If you borrow a stafford loan for college but dont start classes at all, do you still have to pay the loan back?
Not legal advice: Yes, Stafford Loans are loans that are required to be paid back. When the funds are distributed to the University, typically the University will deduct tuition first, and then remit any difference to the student to be used for room, board, books or other educational expenses.
If you never started classes, you should inquire with the school if there is any refund policy on tuition. If so, you can use that refund or partial refund to pay down your Stafford Loan, as there is no early payment penalty. Additionally, if you inform the school within 14 days of receiving notice that your account has been credited with your loan proceeds, that you want to cancel the loan, then the loan can be cancelled.
Currently, subsidized Stafford Loans carry an interest rate of 3.4%. Republican law makers would like to keep this interest rate low by cutting back on Obama’s Health Care Plan. The current reduced interest rate law is set to expire on July 1, 2012, and if Congress does not act, the interest rate will jump up to 6.8% overnight.