Stafford loan.
2. Be a U.S. citizen or eligible non-citizen.
3. Maintain satisfactory academic progress.
4. Not be in default on a prior student loan or owe a federal grant overpayment.
5. Have a completed and approved FAFSA on file with MCC and submitted whatever additional documents requested by the Financial Aid Office.

 When and how do I receive the loan funds?

Loans are paid (disbursed) to your student account at the mid-point of the semester and on a weekly basis thereafter. When your loan is disbursed, it is used first to pay any outstanding charges.  If any loan money is left over, the school sends you a refund check approximately two weeks after disbursement.  This check is made out in the name of the student (the borrower). (PLUS or parent loans are made out to the parent borrower.)

Important! Federal student loans are only disbursed when your class participation is verified, you have a complete financial aid file at the college, and you satisfy all other federal requirements to receive a loan.

How and when do I start repaying my student loan?

You must start repaying your loan six months after you graduate, leave school, or drop below half time (that is, attending less than six credits). This six month period of time is called the grace period.  During this time, your lender will send you information about your repayment terms, and deferment options.  A deferment is a legal postponement of your repayment, such as a deferment for continuing your education in another program of study or at another school.

 What happens if I fail to make loan repayments after I leave school?

If you fail to make a certain number of loan repayments after you leave school (or drop below half time attendance) you may go into default. Defaulting on a student loan has very serious consequences. If you default, any one or more of the following may occur:

• Internal Revenue Service (IRS) can withhold your income tax refund, and apply it toward the loan amount you owe.
• The agency holding your loan may ask your employer to deduct payments from your paycheck.
• The national credit bureaus are notified, which affects your credit rating for a long time.
• You will lose your eligibility to receive additional federal or state aid if you decide to return to school.

Taking out a loan means taking on a lot of personal responsibility. While student loans are available, you should consider borrowing only as a last resort.  Because of this, the Financial Aid Office wants you to be aware of all your options for paying for school.