FINANCIAL AID POLICIES HANDBOOK 2013-2014
Federal Loans may be available to all first year students and returning students who are new borrowers. These loans may include the Federal Direct Stafford Loan and the Federal Perkins Loan.
We discuss the two main student loan programs in this section: the Federal Direct Stafford loan program and the Federal Perkins Loan program. We encourage students to borrow only what is necessary. Our affordability plan is designed to maintain student borrowing at levels manageable after graduation. The Federal Direct Stafford and Perkins Loan limits are shown below. We also include information about the Federal Direct PLUS Loan for parents. The Federal Direct Stafford and PLUS loan programs require a student to be enrolled at least half time.
Federal Stafford Loan (Subsidized and Unsubsidized)
Direct Loan Program for first time borrowers
Limits: Annual Stafford loan limits are $3,500 for a freshman, $4,500 for a sophomore and $5,500 for a junior or senior. Interest on these loans may be subsidized by the government based on the cost of education, the family contribution and other aid received. Students may borrow an additional $2,000 Unsubsidized Stafford in addition to the annual limits to total $5,500 for a freshman, $6,500 for a sophomore and $7,500 for a junior or senior.
If a Federal Direct Stafford Loan is included in your award, it is a subsidized loan amount unless it specifically states that it is unsubsidized. The federal government pays the interest on the subsidized loan while the student is in college at least half time and for six months after graduation. The repayment period is ten to twenty five years depending on the repayment plan that you choose. A minimum monthly payment of $50 is required. However, the actual amount of the payment is dependent on the total debt. Loan fees apply and will be deducted from the loan disbursement amount.
The unsubsidized Federal Direct Stafford Loan is available for those who do not qualify for a subsidized loan. The interest on the unsubsidized Federal Direct Stafford Loan begins to accrue immediately. Students can make the interest payments monthly or quarterly, or choose to have the interest deferred and added to the principal of the loan, which is called capitalization. If the student chooses to defer interest payments until after college, they will be capitalized, and interest is paid on the interest when it is added to the loan. Otherwise, the repayment requirements are the same as a subsidized Stafford Loan.
A student may be eligible for an unsubsidized portion of Stafford Loan beyond any subsidized portion up to the yearly maximum. The student may be eligible to borrow an additional unsubsidized Stafford Loan upon confirmation that the parent is ineligible to borrow a PLUS loan (see Parent Loans below).
Interest Rate. Based on current federal regulations as of 7/1/2012, the interest for a Subsidized Stafford Loan is fixed at 6.8% unless changed by Congress. The interest rate on a Federal Unsubsidized Stafford Loan is a fixed rate of 6.8 percent. Both have an origination fee of 1%.
Eligibility. The amount a student can borrow is limited to the difference between the cost of attendance and the sum of the expected federal contribution and any other financial aid received. For those without subsidized eligibility, the unsubsidized eligibility is the difference in the cost of attendance and any financial aid received. The Federal Direct Stafford Loan shown on your award letter is the amount we recommend that the student borrow to help finance their education.
Applying for the Federal Direct Stafford Loan
For entering students or other first-time borrowers. The financial aid office will initiate processing the loan through the Federal Direct Stafford loan program when the student accepts their award on the financial aid award letter or on the Financial Aid Basecamp. The student must also complete the necessary steps for us to process the award. Click here for more information on the application process.
Entrance Counseling. In compliance with federal requirements, students who are borrowing for the first time at Colorado College must also complete an Entrance Loan Counseling session before the funds can be credited to their account. Students should go to https://studentloans.gov/myDirectLoan/index.action for information about completing this Online Stafford Direct Loan Entrance Counseling Session. (Step 1).
Master Promissory Note (MPN). Under federal regulations, students must complete a Master Promissory Note for Federal Direct Stafford Loans. The Master Promissory Note enables the student to sign only one promissory note for all Stafford Loans while at Colorado College. Click here for more information about filling out the Master Promissory Note (Step 2).
Disbursement of Loan Funds. In most cases the loan proceeds will be payable in two installments. The second payment usually occurs at the beginning of the second semester for full academic-year loans. For students to determine the actual amount of funds they will receive from the Stafford Loan, it is necessary to subtract the loan origination fees from the amount borrowed. Loan fees are added to the overall cost of attendance when applying for the loan. However, it is institutional policy that loan fees are not funded with CC grant or scholarship dollars.
After the student is registered and enrolled, funds will be disbursed electronically directly to the student's account.
Students who have already borrowed a Stafford Loan. We will award a Federal Stafford Loan in the future. Unless the student indicates otherwise, we will process the Stafford Loan award amount.
Deferments, Discharges, Cancellations. Periods during which payment of principal on a Federal Direct Stafford Loan (Direct or FFEL) is postponed are called deferments. Deferments include periods of at least half-time enrollment in a degree-seeking program, study on an eligible graduate fellowship, and approved rehabilitation training programs for disabled individuals. Limited loan forgiveness is available for full-time teachers in designated schools, and others. Additional information on these topics is available in “The Student Guide” to federal financial aid at http://studentaid.ed.gov/resources
Federal Direct Stafford Loan Limits for Independent Students and for Dependent Students Whose Parents are Ineligible to Borrow a PLUS Loan. Students who are considered independent from parental support by federal regulations, and students whose parents are ineligible to borrow a Federal PLUS loan (see PLUS Loan section) may be eligible to borrow up to the maximum loan limits defined below.
$9,500 is the first-year limit: $5,500 initial limit and up to $4,000 in additional unsubsidized loan
$10,500 is the second-year limit: $6,500 initial limit and up to $4,000 in additional unsubsidized loan
$12,500 is the annual limit for third and four year students: $7,500 limit per year for subsequent undergraduate study and up to $5,000 in additional unsubsidized loan
Federal Perkins Loan
Statutory Limits: $5,500 per year as undergraduate based upon limited eligibility and availability of funds.
$27,500 cumulative undergraduate maximum currently at a fixed interest rate of five percent.
The federal government pays the interest while the student is enrolled at least half time and for nine months after graduation. The repayment of this loan is up to 10 years with a minimum monthly payment of $40 required.
Eligibility. Colorado College awards Perkins Loans to students directly so there is no separate application. Students simply accept the Perkins Loan on the financial aid award letter or on the Financial Aid Basecamp. The college receives very limited federal allocations for this loan program.
Disbursement. Federal Perkins Loans will be credited to the student account after the student has signed a Master Promissory Note. Students will receive information that encourages them to sign the MPN electronically. As with the Federal Stafford Loan, first-time recipients must complete a pre-loan counseling session before the loan can be credited to their accounts. Students fulfill this requirement with an on-line Perkins Loan Entrance Counseling Session available at http://www.coloradocollege.edu/admission/financialaid/loans/loancounseling/
Deferments, Discharges, Cancellations. Deferments are available for periods of at least half-time enrollment in a degree-seeking program, study on an approved graduate fellowship, and approved rehabilitation training programs for disabled individuals. Significant loan forgiveness provisions are available for teachers, child or family service workers, law enforcement or corrections officers, Peace Corps volunteers, and others. Additional information on these topics is available in “The Student Guide” to federal financial aid at http://studentaid.ed.gov
Federal PLUS Loan – Parent Loan
In order to comply with federal loan eligibility requirements, the student must file the FAFSA even if they are interested only in the PLUS loan. This federal loan is available to help parents of dependent students obtain additional funds to help finance educational costs. Many parents use this loan to finance their calculated Expected Parent Contribution. The interest rate is 7.9% and the current loan fee is 4 % and will be deducted from the loan disbursement.
Eligibility. A parent with an adverse credit history, according to criteria established by federal regulations, will be unable to borrow on behalf of the student. In case of denial of Direct Plus Loan a student may receive additional Direct Unsubsidized Stafford funding. (Please contact Financial Aid Office for further assistance and other options.)
Repayment. Repayment of a Direct Plus Loan begins 60 days after the full amount you've borrowed for a school year has been disbursed. This means that you generally must begin repayment while your child is still in school. For Direct PLUS Loans with a first disbursement date that is on or after July 1, 2008, you may request that repayment be delayed while your child is enrolled at least half-time and during the six month period after your child graduates or is no longer enrolled at least half-time. If you would like to postpone repayment of your PLUS Loan based on your child's enrollment status, you must contact the Direct Loan Servicing Center. www.direct.ed.gov or www.dl.ed.gov
Disbursement. The loan usually will be disbursed in two equal payments in an enrollment period. For the regular academic year, half would be disbursed in the fall and the other half in the spring. Electronic Fund Transfer (EFT) disbursements are credited automatically to the student's account. If the PLUS Loan on the account exceeds the total amount of charges and creates a credit balance, we are required to release the credit balance to the parent unless we receive written notification from the parent to do otherwise. Students must be registered and enrolled to receive funds.
How to apply for a Federal Direct Parent PLUS Loan: Application steps are available here.
Limit: The parent and student should consider utilizing the student's full eligibility for the subsidized and unsubsidized Federal Stafford Loan. See annual loan limits.
Interest Rate. The interest rates for the current academic year are as follows:
Direct Subsidized Stafford- 6.8% (unless changed by Congress), 1.05% origination fee
Direct Unsubsidized Stafford- 6.8%, 1.05% origination fee
Direct Parent Plus- 7.9%, 4.204% origination fee
Parent Loans, Alternative Financing, Payment Plans
Parents and students may need to consider some of the following alternatives to assist in paying for costs at Colorado College . Students and their parents often combine options to finance college costs. The following are some resources that may be of interest.