Loan Process Overview
There are a variety of loan programs available to students and parents to help finance college education. Because loans must be repaid, usually with interest, you should never borrow more than you absolutely need to pay for your educational expenses.
The financial aid office at your school will determine your Federal Stafford Loan eligibility and will include it in your award package. Some colleges and universities also include other types of loans in the financial aid award, such as parent and private loans. Therefore, you need to be sure to evaluate each loan program carefully. Always borrow Federal Loans first!
In order to receive your loan funds, you will need to respond to the award and apply for any loans that have been offered. If you are a first-time borrower, you will need to complete a Master Promissory Note, as well as Stafford Loan Entrance Counseling. It is important to remember that the loan application process may be different at each college.
Federal Stafford Loan Program - There are two types of Federal Stafford Loans: Subsidized and Unsubsidized.
Subsidized Stafford Loan
- Interest on the loan is paid by the federal government while you are in school, during your grace period, and during authorized periods of deferment.
Unsubsidized Stafford Loan
- You are responsible for paying the interest on your loan from the date of disbursement. You can choose to pay the interest while in school or you can choose to postpone the payment of the interest until you enter repayment.
The Federal Perkins Loan Program is a low-interest loan for students with exceptional financial need.
The Federal Grad PLUS Loan Program is available to students pursuing a graduate or professional degree.
- The loan requires a credit check, so a good credit history is needed to qualify.
- The interest rate is fixed at 8.5%. Interest accrues immediately upon disbursement and during any periods of deferment or forbearance.
For more detailed information, go to Federal Loans.
The Lender provides the funding for your Loan. A lender may be a bank, credit union, state agency, school, or the U.S. Department of Education (Direct Loans). Your school may provide you with a Preferred Lender List, however, you are not required to select a lender that your school recommends.
The Guarantor of your loan is the entity designated by the U.S. Department of Education that provides a guarantee to your lender that your loan will be repaid. FAME is the designated guarantor for the State of Maine.
The Servicer is a company your lender may use to help administer and manage your loans. All payments and correspondence should go to the servicer of your loan. You will be notified if the servicer changes.
A Secondary Market purchases loans from the original lender. You will be notified if the holder of your loan changes.
For more information on student loans, please visit these web sites: