What is a Direct Stafford Loan?

The Federal Direct Stafford Loan is a low-interest loan offered by the federal government to help students pay educational costs.  Minimum enrollment is 6 credit hours per semester.  The federal government withholds an origination fee when the loan is made.  This money must be repaid.  Please visit the Department of Education website for more information about Direct Loans www.studentaid.gov.

Subsidized Loans

 Based on need.  Loans for which interest is paid by the government while you are in school at least half-time, during grace and deferment periods are called subsidized loans.  This subsidy will be lost if you don’t graduate within 150% of the length of your program.

Unsubsidized Loans

Not based on need.  You are responsible for paying the interest on an unsubsidized loan while you are in school, during grace and deferment periods, and during repayment.  Interest can either be paid while you are in school, or it can be postponed until graduation or withdrawal from school.  If you postpone paying interest, once you enter repayment (for example, after your grace period), it will be capitalized.

Loan Application Checklist:

1) Complete the Free Application for Federal Student Aid (FAFSA) at www.fafsa.gov.

2) Register for 6 hours or more.

3) Complete your Entrance Counseling and Master Promissory Note at www.studentloans.gov.

4)  Print your NSLDS history available at www.nslds.ed.gov.

5)  Print a copy of your Loan Repayment Calculation available at www.mappingyourfuture.org. You can get to this calculator by selecting: “Resources”; then “Use Calculators”(under Manage Your Money); then “Student Loan Repayment Calculator”.  (Combine all the loans on your NSLDS report with your current request for the total in the calculator).

6) Complete the ABAC-Bainbridge loan application (available at the One Stop Shop).

7)  If you wish to request unsubsidized loan funds you must schedule an appointment with your financial aid counselor (see contact information below).

8) Keep records of all loan documents.  Remember, you must repay your loan!

9) Keep your address and phone number current with the ABAC-Bainbridge Admissions Office.

10) All loan applications are due by midterm of each semester. Your loan will be processed within 6 weeks of receipt of all documents.

Controlling Education Loan Debt

Don’t leave college with excessive education debt.  These tips may help you keep your student loan debt affordable.

  • Borrow only what you need to cover the cost of education.
  • Pay the interest on education loans as it comes due.
  • Budget to control expenses.  Include out-of-pocket education costs as well as expenses for transportation, personal items and entertainment.  Find ways to cut costs, such as buying used textbooks, rent textbooks, eating out less, and finding a roommate to share expenses.  Always ask yourself before buying: “Is this something I really need?”  If you don’t know, then you usually can skip the purchase.
  • Consider working part-time.  Plan your work schedule so your academic work will not suffer, and investigate campus work-study opportunities.
  • Determine how much education debt you can afford to repay by estimating your future earnings.  Try to keep monthly education loan payments to less than 8 to 10 percent of our expected gross monthly income.
  • Complete your degree on time.  You will accumulate more education debt if you extend your school enrollment.
  • Keep a file of your education loan documents and other financial aid papers.
Annual Income Range of Maximum Affordable Student Loan Debt Range of Affordable Monthly Loan Payments
$15,000 $8,690-$10,862 $100-$125
$20,000 $11,586-$14,483 $133-$167
$25,000 $14,483-$18,103 $167-$208
$30,000 $17,379-$21,724 $200-$250
$35,000 $20,276-$25,345 $233-$292
$40,000 $23,172-$28,965 $267-$333
$45,000 $26,069-$32,586 $300-$375
$50,000 $28,965-$36,207 $333-$417
$75,000 $43,448-$54,310 $500-$625
$100,000 $57,931-$72,413 $667-$833

Range of maximum affordable student loan deb assumes monthly payments don’t exceed 8% to 10% of your gross monthly income, level payment over a term of 120 months and a constant interest rate of 6.8%.

Return of Title IV Aid

If a recipient of Federal Financial Aid withdraws during a payment period (term) the school must calculate the amount of aid the student earned through the date of last attendance.  Unearned aid, including loans, must be returned to the federal financial aid programs.  See the Financial Aid Office for more details.

Loan Exit Counseling and Repayment

Student loan borrowers are required to complete Exit Counseling at the completion of enrollment, graduation or withdrawing, whichever occurs first.  Exit Counseling is done online at www.studentloans.gov.  Student loans enter repayment six months after ceasing enrollment in at least six credit hours. As you plan for life after college, be sure to include preparations for paying back the student loans that helped finance your college experience.

Student Loan Default

Student loan default or not repaying your student loan debt, carries serious consequences.  When taking out a student loan you want to exhaust all other possible funding methods and borrow conservatively.  Students that do not repay their student loans become ineligible for any financial aid and loans in the future.  Defaulted loans prevent students from renewing professional licenses.  The federal government can collect defaulted loans by confiscating federal tax refunds and wage garnishment.  It is the student’s responsibility to always stay in contact with the loan servicing center to stay current with address and enrollment information to help avoid default.


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