Some Facts About Federal Stafford Loans

Federal Stafford Loans come in two forms, Subsidized Loans and Unsubsidized Loans.  The loans are for students attending at least half time (6 credit hours) at Metro.

Subsidized Loans

If you demonstrate need, you may qualify for a Subsidized Loan. No interest is charged to you on a Subsidized Loan while enrolled on at least a half-time basis. You are also provided with a six month grace period after graduation, dropping below half-time or withdrawing before repayment begins. During the grace period, no interest is charged to you for Subsidized Loans.

The financial aid office uses the following basic formula to calculate a student's need:

  • Cost of Attendance minus EFC (Expected Family Contribution) = Need
    (The EFC is calculated by the Central Processor and is reported on your Student Aid Report (SAR)). In addition, all other funding (e.g., Pell grants, VA benefits, etc.) are subtracted prior to determining the amount of the subsidized loan.
  • The cost of attendance (COA) at Metropolitan Community College  includes the direct educational costs of tuition, fees, books and supplies, and indirect educational costs like room and board, transportation and miscellaneous living expenses. 

Unsubsidized Loans

Need is not a factor in determining eligibility for the Unsubsidized Loan. You may be eligible regardless of personal or family income. However, no combination of loans may exceed the Cost of Attendance. Interest begins to accrue immediately with the unsubsidized loan which can be paid by you while you are in school, or the interest can be capitalized. 

Capitalizing Interest

With the Unsubsidized Loan, you have the option to have the interest capitalized while you are  attending at least half-time (six credit hours). This means that unpaid, accumulated interest is added to the principal balance of the loan. Although capitalizing interest postpones making interest payments, it will increase the amount that will have to be repaid. By capitalizing interest you will end up paying more for your student loan than a student who makes interest payments while in school.


Borrowing Limits

Borrowing limits are set by federal regulation and based on academic level.

  • First year students (less than 45 credit hours at the 100 level or higher completed) - $3,500
  • Second year students (45 or more credit hours at the 100 level or higher completed) - $4,500


Rate of Interest

Interest rates for Federal Stafford Loans are fixed at 6.8%.


Loan Fees

The loan origination fee is an expense of borrowing through the Loan Program. The loan origination fee for both Subsidized and Unsubsidized Loans is 3% of the amount you borrow. The guarantee agency may also charge up to a 1% guarantee fee.  These loan fees are deducted from the loan before it is disbursed to the student.

 

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You are not charged interest on an Unsubsidized Federal Loan until six months after you graduate or drop below half-time enrollment.