Summer 2008
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Minnesota State University,
Mankato School Code:
002360
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As the cost of higher education increases, more and more students look to Federal Stafford Loan(s) to pay their expenses. Minnesota State University, Mankato is committed to making every attempt to keep the cost of attendance manageable for all students. However, even with this commitment to reasonable educational costs, many MSU students must take out student loans to meet their educational expenses.
IMPORTANT: The Federal Stafford Loan complies to both Satisfactory Academic Progress Standards (SAPS) criteria as well as the Family Education Rights and Privacy Act (FERPA).
Federal Stafford Loans are part of the Federal Family Educational Loan Program (FFELP). There are two different types of Federal Stafford Loans; Subsidized and Unsubsidized.
It is very important to understand the differences between the Subsidized and Unsubsidized Stafford Loans.
The interest rates of the Federal Subsidized and Unsubsidized Stafford Loans originated on or after July 1, 2006 is fixed at 6.8%. Interest rates for Stafford loans originated from July 1, 1998 through June 30, 2006 are 6.54% while in school or grace and 7.14% when in repayment. The interest rates are based on the 91-day U.S. Treasury Bill index (subject to change). The interest rates are variable and change annually on July 1. The interest rate is capped at 8.25%.
There is a six-month grace period on both the Subsidized and Unsubsidized Stafford Loans. The grace period is the first six months after a student has dropped below 1/2 time enrollment, graduates or withdraws from higher education. During the grace period, students are not required to repay their Subsidized Stafford Loan, but they are encouraged to continue interest payments on their Unsubsidized Stafford Loan. Once the six-month grace period has expired, the student begins repayment on both the Subsidized and Unsubsidized Stafford Loans.
Federal Stafford Loans play an important role in Federal Student Aid programs. Stafford Loans are NOT free money. You are responsible for paying all of your loans back in full, plus interest. You must pay back your student loans even if you do not complete your education, if you are unable to gain suitable employment, or if you are unsatisfied with your education. If you move, change your name, change your telephone number, change schools, drop below 1/2 time, or if you are unable to make your loan payment due to financial hardship, you MUST contact the servicer of your loan(s).
Repayment on a Federal Stafford Loan begins 6 months after you graduate, drop below 1/2 time, or leave school. Your minimum monthly repayment is normally $50.00, but it could be more depending on how much you borrowed. You may make interest and principal payments at any time. Students are encouraged to make their interest payments on their Unsubsidized Federal Stafford Loans while they are in school. There is no penalty for making prepayments on your Federal Stafford Loan(s).
There are maximum annual and aggregate limits on Federal Stafford Loans. The annual maximums are based on grade classification and dependent/independent status. Refer to the Federal Stafford Loan Information document for current information on loan limits.
Individual awards are also limited to the student's eligibility and cost of attendance.
Before taking on the responsibility of Federal Stafford Loan indebtedness, students first need to determine how much loan funding they need for the academic year. Budgeting for the academic years is a wise move for all students, but it is imperative for students taking out Federal Stafford Loans. Borrow only the amount of loan funding that you need to meet your expenses.
Take time to determine the amount of loan funding you will need to meet your expenses while in school. Using the monthly budget sheet, fill in the blanks with how much you anticipate you will spend in each of the categories. Remember, spending should be kept to a minimum. Add up your expenses, then subtract any other financial aid you have been awarded to determine how much loan money you will need to meet your expenses.
Not only is it important for students to budget for the academic year, but it is also important for students to anticipate how borrowing Federal Stafford loans will impact their future budgets. The Subsidized Stafford Loan charges no interest to the student while in school. For some students, it is difficult to realize how much they are borrowing or how it will impact their future budget until after graduation, because they have not had to make monthly payments while in school.
The Federal Family Education Loan Program (FFEL) requires a borrower to choose a lender to provide your Stafford Loan.
It is not the policy of MSU to require students to select one lender over another, however, we highly encourage students to select a lender from the Minnesota State University, Mankato recommended lender list. The guarantee agencies represented on the list participate in the electronic processes that MSU uses to transmit loan information and receive loan funds.
If you decide to select a lender not on the list, you will have to obtain your own Stafford Loan Master Promissory Note (MPN) from your lender. Complete and submit it to MSU Student Financial Services by mail, or in person at the Campus Hub. It is recommended that students use the same lender each year. Choosing the same lender is helpful during the repayment period.
Federal guidelines regulate the primary features of the student loan program, however, there are differences among lenders. Some lenders retain ownership of your loan while others sell loans to secondary markets. Special programs offered may include: reduced fees, reduced interest rates and/or refunded fees for timely payments. You might also receive an interest rate reduction for having payments electronically debited from a checking or savings account. These differences as well as the importance of building a relationship with your lender are some of the reasons it is important that students research the lenders and make their selection carefully.
View MSU Federal Stafford Loan Recommended Lender List
Federal regulations require all first-time borrowers of a Federal Stafford Loan at Minnesota State University, Mankato complete Federal Stafford Loan Entrance Counseling. Loan Counseling must be completed BEFORE a student can be disbursed their Federal Stafford Loan funding.
Students may complete the Federal Stafford Loan Counseling Online. On-line Entrance Counseling contains a testing component. Students must successfully complete the testing component in order to complete the counseling session. After you have successfully completed the on-line counseling your information will be forwarded to MSU.
