Office of Student Aid : Student Aid Glossary
Student Aid Glossary u-z
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If you are borrowing a Federal Direct Stafford Loan that is unsubsidized, the federal government will not pay the interest on (i.e., will not subsidize) your loan while you are in school or during your six-month grace period.
You will be able to indicate on your Federal Direct Stafford Loan Master Promissory Note (MPN) whether you choose to pay the interest on your loan quarterly or allow it to capitalize while you are in school. Choosing to pay the interest quarterly will minimize your loan debt. Payments of principal and interest begin once the six-month grace period expires.
See also subsidized.
A variable interest rate is the rate of interest on a loan that is tied to a stated index and changes annually, every July 1, as the index changes. See also fixed interest rate.
Federal regulations require that the Office of Student Aid reviews all student financial aid applications (i.e., your FAFSA information) to make sure it is accurate and consistent. The Office of Student Aid is required to resolve any inconsistencies or errors made on FAFSA applications to ensure the integrity of federal student financial aid programs. You may be selected for verification if:
Your Social Security number, veteran status, or citizenship status reported on the FAFSA does not match the federal government’s data.
You completed the FAFSA using estimated income information or income information is inconsistent (i.e., your reported adjusted gross income is less than taxes paid). You may be asked to supply copies of federal tax returns.
Penn State operates as a Quality Assurance School in association with the Department of Education. As a result, you do not need to submit verification documents unless Penn State contacts you.
Important: You must respond to requests for verification within the stated deadlines to avoid cancellation of your student aid.
Yearly Maximum Stafford Loan Limit
The total amount of Stafford Loan, both subsidized and unsubsidized, that a student can borrow each year (fall/spring/summer).