- Q: What is a Master Promissory Note (MPN)?
- A: The Master Promissory Note is a loan application and promissory note that is designed to be simpler and clearer for both students and schools. Generally, if you borrow from a school that uses the serial MPN and you do not change lenders, you will not have to fill out a new loan application each time you apply for a Stafford loan. The MPN is good for ten years unless no disbursement is made within 12 months after you sign or you send a written notification to the lender to stop it’s use for additional loans. Please be aware that there are schools that use the annual MPN, which means that you must sign a new MPN each time you apply for a Stafford loan.
- Q: Who is eligible for a federal Stafford loan?
- A: Students attending at least half-time at an eligible institution may qualify for a Federal Stafford loan. However, it is up to your school to certify your eligibility for a subsidized or unsubsidized loan based on your need. Your financial need is determined from the information you provided on the Free Application for Federal Student Aid (FAFSA). Most students do qualify for some type of financial aid.
- Q: What is the difference between subsidized and unsubsidized loans?
- A: Subsidized: The federal government pays the interest while you're in school, during the six-month grace period or during periods of deferment.
Unsubsidized: You are responsible for the interest while you're in-school, during grace, repayment, and periods of deferments. During your in-school or grace periods, interest payments can be made quarterly, or you may have them deferred. If you choose to defer payments and depending on when your loan was first disbursed, the interest will accrue and will be capitalized (added to your loan balance) at the start of repayment. It is in the student's best interest to select a lender like AHELA that only capitalizes upon entering repayment.
- Q: Can my parents take out a loan for me?
- A: Yes, through the Federal PLUS loan program, the parent takes out a loan for his/her dependent undergraduate son or daughter. Repayment begins within 60 days after the final disbursement. Your school determines if you are eligible for this loan and you must pass a credit check.
- Q: What is Confirmation and Notification?
- A: Confirmation requires you to confirm with your Financial Aid Office whether you want, or do not want, the loan that has been awarded. If you want the loan, but would like the amount reduced, the confirmation process allows you that option. With Notification, the school informs you that your loan has been awarded for a specific amount and will be disbursed unless you notify your school that you either do not want the loan or would like it reduced. Your school's Financial Aid Office decides which process to use.
- Q: What if I decide I don't need this loan?
- A: The loan has not been finalized until you endorse the disbursement check. If you do not want the check, you can request that the school send it back to the lender. If the disbursement is being sent via an electronic funds transfer (EFT), you may request to have the disbursement canceled. Check with your institution for its specific EFT cancellation policy.
- Q: When is my loan disbursed?
- A: The school determines or designates disbursement dates that your lender follows. Your loan will be disbursed in at least two payments co-payable to the school and the student. First-time borrowers receive their first disbursement 30 days after classes start.
- Q: If I leave school before the end of an academic term, what happens to my loan?
- A: If the loan has not been disbursed to you, the school will return the full amount to the lender. If you have already received the loan proceeds, you may be required to return a prorated amount to the school, depending on the time you were enrolled/attending. Please check your school's refund policy. The school is required to return the refund amount to the lender. Your lender will apply the refund to the unpaid principal balance of your student loan. You are responsible to repay any funds not refunded to the lender by the school.
- Q: What if I'm in repayment and go back to school or can't repay my loan(s)?
- A: There are several options available to those returning to school or in financial hardship. There are different repayment options available that may temporarily postpone payments (such as a deferment or a forbearance) or a different repayment option (such as graduated, income sensitive or extended repayment plans). Contact your lender immediately if you return to school or have difficulty making your monthly payments.
- Q: How much are my payments going to be?
- A: Your payment depends on the loan amount and interest rate (there is a minimum payment of $50.00 per month or $600 per year for all of a borrower's FFELP loans with each lender). Call your lender for your payment amount.
- Q: What is an Ombudsman?
- A: The Department of Education has designated the Office of the Ombudsman to assist borrowers in informally addressing and resolving problems and complaints regarding their Title IV loans. These requirements apply to schools, lenders and guaranty agencies under three Title IV student loan programs: the Federal Family Education Loan Program, the William D. Ford Federal Direct Loan Program and the Federal Perkins Loan Program. For more information, contact the Office of the Ombudsman:
U.S. Department of Education
Student Financial Assistance
FSA Ombudsman
830 First Street, NE
Fourth Floor
Washington, DC 20202-5144
(877) 557-2575 - Phone
(202) 275-0549 - Fax
http://ombudsman.ed.gov
