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Frequently Asked Questions About the FFELP

Frequently Asked Questions about the FFELP

Overview
Who is eligible to apply for Federal Stafford Subsidized and Unsubsidized Loans?
Who is eligible to apply for Federal PLUS Loans?
How much can a student borrow?
What is the interest rate?
How do I apply for a Federal Stafford Loan?
How do my parents apply for a Federal PLUS Loan?
Are there any fees charged to Federal Stafford Loan borrowers?
Are there any fees charged to Federal PLUS Loan borrowers?
When are loan funds disbursed to the College?
How are Federal Stafford Loan and Federal PLUS funds disbursed to a student/parent?
What happens if a student drops below half-time status?
Can Federal Stafford Loans be consolidated with FFELP Loans?
When are Federal Stafford Loans repaid?
When are Federal PLUS Loans repaid?
Can Federal Stafford Loan payments be deferred?
Who are the typical lenders for Federal Stafford Loans?

Overview
John Tyler requires all applicants for loans (Stafford, Unsubsidized and PLUS Loans) to file a Free Application for Federal Student Aid (FAFSA). Loan eligibility cannot be determined until the needs analysis information from the FAFSA has been received in the Financial Aid Office and has been reviewed.

John Tyler participates in the Federal Stafford Loan Program, which is a part of the Federal Family Education Loan Program (FFELP). The Federal Stafford Subsidized, Unsubsidized and PLUS loans are low-interest loans designed to provide students and parents with additional funds to pay for college. These loans must be repaid. 

Federal Stafford Subsidized Loans are based on financial need. The federal government pays the interest during in-school, grace and deferment periods.

Federal Stafford Unsubsidized Loans are not based on financial need. The federal government does not pay the interest for Federal Stafford Unsubsidized Loans. Students may choose to defer interest payments until repayment begins; however, the student is responsible for all interest that has accrued. The accrued interest automatically capitalizes to the loan principal.

Federal PLUS Loans are for parents of dependent children who are enrolling as students.  Federal PLUS Loans are not based on financial need. The federal government does not pay the interest on Federal PLUS loans. Parents begin repaying the loan, principal and interest, 60 days after the final loan disbursement is made. Interest on PLUS Loans begins to accumulate at the time the first disbursement is made.

Who is eligible to apply for Federal Stafford Subsidized and Unsubsidized Loans?
Full-time and half-time dependent and independent students may apply for Federal Stafford Loans. The program is limited to U. S. citizens and permanent residents. Students must be enrolled in a degree or certificate-granting program and taking at least six credits.

Who is eligible to apply for Federal PLUS Loans?
A natural parent or an adoptive parent (a stepparent cannot be the primary borrower on the PLUS Loan) may borrow on behalf of a dependent undergraduate student who is enrolled full-time or half-time. The PLUS Loan program is limited to U.S. citizens and permanent residents. Students must be enrolled in a degree or certificate-granting program and taking at least six credits.

How much can a student borrow?

Effective with the 2009/2010 aid year, if you are a dependent undergraduate student you can borrow up to:

  • $3,500 if you are a first-year student enrolled in a program of study that is at least a full academic year;
  • $4,500 if you are a second-year student (with at least 30 credit hours) enrolled in a program of study that is at least a full academic year.

For periods of undergraduate study that are less than a full academic year, the loan amount a student may borrow will be less than the amounts listed above.

Independent students may borrow up to an additional $6,000 in an Unsubsidized Stafford Loan in addition to the above amounts.

Note: The amounts listed above are the maximum yearly amounts a student may borrow in both Subsidized and Unsubsidized Stafford Loans, singly or in combination. However, a student may not borrow more than the cost of education minus any other financial aid that is received.

The total cumulative Subsidized and Unsubsidized Stafford Loans and FFELP Loan amounts are:

  • $23,000 as a dependent undergraduate student;
  • $57,500 as an independent undergraduate student (with a maximum of $23,000 of this as Subsidized Stafford Loans);
  • $138,500 as a graduate or professional student (with a maximum of $65,500 of this as Subsidized Stafford Loans). The graduate debt limit includes outstanding loans from undergraduate programs.

What is the interest rate?
Subsidized and Unsubsidized Federal Stafford Loans borrowed prior to July 1, 2006 have an interest rate that is variable and will never exceed 8.25%. The interest rates on Federal PLUS Loans borrowed prior to July 1, 2006 are also variable and will never exceed 9%.

Effective on July 1, 2006, the interest rate for Subsidized and Unsubsidized Federal Stafford Loans became fixed at 6.8%. The interest rate for Federal PLUS Loans became fixed at 8.5%.

