Student loans consist of three major types of loans that include the Subsidized Stafford Loan, Unsubsidized Stafford Loan, and Parent (PLUS) Loan.
To apply for a student loan, a student must first complete the FAFSA. The subsidized loan is considered first because the federal government pays the interest on the loan while the student is enrolled in school at least half-time and during the six-month grace period. The unsubsidized loan is considered next, and the borrower will be responsible for the interest on the loan. Parents wishing to borrow a PLUS Loan for their dependent child’s educational costs may borrow up to the Cost of Attendance less any other anticipated financial aid awards.
Student loan interest rates are set each year by Congress. As of July 1, 2017, interest rates for both subsidized and unsubsidized loans is set at 4.45%. Another cost of borrowing under the Direct Loan programs is the origination fee, which is currently 1.066%, effective October 1, 2017. The Parent PLUS Loan has an origination fee of 4.264% for loans disbursed on or after October 1, 2017. The Financial Aid Office has many forms of printed information that may be used to make an informed decision about borrowing money for educational costs. A helpful internet website is http://studentaid.ed.gov. Interest rates for the upcoming year are announced on or before July 1 each year.
Loan Limits: The maximum subsidized loan allowable for the classification of freshman is $3,500 per year, and the maximum subsidized loan allowable for the classification of sophomore is $4,500 per year. In addition, dependent students may borrow an additional $2,000 in unsubsidized loan funds each year. For independent students and dependent students whose parents were denied a PLUS Loan (due to adverse credit or other documented exceptional circumstances), the annual loan limit for additional unsubsidized loan funds is $6,000 a year.
- In order to complete an application for a student loan, a borrower must have completed the FAFSA. Before completing the student loan application, a student must complete a Student Loan Entrance Interview. This interview is available online at https://studentloans.gov and explains all of the rights and responsibilities for a student loan.
- Federal student loan requests are based on grade level, annual borrowing maximums, and total loan limits. Students are encouraged to borrow only what is needed to pay for educational expenses. Loans may be certified for less than the maximum amount for the grade level.
- Federal student loan requests must be prorated if a student’s academic program is shorter than an academic year or when a student is enrolled in a program that is one academic year or more in length but the remaining period of study is shorter than an academic year. No changes will be made after certification. Students enrolled less than half-time time are not eligible to receive a student loan.
- Loan maximums are for a calendar year. A student, if eligible, may borrow the applicable yearly maximum loan amount during a period between July 1 and June 30.
- For loan-borrowing purposes, a freshman is considered to be anyone who has successfully completed up to 29 semester credit hours. A sophomore is anyone who has successfully completed 30 or more credit hours.
- First-year, first-time borrowers may not collect the proceeds of their first loan disbursement until 30 days after the beginning class day for their first semester of enrollment.
- Loan applications must be completed by the student and the Southeast Arkansas College Financial Aid Office before the last full week of the semester. After this time, the Financial Aid Office cannot guarantee that the loan certification or origination will take place within the required timeframe for an eligible late disbursement to be made.
- Developmental coursework prepares a student for college-level work. If a student is enrolled solely in developmental courses, he/she is not considered to be enrolled in an eligible program for the receipt of FSA funds (including student loans). However, if the student is admitted into an eligible degree program and takes developmental coursework within that program, he/she is considered to be a regular student and may receive student loan funds, even if he/she is taking all developmental courses before enrolling in any regular classes.
- Students with a prior student loan balance will be subject to the loan limits of the various loan programs for the current classification (freshman, sophomore). Transfer students must transfer a minimum of 30 credit hours toward their degree at Southeast Arkansas College in order to borrow at the sophomore level. Students with a loan balance above the maximum annual or aggregate loan limit may not apply for additional student loan funds.