CALifornia Institute

of the ARTS 2008/2009

Federal Subsidized Stafford Student Loan

The Federal Stafford Loan Program consists of two types of loans that are guaranteed by the federal government. Your Offer of Financial Aid will list which of these loans and how much has been offered to you. BORROW ONLY WHAT YOU NEED, THIS IS A LOAN AND MUST BE REPAID.

1. Federal Stafford Subsidized Loan is awarded on the basis of financial need, as determined by the FAFSA. The federal government pays the interest on the loan until the student enters repayment.

2. Federal Stafford Unsubsidized Loan is not awarded on the basis of financial need. Interest is charged from the time the loan is disbursed until it is paid in full. Students have the option of paying this interest while in school or deferring the interest until withdrawal or graduation.

Students must complete a FAFSA before applying for a Federal Stafford Loan. Currently the interest rate is fixed at 6.8%. Rates are subject to change annually on July 1^st. Repayment will begin six months after the student graduates, withdraws or drops below half-time status. Loan funds are usually sent electronically at the beginning of each semester to CalArts for disbursement to the students account.

Fees

Application process

Eligibility

Any student who is registered at least half-time is eligible to apply. You must be a U.S. citizen or eligible non-citizen who has satisfied all Selective Service requirements. In addition, you must not be in default or owe a repayment on any Title IV program, and must maintain satisfactory academic progress. You must also fulfill the school’s entrance and exit interview requirements.

Credit Criteria

A credit check is not required for the Federal Stafford Loans.

Borrowing Limits

Loan limits depend on the student’s year level. This table shows the loan limits on or after July 1, 2007.

Annual borrowing limits for Subsidized Federal Stafford Loans

Available to dependent and independent status students who demonstrate financial need.

BFA 1 BFA 2 BFA 3 BFA 4

$3,500 $4,500 $5,500 $5,500

MFA 1 MFA 2 MFA 3

$8,500 $8,500 $8,500

Interest Rates

For loans first disbursed on or after July 1, 2008 the interest rate is fixed at 6% for dependent undergraduate borrowers ONLY. All others will be fixed at 6.8%. Borrowers who borrowed their first Stafford Loan prior to July 1, 2007 may have a variable rate loan. Variable rates are subject to change annually every July 1^st.

Repayment

The first payment of your subsidized Stafford is due following a 6-month grace period after you graduate or withdraw. Deferment periods (i.e., a time when your payments are suspended) may be available under certain circumstances, such as continuing your education or financial hardship.

Monthly payments are calculated based on the amount owed at the beginning of repayment. Payments may be adjusted based on your income level. Additionally, some lenders offer repayment incentives such as a reduction in the interest rate for payments that are automatically deducted from a checking account or for a certain number of consecutive on-time payments counted from the first required payment. There is no penalty for prepayment. For more information contact the lender or your financial aid office.

Generally, the repayment period is 10 years. There are, however, various loan repayment and consolidation programs available, either through a lender or through the federal government, that may extend the period of time depending on the program or your circumstances. For more information on repayment, contact your lender or your financial aid office.

Fees

As of July 1, 2008, the federal government assesses an origination fee of 1% of the principal borrowed and the guarantee agency assesses a Federal Default Fee of up to 1% principal borrowed. Some lenders waive these fees or pay them on behalf of their borrowers, check our lender list for each lenders policy. If charged, the fee is deducted from each disbursement.

Disbursement

The total Stafford Loan you borrow will be divided equally between each semester and disbursed electronically. Funds are applied directly towards your tuition and fees and will be available to you for registration provided you have completed all necessary applications/paperwork. The Student Account Office will release any excess funds to you after the registration period, provided you have completed all paperwork and you are enrolled at least half-time and maintaining satisfactory academic progress

Applying for a subsidized Stafford Loan

To apply for a Stafford Loan you need to check the “accept” column on your Offer of Financial Aid and return the Offer to the office of financial aid.

New Borrowers: If you are borrowing a Stafford Loan for the first time you will need to complete a Master Promissory Note (MPN). Sometime after you have submitted your signed Offer of Financial Aid you will receive an e-mail (using the e-mail address you provided on your FAFSA) from Sallie Mae giving instructions to complete the MPN and sign it electronically (e-sign). Remember, you are signing a promissory note for a loan that must be repaid. If you are unable to e-sign your MPN you may print, sign and mail the form, following the website instructions. Be prepared to provide two references residing at different addresses.

New borrowers must complete Loan Entrance Counseling. You will be prompted to complete this mandatory counseling before you will be able to complete your loan application. The counseling will assist you in understanding your rights and responsibilities as a student loan borrower and must be completed before any loan funds will be available to you.

Continuing Stafford Borrowers: By accepting and signing the Stafford Student Loan on your Offer of Financial Aid you are applying for the loan. The Office of Financial Aid will complete the application process using your prior lender. In the event your lender has any questions you will be contacted via your CalArts email address.

Remember this is a loan and must be repaid.

Application Deadline

If you expect to pay your tuition with your loan funds you will need to apply as early as possible, not later than July 15, 2008. We strongly encourage you to apply earlier to avoid last minute complications with your financial aid that could result in a late registration fee of $200. Loan applications will be accepted throughout the school term, deadline is May 8, 2008.

Suggested Lenders

Although you may chose any lender that participates in the Federal Stafford Loan program, CalArts has developed a list of suggested lenders selected as a result of years of experience with student loan lenders and their submission of our Request for Information.

The link below outlines each lender’s contact information, fees, interest rate upon repayment, repayment incentives and options. Contact the lender directly for any updated information. You should always review and verify exact terms, conditions, qualifications and disclosures associated with any loan.

Students have the right and ability to select the education loan provider of their choice and are not required to use any of the suggested lenders.

Suggested Lenders for Federal Stafford Loans,2008-2009

Other Lenders

Be aware that CalArts is not electronically connected with every lender and guarantee agency. If you choose a lender not listed be sure to provide the financial aid office with their contact information. If the lender you choose issues their disbursements via paper check it is VERY important that you apply EARLY to ensure receipt of funds before the date of registration.

All information was accurate as of 2/29/08. CalArts is not responsible for any information changed by lenders or government agencies after this date.