About Federal Student Loans

What is a student loan?

A loan is borrowed money you must repay with interest. Student loans must be repaid (principal and interest) over an extended period of time.  The federal student loan program is called the Federal Family Education Loan (FFELP), which is also called the Stafford Loan.

The Federal Family Education Loan program consists of the following:

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

Is a credit check made?

There is no credit check made for Federal Student Loans.  However, there is a credit check for a parent PLUS 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 is called the grace period.  Your lender will send you information about your repayment terms, and not the school.

What is the interest rate?

Currently, the interest rate is 6.0%.

What is the difference between a subsidized and unsubsidized loan?

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 the 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 along on a monthly basis or you can allow it to accumulate and be added to the principal amount of your loan.  The choice is yours.

How much can I borrow?

The maximum loan amount depends on the number of credits you have earned at North Shore Community College (this includes transfer credits that have been accepted from another school). If you are a returning student and want to know how many credits you have earned, log-in to Campus Pipeline and under the School Services tab, select:

> Student Services, Registration & Financial Aid
> Student Records
> Academic Transcript (look for “earned hours”)

NOTE:You may qualify for additional loan funding:

• If you filed the FAFSA as an independent student, you may be eligible for an additional $4,000 unsubsidized federal loan (or $2,000 per semester). 
• If you filed the FAFSA as a dependent student, your parent(s) may qualify for a PLUS loan.

When and how do I receive my loan?

Loans are disbursed (that is, paid to your student account) on a weekly basis throughout the semester.  Important: the FIRST disbursement occurs approximately 30 days after the start of the semester.

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 one to 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.

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

If you fail to make loan repayments you 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. Because of this, the financial aid office wants to make sure that you understand the entire loan application and repayment process.

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 outlined in the Student Financial Aid Handbook (pdf). Some of these requirements include:

1. Enrolled in a minimum of six credits in an eligible program of study
2. Successfully complete a loan entrance interview online
3. Not be in default on a prior education loan
4. Not exceeded the maximum total (aggregate) amount of all Stafford Loans borrowed in the past. These maximum amounts are mandated by federal regulations.

Who do I contact with questions regarding a loan?

Contact your financial aid counselor.