How do I apply for a Federal Stafford Loan?
You must first file a FAFSA,which can be done online at www.fafsa.ed.gov. You must also meet with staff in the Counseling Office and be placed into an academic curriculum at John Tyler, and be making Satisfactory Academic Progress. After your FAFSA is processed and you have been curriculum placed, complete the John Tyler Federal Stafford Loan Application process detailed at www.jtcc.edu/loans.

How do my parents apply for a Federal PLUS Loan?
You must be placed into an academic curriculum at John Tyler and be making Satisfactory Academic Progress in order for your parent to apply for a Federal PLUS Loan.  Your parents should obtain and complete the Federal PLUS Loan application available from the Financial Aid Office.

Are there any fees charged to Federal Stafford Loan borrowers?
Fees for Federal Stafford Loans range from 1-3%.

Are there any fees charged to Federal PLUS Loan borrowers?
Fees for Federal PLUS Loans range from 3-4%.

When are loan funds disbursed to the College?
Disbursements occur approximately a month and a half after the first day of classes for each semester.

How are Federal Stafford Loan and Federal PLUS funds disbursed to the students and parents?
Refunds from loans are processed after any tuition, fees, and book charges are deducted by the Business Office. A check will be made available to the student or parent approximately 14 days after the disbursement arrives at the College.  Students will be mailed letters when their loan funds arrive at the College providing them with date of refund check availability.

What happens if a student drops below half-time status?
If you drop or withdraw from a course before your loan is disbursed and you fall below half-time status, your Federal Stafford Loan or Federal PLUS Loan will be canceled for that semester, and you will owe any balance due on your student account.  If your loan has already been disbursed and you withdraw from all of your courses, you will need to repay a portion of your loan funds to the College.  The repaid portion would reduce the amount of the principal loan balance that you will owe to your lender when you enter repayment.  In addition, if you drop below half-time status, you will enter your six month grace period for repayment of your loan.

Can Federal Stafford Loans be consolidated with FFEL Loans?

Federal Stafford, Unsubsidized Stafford and SLS Loans through private banks and lending institutions can be consolidated with Federal Stafford Loans through the Federal Stafford Consolidation Loan Program. This consolidation program will allow you to have all your loans held by one servicer and make only one payment on all consolidated loans.

When are Federal Stafford Loans repaid?

Repayment of Federal Stafford Loans begins six months after either graduation, when a student leaves school, or drops below half-time enrollment. The length of repayment and monthly payment amounts depends on the outstanding loan balance, the interest rate and repayment policies. Federal Stafford Unsubsidized Loan borrowers with deferred interest will have the interest capitalized at the end of the in-school or grace period.

When are Federal PLUS Loans repaid?
Parents begin repaying the loan, principal and interest, 60 days after the final loan disbursement is made.  Interest on PLUS Loans begins to accumulate at the time the first disbursement is made.

Can Federal Stafford Loan payments be deferred?
Payment is deferred automatically if a student is enrolled for at least six credits (half-time status).  Payment may also be deferred if the borrower enters into a deferrable situation and requests deferment of payment by submitting appropriate documentation to the loan servicer.  Deferments, even for the reasons stated below, are not automatic. Borrowers must contact the lender for more information. Deferrable situations include but are not limited to:

  • Active duty in the U. S. Armed Forces
  • Services in a full-time volunteer organization such as the Peace Corps or Vista
  • Temporary total disability
  • Teaching full-time in a teacher shortage area
  • Unemployment
  • Pursuing half-time course of study

*Active duty and teacher shortage deferment options are not applicable to new borrowers (no outstanding FFEL balance and first disbursement on or after July 1, 1993).

Lenders for Federal Stafford and PLUS Loans
You will choose a lender for your loan when you complete your Master Promissory Note. The list below provides the most commonly used lenders at John Tyler. The Financial Aid Office has developed this list of lenders based on research which was completed to find lenders that provide the best borrower benefits, charge the lowest fees, and provide exceptional customer service. The list has also been formulated to be consistent with the banks the students in our area most commonly use for their personal finance needs. When you complete your Master Promissory Note, the benefits of each lender will be summarized so that you can make the selection that best suits you. If you decide that you would like to use a lender that is not on our list, you have the right to do so. Further details regarding how to go about doing so are outlined within the loan application website mentioned above.

Federal Stafford Loan borrowers - please keep in mind that you will complete your loan application via the above mentioned website (www.jtcc.edu/loans), not through one of the below lender’s websites. Federal PLUS Loan borrowers – you will obtain your loan application directly from the Financial Aid Office.

 

AMS, a Sallie Mae Company
Edamerica
Wachovia
SunTrust

Information Maintained by:
Office of the President

Mara Hilliar, Executive Assistant to the President
Kara Carter, Administrative Assistant to the President

804-594-1573
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