Federal Stafford Loan - FAQs

• Be a U.S. citizen or national, a U.S. permanent resident or eligible non-citizen, as applicable
• Provide his or her valid Social Security Number
• Be attending an eligible school, or accepted for enrollment, as at least a half-time student
• If already enrolled, maintain satisfactory academic progress in his or her course of study according to the school's published standards
• Have at least a high school diploma or the recognized equivalent of a high school diploma or the student must meet one of the following standards: The student must (a) be beyond the age of compulsory school attendance in the state in which the post-secondary school is located and (b) pass an independently administered ability-to-benefit test that has been approved by the Department of Education. Or the student must have - and may self-certify that he or she has - completed a secondary school education in a home school setting that is treated as a home or private school under applicable state law
• Unless exempt, male students must register with the Selective Service
• Certify that he or she will use the loan funds only for educational purposes
• Not be in default on any federal education loan or owe money on a federal student grant
• Not have fraudulently borrowed a loan, provided information that caused his or her loan to exceed applicable annual loan limits during an academic year, nor knowingly exceeded an aggregate loan limit for the Federal Family Education Loan Program, Federal Direct Loan Program or Federal Perkins Loan Program
• Not have had his or her eligibility for Title IV aid denied due to conviction of possession or distribution of an illegal drug within prescribed time frames
• Not be incarcerated at the time funds are disbursed or delivered
• Not be serving in a medical internship or residency program required of doctors of medicine, osteopathy and optometry. Students who are serving in an internship as part of any other degree program (e.g., a dental or veterinary internship) are considered eligible students for purposes of Stafford loans and PLUS loans, as applicable

• You must be at least 24 years old by Dec. 31 of the award year
• You are married as of the date the Free Application for Federal Student Aid (FAFSA) is submitted
• You have at least one child who receives more than half their support from you
• You have a dependent (other than a spouse or a child) who lives with you and receives more than half of his or her support from you from the time the FAFSA is completed through June 30 of the award year
• You are an orphan or ward of the court (or were a ward of the court until age 18)
• You are or will be working on a master's or doctoral program (such as an MA, MBA, MD, JD, PhD, EdD or graduate certificate) at the beginning of the award year for which the FAFSA is completed
• You are a veteran of the U.S. Armed Forces. You are considered to be a veteran if you meet both of the following criteria prior to the end of the award year for which the FAFSA is filed: 1) you are currently serving on active duty in the U.S. Armed Forces; were a National Guard or Reserves enlistee and called to active duty for purposes other than training (does not include active duty for state purposes); or you were a cadet or midshipman at a service academy (even if you withdrew before graduation), 2) you were released under a condition other than dishonorable

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When it comes to making sure you have the money you will need to pay for college, you can't afford to wait. Make sure you touch base with your school's financial aid office to determine their application deadlines.

Here's how the loan process works:

1. You need to complete and submit a Free Application for Federal Student Aid (FAFSA), from the U.S. Department of Education.
2. You will receive a Student Aid Report (SAR), which will include your Estimated Family Contribution (EFC).
3. You will receive an award package or financial aid package from the financial aid office of your school. The package may include scholarships, grants, work-study programs and may also include Stafford loans.

Once you have received the financial aid package from your school indicating your Stafford loan availability, you can complete and submit a Stafford loan Master Promissory Note (MPN).

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Your Stafford loan amount will be determined by the federal government and your school's financial aid office, based on information you provided in the FAFSA. Maximum loan amounts are indicated in the chart below. These limits are applicable for loans first disbursed on or after July 1, 2008.

	Dependent Undergraduate Students1	Independent2 Undergraduate Students	Graduate Students
Year 1	$5,500 (with no more than $3,500 in subsidized loans)	$9,500 (with no more than $3,500 in subsidized loans)	$20,500 (with no more than $8,500 in subsidized loans)
Year 2	$6,500 (with no more than $4,500 in subsidized loans)	$10,500 (with no more than $4,500 in subsidized loans)	$20,500 (with no more than $8,500 in subsidized loans)
Years 3 and 4 (each)	$7,500 (with no more than $5,500 in subsidized loans)	$12,500 (with no more than $5,500 in subsidized loans)	$20,500 (with no more than $8,500 in subsidized loans)
Maximum Total Stafford Debt (upon graduation)	$31,000 (only $23,000 of this amount may be from subsidized loans)	$57,500 (only $23,000 of this amount may be from subsidized loans)	$138,500 (only $65,500 of this amount may be from subsidized loans) - limit includes Stafford loans received for undergraduate study

These amounts are the maximum yearly amounts you can borrow in both subsidized and unsubsidized FFELP or Direct Loans, individually or in combination. Because you can't borrow more than your cost of attendance minus the amount of any Federal Pell Grant you're eligible for and minus any other financial aid you get, you may receive less than the annual maximum amounts.

