Question on Stafford loans

[cruisnfamily]

OK, finished the FAFSA and it said this:
You may be eligible for the following: direct Stafford Loan Estimate - $5,500.00

Does that mean subsidized or unsubsidized.
When/how do I find out if we can actually get this?
And the details of the money disbursement? Here to the house? Or directly to the college?
Can you use it for anything you want? (ie, room and board as opposed to tuition)
Can you make payments while the child is in college?
I understand the loan is for my daughter, not the parent but I would have her take it in her name to help fund college and I would pay it entirely instead of coming up with the cash out of our savings, but would NOT want to wait 4 years, would want to make payments while she's in school. Can you do that?

 

[Debbie7452]

I'm no expert, but I think every family is offered that amount in Stafford loans. I thought we were going to use it last semester (DD is Freshman) but when I looked into the terms they were awful. There was a large fee added right on top and the interest started accruing immediately and was over 6%! We were not eligible for any "real" aid so maybe your situation is different. I hope so!

 

[SOnotLayuh]

I'm a graduate student, so I have a lot of experience here unfortunately.

The total is split between subsidized and unsubsidized - they will break it down further for you when you go through your actual program information.

You CAN start paying sooner with no penalty.

The money will go straight to the school and you will get a refund for what is left after they take the money for tuition, room, and board

Refunds usually hit a bank account (through direct deposit) 2-3 weeks after the semester starts.

 

[msmayor]

For the freshman year, the maximum subsidized loan is $3,500 and the remaining $2,000 is unsubsidized. The split between subsidized and unsubsidized is driven by the EFC computed via FAFSA. Not every student is entitled to the full subsidized amount, but you can always obtain up to the maximum $5,500 in unsubsidized money.

If the student is attending a standard two-semester-per-year school, the loan is disbursed in two equal payments (so you don't get the full amount up front).

Once the semester begins, the funds are disbursed directly to the school. Schools will generally credit whatever loan funds you are expecting against your bill as they know they will receive it, so you don't need to worry about the payment deadlines for that amount (my daughter's tuition bill is always due weeks before the quarter begins, but we always get credit for her loan funds even though the school doesn't get that money until two weeks after classes begin.

If there is any excess money left as a credit in the student's account, the money is refunded.

There will most likely be some extra forms your child will need to complete to process the loan, and she will be required to complete Entrance Counseling for the loan as well so she fully understands the obligation. The Entrance Counseling is done on-line, and there is a short quiz at the end.

If offered a Stafford Loan through her school, she most likely will need to "accept" it as part of her financial aid package. Do not skip or miss this step or the loan money will be delayed.