05.04.09 | Stafford Loan Funds, 30-day hold
If you’re a first-year undergraduate student and a first-time borrower, your first disbursement can’t be made until 30 days after the first day of your enrollment period. What that basically means is if the fall semester starts on September 8, your lender will not send the funds until October 8.
The reason they enforce this rule is because many students were abusing the system. What students were doing was taking out Stafford loan funds and then dropping out of class within the alloted time frame where they could get a refund. Then they would use those dollars for unschool related expenses.
Your school is obvioulsy aware of this procedure, so don’t stress out this summer if the they send you a standard Dear John letter stating you have an outstanding balance. You can just call the FAO and knidly remind them that you are a freshman and that their is a 30-day hold on the Stafford loan you were approved for. They will confirm that in the system and then you can go back to playing on that slip n’ slide.
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Thanks a lot for the information. I am an undergraduate student and was thinking of taking out Stafford loan. I was delaying earlier but after I read your article, I came to know about the 30-day hold procedure. I must thank you for this information; otherwise I would have been able to enroll for the fall semester. I just wanted to add as additional information that for this academic year 2009-2010, the Stafford loans for graduate students are at a fixed rate of 6.8%.
September 30th, 2009 | #