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Student Stafford Loans

  Student Stafford Loans

Stafford loans are the largest source of federal student aid. There are two types of Stafford loans: subsidized, for which the government pays the interest while students are in school and during grace and deferment periods; and unsubsidized, for which students pay all the interest on the loan. Students may receive both types of loans at the same time.

The interest rate on new Stafford loans is variable, adjusted annually on July 1, with a cap of 8.25 percent. Origination and insurance fees of up to 4 percent may be deducted from each disbursement.

Subsidized Stafford Loans

Subsidized Stafford loans are for students who have demonstrated financial need. The federal government pays the interest on subsidized loans while the student is in college and during grace and deferment periods. To qualify, students must be able to demonstrate financial need as determined in accordance with federal regulations. When determining eligibility, colleges consider all of the student's financial aid resources.

Unsubsidized Stafford Loans

Unsubsidized Stafford loans are not based on financial need. With unsubsidized loans, students are responsible for paying all the interest on the loan, from the day the loan is first disbursed to when it is paid in full.

Although these loans are made through lending Institutions such as banks and savings and loans, you MUST apply for financial aid, attend a loan workshop every year, and turn in all documents requested before the Financial Aid Office will approve your Stafford Student Loan. Current and former students who are in default or in overpayment status of federal student aid funds will not be permitted to receive federal aid.

  How do I apply?

 What are the requirements?

  • You must have financial need. This will be computed by the federal processor from the information on your FAFSA application.
  • You must be enrolled in and continuously maintain a minimum of half-time (6 units).
  • All loans MUST be divided into two payments
  • The earliest a check may be released is the first day of the semester.

 Loan Workshop

The loan workshop is designed to instruct the student about their rights and responsibilities as a borrower. Workshops are offered several times each semester. Attendance at a workshop is MANDATORY in order to initiate the loan process.

Fall 2008 Loan Workshop Dates

We do not have summer loans

Choosing a Lender

Cuesta College sets its own criteria for which lenders will appear on our  lender list. The process is objective and unbiased and it is not necessarily focused solely on cost. Cuesta College tries to consider other factors, such as the quality of customer service, the speed of problem resolution, and counseling activities. For example, most students want 24 hour customer service via toll free phone numbers and online interfaces, but don't realize this until later. Where some students want the security of a larger company, other students want the personal attention of a smaller lending institution. Federal law requires colleges to certify federal education loans without regard to the borrower's choice of lender or the guarantee agency used by the lender. So you can choose any lender, including those that are not on the college's list of recommended lenders.

All borrowers and potential borrowers are encourage  to research lenders prior to making a decision.  Compare and Contrast different lenders according to the features that are important to you, by visiting lender web sites for the latest information on current Borrower Benefits including:

  • Discounts
  • Devices
  • Origination Fees
  • Interest Rates
  • Repayment Opportunities

 You Should Know: 
Rates and services are changing right now be sure and get clear information from lenders when choosing.

Below are links that may help you get started. 
 http://www.finaid.org/loans/     -      General Student Loan Information
 http://www.finaid.org/loans/studentloandiscounts.phtml      -      Student Loan Discount Information
 

The Default Management Plan

The Default Management Plan is instrumental in reducing Cuesta College's default rate. In addition to financial need, Cuesta College reviews a student's loan eligibility on the following criteria:

  • Financial Aid Probation Status
  • Academic History
  • Academic Progress Toward Educational Goal
  • Current Budget Status
  • Excess Units
  • Cumulative Student Loan Balance--As a community college student, we do not recommend borrowing in excess of $7,500 in student loan debt)

Until this review has occurred, DO NOT ASSUME that you will qualify for the Stafford Student Loan.

Students who apply for a Stafford Student Loan in the Spring semester will, if eligible, be awarded a one-semester loan.

Ombudsman's Office

The Federal Student Aid Ombudsman of the Department of Education helps resolve disputes and solve other problems with federal student loans.

Contact Information for the FSA Student Loan Ombudsman's Office: