Federal Direct Stafford Loans
Stafford loans are offered through the Direct Loan program, which is administered by the Department of Education. Students applying for a Stafford loan must submit a Free Application for Federal Student Aid (FAFSA) and meet the General Eligibility and Satisfactory Academic Progress requirements for financial aid, and for more information on how to apply and the application process, you can read about the Financial Aid process. For a description of how the loan type and amount are determined please visit the General Eligibility Requirements page and review the section titled "Determining Financial Aid Eligibility."
Two types of Stafford Loans – subsidized and unsubsidized--are offered. Both types have a fixed interest rate (see Interest Rates below) and an origination fee (see Loan Fees below). No payments are required while the student is in school at least half time (6+ credits). When the student drops below half-time attendance, the student enters a six-month grace period. Payments begin at the end of the grace period. Stafford loans in repayment may be deferred if a student returns to school at least half time.
Subsidized Loans are loans in which the interest is paid by the government while the student is attending college at least half time (6+ credit hours) and during the six month grace period. This loan has a fixed interest rate that depends on when the first disbursement of the loan is made (see Interest Rates below). The student is responsible for the interest once the loan enters repayment (at the end of the grace period).
150% Completion Rate and Subsidized Loan Eligibility - Due to the "Moving Ahead for Progress in the 21st Century Act", a new student borrowing loans on, (or after) July 1, 2013 cannot receive loans past the 150 percent completion rate for the borrower's education program. For example, if a student's program is 60 credits, the student will only be eligible for subsidized loans for up to 90 credits. Once the 150 percent of the program is reached, the student will then be only eligible to receive unsubsidized loans.
Unsubsidized Loans are loans in which the interest begins to accrue at the time the loan is disbursed, and continues to be charged until the loan is paid in full. The student can choose whether or not to make interest payments during in-school, grace, and deferment periods. Students who choose not to make interest payments during these periods will pay more in the long run. Due to this, student are strongly encouraged to make interest payments as the interest accrues. Interest which is not paid is capitalized. This means that as the interest accrues the unpaid interest is added to your loan. Interest is then calculated on this new amount.
For example, a student has an unsubsidized loan of $1500. The student loan is charged $4.82 in interest and the student chooses not make the payment. The $4.82 is added to the principal loan amount of $1500, and interest is then charged on the new balance of $1504.82.
To see estimates of what interest will accrue each month view the Monthly Accrued Interest chart.
Loan interest rates are based on when the first disbursement of the loan is made. See the chart below for subsidized and unsubsidized Stafford Loan interest rates.
Subsidized and Unsubsidized Stafford Loans
|Disbursement Date||Fixed Interest Rate|
|July 1, 2016 - June 30, 2017||3.76%|
Loan Fees (Direct Loan Program)
|For loans first disbursed:||Origination Fee*|
|October 1, 2016 - October 1, 2017||1.068%|
*The origination fee is a fee that is charged before the loan is disbursed to the student. For example, a student who requests $1000 in a loan is charged a 1% origination fee of $10, for a disbursement amount of $990. The student receives $990, but will be required to repay $1000 when the loan enters repayment (see "Repaying Your Loans" below for more information).
Base Stafford Loans
|Base Stafford Loan*||Annual Loan Limits|
|Freshman (0-29 credit hours)||$3500|
|Sophomore (30+credit hours)||$4500|
*Eligible students will be offered up to the Base Annual Loan Limit in a subsidized Stafford Loan. Students not eligible for all or part in a subsidized loan will be offered an unsubsidized loan for the portion which is not subsidized.
Additional Unsubsidized Stafford Loans
|Dependent Students||Annual Loan Limits**|
|Freshman (0-29 credit hours)||$2000|
|Sophomore (30+ credit hours)||$2000|
|Independent Students & Dependent Students Whose Parent Was Denied A Plus Loan||Annual Loan Limits**|
|Freshman (0-29 credit hours)||$6000|
|Sophomore (30+ credit hours)||$6000|
**A student may not be eligible for the maximum annual loan limit. All financial aid (grants, loans, scholarships, and other financial assistance) cannot exceed the Cost of Attendance for the term(s) the loan is being requested.
***Students must submit the Additional Stafford Request Form to request additional unsubsidized Stafford loans.
Aggregate Limits for Stafford Loans
|School Status||Subsidized||Total (Subsidized & Unsubsidized)|
|Independent Undergraduates & Dependent Students whose parents cannot get PLUS||$23,000||$57,500|
Students may not exceed the aggregate limits for Stafford loans. Stafford loans received by the student while attending any college are included in the aggregate limits.
Students who borrow a Stafford Loan are required to complete Stafford Entrance Counseling each academic year a loan is borrowed. Entrance Counseling is available online at www.studentloans.gov. You can find step by step instructions here.
Exit counseling is also required when a borrower drops below half-time enrollment at LDSBC. The Financial Aid Office will request Exit Counseling be completed when a student applies for graduation, does not enroll for a subsequent semester, drops or withdraws from classes to less than 6 credit hours, withdraws from all classes, or does not complete at least 6 credit hours in a semester. Exit counseling is available online at www.nslds.ed.gov, including a printable version of the information presented in the session.
Master Promissory Note (MPN)
Disbursements of loans for a semester begin 10 days prior to the first day of the semester, and continue weekly throughout the semester for students whose loan is ready to be disbursed later. Loans will not be disbursed unless:
- the loan has been accepted (check the Student Center to see if the loan shows as accepted);
- a Master Promissory Note (MPN) has been signed;
- entrance counseling has been completed;
- all To Do List Items (Student Center) are complete;
- the student meets Satisfactory Academic Progress requirements;
- the student is enrolled at least half-time (6+ credits);
- the student does not have any holds (Student Center) which prevent financial aid from being disbursed; and
- disbursements have begun for that semester.
Visit the Disbursements page for more detailed information regarding financial aid disbursements.
Students who borrow a loan are required to pay back the full amount of the loan plus any accrued interest. There are several repayment options available to students to provide options for students to make their payments on time each month. Failure to make payments can impact the student's credit and, if the loan goes into default, prevent the student from receiving further federal financial aid. This section is designed to assist students with the repayment process. Students who are having difficulty making their payments must contact their servicer immediately.
Students can view information on all their federal loans online at www.nslds.ed.gov (The National Student Loan Data System). Students may sign into this site and view information on their loans including disbursed amounts, type of loan, outstanding principal and interest, the name and contact information for the agency servicing the loan, and the total amount the student borrowed in loans. Repayment is made to the agency servicing your loan. The student then works with this servicer listed to make payments, change addresses, request deferments, forbearance, or a new repayment plan. Detailed information and repayment calculators for each repayment option is available at www.studentloans.gov or by checking out other repayment options. A summary of the eight repayment options is provided below.
Under the Standard Repayment Plan, a student pays a fixed amount each month. Monthly payments are at least $50, but the minimum payment may be higher based on the total amount borrowed (view a Monthly Repayment Table). There is a 10-year limit on repayment under the Standard Repayment plan.
Example: Susan has graduated and borrowed a total of $7500 in Stafford loans with an interest rate of 6.8%. Her monthly payments under the Standard Repayment plan are approximately $86.31 for 120 months. This student will pay a total of $10,357.20 when her loans are paid in full.
Under the Extended Repayment Plan, a student pays a fixed annual or a graduated repayment amount over a period of time. The maximum time period for this plan cannot exceed 25 years. To apply for this plan, a student must have over $30,000 in loans for one loan program (FFEL or Direct Loan program). This means that a borrower who has $5000 in the FFEL program (which was discontinued June 30, 2010) and $35,000 in the Direct Loan program will only be able to do the extended repayment option for the $35,000 in the Direct Loan Program.
Example: Stanley borrows $37,750 in Stafford loans under the Direct Loan program. His loans have a 6.8% interest rate. Under the standard repayment plan, his payments would be approximately $575.40. Billy cannot make this payment so he applies for the extended repayment plan through his servicer. His payments are now a fixed $347.04 a month for 300 months. However, under the plan, he will pay significantly more in interest. His total payments will be $104,112 if he only pays the minimum payment for the full 300 months.
Under the Graduated Repayment Plan, the payments start low and are increased every two years. The payment period is ten years. This plan is for students who expect their income to increase steadily over the payment period. For more information and to calculate repayment amounts go to the Department of Education's Repayment Plans and Calculators at studentloans.gov.
Under the Income Based Repayment (IBR) plan, a student can set up a plan with the servicer which should be affordable based on the income and family size. Students should qualify if the repayment amount calculated is less than the monthly amount for the Standard Repayment plan. Please go to other forms of repayment for more information and access to the IBR calculator.
The Income Contingent Repayment (ICR) plan is only available to Direct Loan borrowers. Monthly payments are recalculated annually using the student's AGI, spouse's income (if married), family size, and the total amount in Direct Loans. For more information and for ICR calculator, visit studentloans.gov or viewing other forms of repayment.
The Pay As You Earn Repayment Plan (PAYE) is only available to new borrowers on or after Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011. On this plan, your maximum monthly payment will be 10 percent of discretionary income. Payments are recalculated each year and are based on your updated income and family size. Any outstanding balace on your loan will be forgiven if you have not repaid your loan in full after 20 years.
