What is a federal student loan?


A federal student loan allows students and their parents to borrow money to help pay for college through loan programs supported by the federal government. They usually have low interest rates and offer attractive repayment terms, benefits and options. Generally, repayment of a federal loan does not begin until after the student leaves school. Federal student loans can be used to pay school expenses such as tuition and fees, room and board, books, supplies and transportation. Federal student loans are delivered to students through the Direct Loan Program.


Why are federal student loans a better option for paying for college?


Federal student loans offer borrowers many benefits not typically found in private loans. These include low fixed interest rates, income-based repayment plans, loan forgiveness and deferment (postponement) options, including deferment of loan payments when a student returns to school. For these reasons, students and parents should always exhaust federal student loan options before considering a private loan.


How do I get a federal student loan?


To get a federal student loan, you must complete the Free Application for Federal Student Aid (FAFSA). The easiest way to complete the FAFSA is online at www.fafsa.gov . Here, you identify schools that you are interested in attending. When your FAFSA is processed, the schools you have identified will receive your information. The school will then tell you how much financial aid is available, including grants, scholarships, work opportunities and federal student loans. Should you choose a federal student loan, your school will provide you with instructions on next steps.


How much money can I borrow in federal student loans?


Undergraduate student loan limits range from $5,500 to $10,500 per year depending on certain factors, including the student's year in college. Parents can also get federal student loans to help pay the remainder of college costs that are not covered by their children's other financial aid. These are called PLUS loans. In addition, graduate students may obtain PLUS loans to help pay for their own education.


Why should I complete a FAFSA when the private loan application process may be easier?


While the application process may be easier in some instances, federal student loans usually have lower interest rates and better repayment terms and options than private student loans. Additionally, schools use the information provided on the FAFSA to determine eligibility for other types of financial aid provided by the federal government, from your state, or from the school itself. This aid can include grants, scholarships and work opportunities.


What kinds of federal student loans are available?


Direct Stafford Loans are for undergraduate and graduate students. There are two types of Stafford loans: Subsidized and Unsubsidized.

  •   Subsidized Direct Student Loans
  •   Unsubsidized Direct Student Loans


PlUS loans are low interest loans that parents can obtain to help pay the cost of education for their children. In addition, graduate students may obtain PLUS loans to help pay for their own education. PLUS loans require a credit check and, in some instances, an eligible cosigner. Repayment of PLUS loans begins following the final disbursement for the year. Parents of dependent students may be able to defer repayment of their PLUS loans until after the student is no longer enrolled in school at least half-time, although interest will continue to accrue. 

Consolidation loans allow student or parent borrowers to combine multiple federal student loans into one loan with one monthly payment. A federal consolidation loan cannot include private loans. However, some private lenders may offer consolidation loans. Borrowers should be aware that they will lose their federal borrower benefits if they consolidate their federal student loan into a private consolidation loan. Borrowers should always exhaust federal student loan options first before considering a private consolidation loan.   

Dependency Status Questions


Federal financial aid regulations lay the primary responsibility for meeting educational costs on the student’s family. If you are considered a dependent student according to the federal financial aid definition, your aid eligibility is determined by using parent income and asset information in addition to your information.


What makes a student Dependent or Independent?


Your student dependency status is determined by the U.S. Department of Education based on your responses to specific questions on the FAFSA. For financial aid purposes, federal regulations have defined an independent student as one who meets AT LEAST ONE of the following conditions:

• Born 24 years old;


• Married as of the date FAFSA signed;


• Have children who receive more than half their support from the student, OR has legal dependents, other than a spouse or children, who live with student and who receive more than half their support from the student;


• Attending Graduate level program of study during the 2012-13 academic year;


• Veteran of U.S. Armed Forces (or will be a veteran as of June 30, 2012), or have attended a service academy and were released under a condition other than dishonorable;


• Currently serving on active duty in U.S. Armed Forces (other than for training);


• Emancipated Minor or in Legal Guardianship as determined by the court in her/his state of legal residence;


• Orphan, Ward of Court, Foster Care (after age 13);


• A self-supporting unaccompanied youth who is homeless or at risk of homelessness (as certified by governmental or school agency).


A student who does not meet ANY of the above conditions is classified as a Dependent student.


What is a Dependency Override?

A dependency override occurs when a financial aid administrator exercises professional judgment and overrides the Department of Education’s criteria for dependent students. An override may only be granted on a case-by-case basis for students with unusual & exceptional circumstances. These circumstances must show compelling reason for a student to be considered independent rather than dependent.


What conditions COULD warrant a Dependency Override?

The following are some examples of conditions that could warrant a dependency override:


• Documented abandonment


• Parental drug abuse


• Parental mental incapacity


• Physical or emotional abuse


• Severe estrangement from parents


• Parental Incarceration


What conditions DO NOT warrant a Dependency Override?

By Federal Law, the following conditions DO NOT warrant a dependency override:


• Parents refuse to provide information on the FAFSA application or for verification


• Parents do not claim student as a dependent for income tax purposes


• Parents unwilling or unable to contribute to student’s education


• Student demonstrates self-sufficiency


• Student reluctant to request the income information from parents


• Student does not wish to communicate with parents


Financial Aid Policy at Cuesta College requires a student seeking a dependency override to complete the Cuesta College Dependency Override Appeal. Decisions made at other institutions are not accepted.

2013-14 Petition to Change Dependency Status 

You should complete this form if you are considered a dependent student for federal financial aid and believe you have compelling extenuating circumstances which should allow you to be considered an independent student. Return the completed form with the required documentation to the Office of Financial Aid. We understand the sensitive nature of these circumstances; all documentation received by our office will be kept confidential.