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For Stafford loans first disbursed on or after July 1, 2006, the statutory interest rate is fixed at 6.80% (including periods when the borrower is in school, grace, deferment and repayment).

Over a four-year period beginning July 1, 2008, the interest rate on subsidized Stafford loans made to undergraduate students will be reduced. The applicable interest rates for subsidized undergraduate Stafford loans made during this period are as follows:

First disbursement of a loan between the following dates:	Interest rate on the unpaid balance:
July 1, 2008, and June 30, 2009	6.00%
July 1, 2009, and June 30, 2010	5.60%
July 1, 2010, and June 30, 2011	4.50%
July 1, 2011, and June 30, 2012	3.40%

This change does not affect any prior loans made to borrowers. The terms and interest rates of those loans remain the same. These reduced interest rates apply only to subsidized loans. Any unsubsidized Stafford loan for the same undergraduate borrower continues to be made at the current fixed interest rate of 6.80%.

Stafford loans disbursed between July 1, 1998, and June 30, 2006, are variable rate loans that adjust annually on July 1 and are capped at a 8.25% interest rate.

Effective July 1, 2009, through June 30, 2010, the variable interest rate for all loan periods, including repayment, forbearance and deferment are as follows:

During school, grace and deferment periods: 1.88%

During repayment, including forbearance periods: 2.48%

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Generally, the minimum annual payment must be the lesser of $600 a year ($50 a month) or the outstanding balance including interest. Repayment begins six months after the student graduates, leaves school or drops below half time. Generally, the repayment period is 10 years (excluding periods of deferment and forbearance).

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Yes. Payments can be postponed until after graduation by capitalizing the interest. However, this adds the interest payments to the loan balance, increasing the size and cost of the loan.

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Once the payment due date is established, it cannot be changed. However, you have the option to make a payment at any time before the due date.

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Yes. You may prepay all or any portion of your loan at any time without penalty. Prepayment is encouraged as it can significantly reduce the total amount of interest paid over the life of the loan.

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No. You can repay your Stafford loan early without a penalty or fee.

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Yes. Stafford loans are regulated by the federal government. To protect the lenders from loss in the event of the borrower's death, disability, bankruptcy or default, loans are guaranteed against default. The federal guarantee keeps your interest rates low, and entitles you to certain benefits.

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HOPE Scholarship and Lifetime Learning Tax Credits
These programs reduce the amount of your federal taxes based on qualifying "out-of-pocket" educational expenses paid for yourself, your spouse or your dependent child. Only one of these tax credits may be claimed per tax year.

HOPE Scholarship Tax Credit
With this tax credit, you can receive up to $2,500 per eligible student for a taxpayer paying education-related expenses. This represents 100% of the first $2,000 of your out-of-pocket educational expenses for each student, plus 25% of the next $2,000.

The HOPE Scholarship credit can be increased to $3,600 for enrollment in an eligible institution located in a Midwestern disaster area.

Lifetime Learning Tax Credit
With this credit, you can claim a maximum credit of up to $2,000 (20% of the first $10,000). This credit is calculated per family, not per student.

The Lifetime Learning credit can be increased to $4,000 for enrollment in an eligible institution located in a Midwestern disaster area.

Because tax credits and deductions phase out at certain income levels, we encourage you to consult with your tax advisor and review IRS Publication 970, or call the IRS information line at 1-800-829-1040 to determine your eligibility and learn how these benefits apply to your specific situation.

New changes in the tax code may offer favorable tax advantages when you finance your child's education with a PLUS loan.¹ There is now an unlimited timeframe for student loan interest deductions — depending on your income you may be entitled to deduct interest regardless of the age of your loan. In addition, eligibility requirements are more flexible, so deductions are available to a wider group of taxpayers. We encourage you to learn more about the potential tax benefits.

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You can apply now, or call the toll-free number above to apply for a Federal Stafford Loan.

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Borrowers are responsible for paying a default fee and an origination fee, which are forwarded to the U.S. Department of Education. A 1.00% origination fee applies to Stafford loans first disbursed between July 1, 2008, and June 30, 2009. The origination fee is reduced to 0.50% for loans first disbursed between July 1, 2009, and June 30, 2010. For Stafford loans first disbursed on or after July 1, 2010, the origination fee will be eliminated. These fees are deducted from the loan proceeds. The guarantor may elect to pay all or a portion of the default fee on behalf of the borrower.*

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