Stafford Loans

Many of America's students find they need assistance from the Federal Family Education Loan Program (FFELP). Included in the FFELP program are:

• Federal Stafford Loans
• Unsubsidized Federal Stafford Loans.

Federal Stafford Loans are subsidized by the federal government. This means, if you qualify, the government will make interest payments while you're attending an eligible postsecondary school on a full-time basis or whenever you are in a qualified deferment period (in certain instances, you may have your loans subsidized for half-time school attendance!). Federal Stafford Loans are need based. Once you complete the necessary forms and submit them to the financial aid office, your financial aid officer will tell you the amount of financial aid for which you qualify.

In the Unsubsidized Federal Stafford Loan program, the government will not make your interest payments. You must either make interest payments during your in-school, or have interest capitalized (added to the outstanding principal balance) which increases the amount you would repay.

Fortunately, both of these loans are designed to assist students by providing low interest rates (new loans disbursed on or after July 1, 2006 have a fixed interest rate of 6.8% while Stafford loans disbursed prior to July 1, 2006 have a variable interest rate which can never exceed 8.25%) , and by providing deferment and forbearance assistance to help a student get through college, graduate school, and begin a career. Careful planning will be your key to a healthy financial future.

Check out the Federal Stafford Loan Limits.

FFELP Program Eligibility

To be eligible to receive either Stafford Loan under the FFELP, the student borrower must:

• Be either a U.S. citizen, U.S. national or eligible non-citizen; and,
• Not be in default on any education loan or owe a refund on any education grant.

Fees on Stafford Loans

Both Stafford Loans under the FFELP program have the following loan fees:

• 1.5% federal loan origination fee
• 1% federal default fee

Be certain to plan accordingly for the actual amount you will receive. Loan origination and default fees are federally mandated and will be deducted from each disbursement of your loan (Federal default fees may be paid for the borrower by some loan guarantors).
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Disbursement of Stafford Loan Proceeds

In most case, schools are required to request Stafford loans (subsidized of unsubsidized) to be disbursed in no fewer than two installments. Your first installment will occur at the beginning of your loan period, as determined by the school, and the second cannot generally be requested until 50% of the loan period has elapsed. In most cases, the second disbursement will be coordinated to arrive with the start of a new semester, trimester, quarter, etc. If you happen to be a freshman borrower who does not have any outstanding Stafford Loans, the first disbursement of your first loan is generally required to be delayed until 30 days after the start of the loan period. Plan accordingly if you are in this category and if you need assistance, contact your financial aid office as they may be able to defer some of your expenses pending the arrival of the first loan disbursement.
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Interest Rates

All Stafford Loans first disbursed on or after July 1, 2006 have a fixed interest rate of 6.8%. All Stafford Loans first disbursed on or after July 1, 1994 through June 30, 2006 have a variable rate of interest. The variable rate may change every July 1, but can never exceed 8.25%. This hold true even for borrowers who have other outstanding Stafford Loans (formerly known as Guaranteed Student Loans or Federally Insured Student Loans) at different interest rates. The variable rate will change every July 1, but can never exceed 8.25%.

Rates for new loans made after July 1, 2006:

In-school, grace or deferment:	In Repayment:	Rate Effective Dates:
6.80% Fixed	6.80% Fixed	7/1/2006

Rates for loans disbursed after July 1, 1998 through June 30, 2006:

In-school, grace or deferment:	In Repayment:	Rate Effective Dates:
6.54%	7.14%	7/1/2006 - 6/30/2007

Rates for loans disbursed  July 1, 1995  through June 30, 1998:

In-school, grace or deferment:	Repayment:	Rate Effective Dates:
7.34%	7.94%	7/1/2006 - 6/30/2007

Grace Period

The Grace Period on all Stafford Loans is a full six months. This means your first actual payment of principal and interest will not be due until 6 months after you either:

A. graduate; or,
B. drop below half time status.

On Stafford Loans which are subsidized, you do not have to make principal or interest payments until this 6 month period lapses. The same is true on Unsubsidized Federal Stafford Loans but keep in mind that interest is accruing and being capitalized even during the Grace Period which means your payoff amount continues to increase if you opt not to make interest payments during your in-school and grace periods.
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Prepayment Options

Prepayment of your Stafford Loans is very advantageous. Not only is it a positive reflection on your credit history, but there are no penalties, early payment fees or charges assessable. This means if you payoff your loan(s) early, all you can be charged is interest accrued to date - nothing more!
If you choose to add additional dollars to your monthly payments to reduce principal, be certain to attach a short note to your payment requesting these added funds to be utilized to reduce principal which will pay off you loan sooner. You'd be amazed what the effect is of adding just a few dollars every month to your payment will do to decrease your total payoff on you Stafford Loans!!

Another thought, while you are in-school and/or your grace period, don't forget that subsidized Federal Stafford Loans are interest free and you could payoff your loan during this period (as well as qualified deferment periods) interest free. If the entire subsidized Federal Stafford Loan is paid off prior to the end of the Grace Period, you will owe no interest at all as the federal government paid your interest for you during these periods!!
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Deferments

Borrowers who qualify for a deferment may postpone loan principal and interest payments (although interest will continue to accrue on Unsubsidized Federal Stafford Loans and be periodically capped to the principal amount) during periods of deferment. For borrowers with no outstanding balance on FFELP Stafford Loans made before July 1, 1993 the following deferments apply:

• At least half-time enrollment at an eligible school (unlimited period);
• Graduate fellowship program (unlimited period);
• Rehabilitation program for the disabled (unlimited period);
• Unemployment (up to 3 years); and,
• Economic hardship (up to 3 years).

Forbearance

If you should experience unexpected temporary hardship for reason that does not qualify you for a deferment, a forbearance may be available. During forbearance, principal payments may be postponed or reduce. Interest will continue to accrue and must either be paid or be capitalized onto the loan principal. If you are interested in obtaining a forbearance or would like more information, please call the Nelnet customer service line 1-888-486-4722.
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Individual Title IV Student Loan Information

Individual title IV student loan information may be accessed by students/borrowers by calling the National Student Loan Data System (NSLDS) toll free phone number at 1-800-4FED-AID or logging onto the website at www.nslds.ed.gov

On-line Application

You can apply for a Stafford loan through ASAP/Union Bank & Trust on-line or request an application to be sent to you by mail.