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The U.S. Department of Education administers the Federal Family Education Loan Program (FFELP). The FFEL Program consists of what are generally known as Stafford Loans (for undergraduate and graduate students) and PLUS Loans, for the parents of dependent undergraduates.
Additional information for Stafford Loan Borrowers
What are Stafford Loans?
FFEL Stafford Loans are either subsidized or unsubsidized. You can receive a subsidized loan and an unsubsidized loan for the same enrollment period.
A subsidized loan is awarded on the basis of financial need. You won' be charged any interest before you begin repayment or during authorized periods of deferment. The federal government "subsidizes" the interest during these periods.
An unsubsidized loan is not awarded on the basis of need. You'll be charged interest from the time the loan is disbursed until it's paid in full. If you allow the interest to accrue (accumulate) while you're in school or during other periods of nonpayment, it will be capitalized - that is, the interest will be added to the principal amount of your loan, and additional interest will be based on that higher amount.
NOTE: If your interest is capitalized, it will increase the amount you have to repay. You can choose to pay the interest as it accumulates; if so, you'll repay less in the long run.
Who can get a Stafford Loan?
If you're a regular student enrolled in an eligible program at least half-time, you may receive a FFEL Stafford Loan.
How do I get this loan?
You apply using the FAFSA or Renewal FAFSA, just the way you would for other federal student aid. Once you have been awarded a Stafford loan, you complete an online Master Promissory Note (MPN). The promissory note is a binding legal document; when you sign it, you're agreeing to repay your loan under certain terms. Read the note carefully and save it.
What are loan origination fees? *** NEW ***
Loan orgination fees are fees that the lender charges. These fees may range from 1% to 3%. For example, if you borrow $3,500 ($1,750 per semester), the lender may hold out $105 in origination fees for the year (or $52.50 per semester). So for the semester, you would then have $1,697.50 applied to your bill instead of the $1750. You are still required to repay whatever amount the lender holds out in these fees.
How much can I borrow?
If you're a dependent undergraduate student, you can borrow annually up to
· $ 3,500 if you're a first-year student enrolled in a program of study that is at least a full academic year.
· $ 4,500 if you've completed your first year of study and the remainder of your program is at least a full academic year.
· $ 5,500 if you've completed two years of study and the remainder of your program is at least a full academic year.
If you're an independent undergraduate student or a
dependent student whose parents are unable to get a PLUS Loan, you can borrow annually up to
· $ 6,625 if you're a first-year student enrolled in a program of study that is at least a full academic year (only $ 3,500 of this amount may be in subsidized loans).
· $ 7,500 if you've completed your first year of study and the remainder of your program is at least a full academic year (only $ 4,500 of this amount may be in subsidized loans).
· $ 10,500 if you've completed two years of study and the remainder of your program is at least a full academic year (only $ 5,500 of this amount may be in subsidized loans).
Generally, the total debt you can have outstanding from all Stafford Loans combined is
· $ 31,500 as a dependent undergraduate student (no more than $23,000 may be subsidized loans)
· $ 57,500 as an independent undergraduate student (no more than $ 23,000 may be in subsidized loans)
· $ 138,000 as a graduate or professional student (only$ 65,500 of this amount may be in subsidized loans). The graduate debt limit includes any Stafford Loans received for undergraduate study.
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