The Revised Pay As You Earn Repayment Plan (REPAYE) is available to any direct loan borrower with an eligible loan type. On this plan, your maximum monthly payment will be 10 percent of discretionary income. Payments are recalculated each year and are based on your updated income and family size. Any outstanding balace on your loan will be forgiven if you have not repaid your loan in full after 20 or 25 years.
On the Income-Sensitive Repayment Plan, your monthly payment is based on your annual income. This plan is for up to 15 years. You will pay more over time than under the 10-year Standard Plan.
For more information about any of these plans, please go to the Federal Student Aid website.
If you are having trouble making your payments it is important that you contact the agency servicing your loan immediately. You may qualify for a deferment, forbearance, or another plan to help you make your payments.
Deferment is a temporary suspension of loan payments. Payments are not required for loans in deferment status, but interest still accrues on unsubsidized Stafford and PLUS loans. Forbearance is a temporary postponement or reduction of payments for a period of time due to economic hardship. More information is available online at studentloans.gov or by viewing other forms of repayment.
Consolidation is the process where a student can combine the borrower's federal education loans into one new consolidation loan. To apply or for more information go to www.studentloans.gov and select "Direct Loan Consolidation."
Federal Parent Loans for Undergraduate Students (PLUS)
The PLUS loan is a loan available to parents of dependent students to help pay for the student's education expenses. To be eligible for a PLUS loan:
- a credit check on the parent's credit will be done;
- Parent cannot have adverse credit history, or must have someone else (who can pass the credit check) endorse the loan. An endorser agrees that he/she will repay the loan if the parent does not.
- the student and parent must meet the General Eligibility Requirements for federal student aid, and the student must meet the Satisfactory Academic Progress requirements;
- the student must be enrolled at least half time (6+ credits) for the semester(s) for which the loan will be disbursed; and
- the parent applying for the loan must be the student's biological or adoptive parent. A step-parent may only apply if the step-parent's information was included on the student's FAFSA.
How to apply:
- Complete the FAFSA.
- Submit any forms/documents requested by the Financial Aid Office.
- Accept/Decline financial aid offer (will be posted in the Student Center in the student's MyBC account).
- Submit the PLUS Application (available online under Forms).
- The amount being requested must be specified on the application. The parent may only borrow up to the cost of attendance (COA) minus the student's other aid for the term(s) the loan is requested.
If the loan is approved, funds will first be applied to outstanding current balances the student owes to LDS Business College. Remaining funds will be sent to the parent borrower, or if the borrower authorizes, to the student. Parent borrowers will also be required to complete the Direct PLUS Loan Master Promissory note online at studentloans.gov.
If the PLUS loan is denied, the student becomes eligible for the higher Stafford loan limits for an independent student.
Terms of the PLUS Loan
- 6.84% interest rate, which begins accruing the day the loan is disbursed.
- 4.272% origination fee
Repaying the PLUS Loan
- Repayment begins 60 days after the final disbursement of the loan.
- A servicer will be assigned the loan. The parent will contact the servicer to make interest payments, loan payments, to request deferments, forbearance, or different payment plans. The parent may check their account at www.nslds.ed.gov for the servicer's contact information.
- The parent may request to have the payment deferred until after the student has ceased half time enrollment for six months. This must be requested through the loan servicer.
- A parent unable to make payments must contact the servicer to determine if they qualify for a different repayment plan, deferment, or forbearance. Never just stop making payments. Always contact your servicer if you are having difficulty making payments. Another option may be available to you.
- The Department of Education has provided repayment calculators which are available at studentloans.gov or by viewing other forms of repayement.
More information regarding the PLUS loan and repayment options is available online at www.studentloans.gov.
Alternative Student Loans
A student who wishes to borrow additional funds has the option to borrow directly from a bank. We strongly encourage students to complete the FAFSA and find out their eligibility for grants and/or Stafford Loans before applying for an alternative student loan. These loans are not federal student loans, so alternative student loan terms will vary from lender to lender. Students considering this option are encouraged to carefully research the loan terms (fees, interest rates, repayment plans, etc.) before taking out the loan. Alternative student loans have variable interest rates. Students apply for alternative student loans directly with the lender. The lender will then request the Financial Aid Office certify the loan. The maximum loan amount a student may receive is the Cost of Attendance (COA) minus any other financial aid (grants, loans, scholarships, and other educational assistance). After certification federal law requires lenders to wait at least 8 business days before sending the loan funds to the college. Due to this, student are encouraged to apply early so funds are not delayed. Please contact the Financial Aid Office with any questions.