Frequently Asked Questions

1. What is a Federal Stafford Loan?
   Federal Stafford Loans are the most common type of Federal Student Aid received by Students. The Federal Stafford Loan is a federally guaranteed loan that carries the benefits of Federal Student Aid (deferment, forbearance, forgiveness, consolidation, etc.). The Federal Stafford loan is non-credit based loan with a low interest rate that is obtainable and affordable by most students.
   
   There are two types of Stafford loans available through the Federal Stafford Loan Program; Subsidized and Unsubsidized.
   • Federal Subsidized Stafford Loans Need based loan where the Federal Government pays the interest while the borrower is in-school or in a deferment status.
   • Federal Unsubsidized Stafford Loan Need based loan available to students who may not qualify for a Subsidized Stafford loan, but still show need. The borrower is responsible for the paying all interest accrued on the loan. The borrower has the option to pay the interest as it accrues or capitalize the interest.
   
   A student’s financial need determines the type of Federal Stafford Loan received. A student with a higher level of financial need receives the Federal Subsidized Stafford Loan.
2. What are the features of the Federal Stafford Loan?
   Features of the Federal Stafford Loan:
   • The Federal Stafford Loan is a low fixed interest rate loan that is affordable to most borrowers – 6.8%.
   • The Federal Stafford loan often offers borrowers money saving benefits via Borrower Benefit programs.
   • No credit check to obtain the loan.
   • The Federal Stafford is part of FFELP and therefore Federal Student Aid benefits apply (deferment, forbearance, forgiveness, consolidation, etc.).
   • The Federal Stafford Loan is an excellent alternative to high interest/cost Private Loans to pay for higher education costs.
   • The interest for Federal Stafford Loans may be deferred while in school and interest that is paid may be tax deductible.
   • No prepayment penalties.
   • Borrowers of the Federal Stafford loans enjoy a 6 month grace period before repayment begins.
3. What are the eligibility requirements for a Federal Stafford Loan?
   In order for a student to obtain a Federal Stafford Loan, the student must meet the following eligibility requirements:
   • Complete the FAFSA for the appropriate academic year.
   • Be a U.S. citizen or eligible non- citizen with a social security number.
   • Be accepting for enrollment in a participating institution of higher learning; or, if enrolled, by making satisfactory progress.
   • Be classified as at least a half- time student and working toward a degree or certificate
   • Not be in default on an education loan or owe any education grant refunds.
   • Be registered with Selective Service, if required
   • Have financial need in order to receive a Stafford Loan
4. How much money can I borrow?
   The amount of money a student may borrow in Federal Student Aid is based on their financial need.
   
   

   Federal Stafford Loan Maximums 2007 - 2008
   	Subsidized	Unsubsidized	Total
   Dependent Undergraduates
   First Year	$3,500*		$3,500
   Second Year	$4,500*		$4,500
   Third Year and Beyond	$5,500*		$5,500
   Independent Undergraduates
   First Year	$3,500	$4,000**	$7,500
   Second Year	$4,500	$4,000**	$8,500
   Third Year and Beyond	$5,500	$5,000**	$10,500
   Graduate and Professional Students
   All Years	$8,500	$12,000	$20,500
   Aggresgate Limits
   Dependent Undergraduates			$23,000
   Independent Undergraduates			$46,000
   Graduate and Professional			$138,000

5. What are the Federal Stafford Loan Interest Rates?
   Interest rates on Federal Stafford loans disbursed on or after July 1st, 2006 are fixed at 6.8%.
   
   Interest rates on Federal Stafford loans disbursed prior to July 1st, 2006 are variable and adjusted every July 1st (based on the 91- day Treasury Bill +1.7% while you’re in school, grace or deferment and +2.3% during repayment)
6. How can MyTuition.com help lower my interest rate?
   MyTuition.com rewards package: .375% Interest Rate Reduction for electing to use auto-debit for repayment
7. Who is the money disbursed?
   Typically, a student requests a Federal Stafford loan to cover one academic year. The Federal Stafford Loan is typically disbursed to the school’s financial aid office in scheduled payments over the course of the academic year.
   
   For example, a 1st year student is attending a school that academic year is comprised of a Fall Semester and Spring Semester. The student has financial need that resulted in them being eligible for the Federal loan maximum the loan monies - $2,625. The student’s loan monies will be disbursed in two installments directly to the school – ½ in Fall Semester and other ½ in the Spring Semester. The borrower’s loan fees are deducted from each disbursement. After the school deducts the balance on the student’s account any left over loan monies are sent to the borrower/student.
8. Are there any Federal Stafford Loan Fees?
   A Federal Stafford Loan may have up to 3% in fees that are collected by the Lender and paid to the Department of Education. Fees are assessed on all Stafford Loans and are paid via the lender’s quarterly filing of its Lender Reporting Systems (LaRS) to the DOE. The fees charged help offset the costs of the FFEL program.
   
   A borrower of a Federal Stafford loan incurs the following fee:
   • Guarantee Fees - typically 1%
   
   Federal Stafford Loan fees are deducted proportionately from the loan disbursement. The borrower is NOT required to come up with any upfront money to obtain a Stafford loan. The fees are deducted from the Stafford Loan disbursement and are typically non- refundable once the loan is disbursed. If a borrower cancels the loan, the fees are refundable.