The Stafford Student Loan Program

2008-09

College of the Canyons participates in the Stafford Student Loan Program funded by the federal government and guaranteed by the State of California.  Your financial aid award letter may include one or more student loans.  Federal law requires that a student borrower must be enrolled at least part-time, defined as 6 + units per semester.  A student loan is borrowed money, which must be repaid with interest, to help you pay for your college expenses. Remember, you must complete a Free Application for Federal Student Aid (FAFSA) at www.fafsa.ed.gov before you can receive a Stafford student loan.

There are two types of Stafford Loans: a Subsidized Stafford Loan and an Unsubsidized Stafford Loan.  You may have received one or both types of these Stafford loans. Your unmet financial need, calculated by your cost of attendance (COA) minus your estimated family contribution (EFC), determines which type of Stafford Loan you qualify for.  

The Stafford Loan interest rate for Subsidized Stafford Loans first disbursed between July 1, 2008 and July 1, 2009 is fixed at 6%.  Stafford Loan interest rate for Unsubsidized Stafford Loans first disbursed between July 1, 2008 and July 1, 2009 is fixed at 6.8%.

The federal government charges a 1% origination fee for each Stafford Loan.  These fees are automatically deducted from each disbursement of your loan.  You will also be charged a 1% guarantee fee by our guaranty agency, EdFUND. Repayment of your loan generally begins six months after you are no longer enrolled in 6 or more units, which is considered as half-time enrollment status.   

The federal government pays the interest on your Subsidized Stafford Loan while you are in school and during the six-month grace period after you leave school.   

Unsubsidized Stafford Loans are not need-based; therefore the loan amount cannot exceed your cost of attendance minus your EFC, including any subsidized loan amount awarded. Unsubsidized loans have no interest subsidy, which means that you are responsible for paying the loan interest while you are in school.  You may choose to postpone your interest payments, but any accrued interest will be added to your original loan amount.  This is called capitalization.  Independent students, those not required to report parental income and benefits, have Unsubsidized Stafford Loan borrowing limits in addition to the Subsidized loan limits for each academic year.

Stafford Loan Packaging Policy and Application Process

A Federal Stafford Loan will be awarded to you only if you have indicated on your FAFSA that you are interested in a student loan.  For any student loan, your Federal Pell Grant eligibility must be determined first before we will determine your loan eligibility or before we will certify your Stafford  Loan application. This is to ensure that you get all the free money you are entitled to before choosing to borrow through the Federal Family Educational Loan Program.  

You may apply for the Stafford loan after you have received your Financial Aid Award letter indicating your eligible loan types/amounts.  To apply for the Stafford loan, you must follow the instructions in the section of this website called How to Apply for A Stafford Loan. 

Borrowing Limits

You may borrow a loan amount equal to or less than the amount indicated on your Award Notification Letter, and within the loan limits specified.  You have the right to accept or deny any student loans or amounts offered.  College of the Canyons recommends that students not exceed $20,000 as a maximum loan limit while attending our two-year college, including all Stafford Subsidized and Unsubsidized loans.  It is our goal that you leave COC with minimal loan indebtedness, especially if you plan to transfer to a four-year college or university in the future.  The minimum loan amount is $500.

Loan Terms You Need To Know

Accrued Interest:  Interest that accumulates on the unpaid balance of your outstanding loan principal.

Capitalization of Interest:  Addition of accrued, unpaid interest is added to the principal of your student loan.

Credit Bureau:  An organization that tracks the manner in which you repay credit obligations.  This information becomes part of your credit report and is available to other financial institutions and ranked as to your credit worthiness or credit risk.

Default:  Failure to repay your loan in a timely manner, or in accordance of the terms of your Promissory Note.  If you are in default on a student loan, or owe an overpayment to the U.S. Department of Education, you are NOT eligible for any federal financial aid, including student loans, from any college or university in the United States.

Deferment:  A period of time when a borrower may suspend loan payments under specific conditions.

FFELP:  Federal Family Educational Loan Program.  Under the FFELP there are the Stafford and PLUS loan programs.

Grace Period:  A specified period of time (generally six months after you graduate, drop below 6 units or leave college).  You are not required to make payments during your approved grace period.

Guaranty Agency:  The state or private non-profit agency that insures your student loan for your lender and assists with the administration of the Federal Family Educational Loan Program (FFELP) for the federal government.  College of the Canyons uses EdFUND as its guaranty agency.

Interest Rate:  The cost you pay to borrow money for college.

Lender:  The bank, credit union or other financial institution that provides the money for your student loan.

Master Promissory Note:  A Master Promissory Note (MPN) is a legally binding contract you sign, agreeing to repay the loan money you borrowed.

PLUS Loan:  The parent loan is a loan for undergraduate students borrowed by your parents or stepparents for your (dependent student) college costs.  PLUS loans are not based on your family income or assets and you can borrow up to the total cost of the student’s education, minus any financial aid received.

Principal:  The amount of loan you borrow, which may increase as a result of the capitalization of interest, and the amount of interest you must repay.

Servicer:  An organization that administers and collects student loan payments, either as the holder of the loan (your lender) or as an agent acting on the behalf of your lender.

Subsidized Loan:  A need-based student loan of which the interest is paid by the federal government while you are in-school, or are in your grace or deferment period.

Unsubsidized Loan:  A non-need based student loan of which the interest is paid by the borrower, not the federal government.

    (661) 362-3242    PHONE

(661) 362-5617        FAX

finaid@canyons.edu        EMAIL

www.canyons.edu/Money4College       WEB

This website is being updated and maintained by the Financial Aid Office: (661) 362-3215