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    FINANCIAL AID

              types___________________________________________

      Stafford Loans
including:
Federal Family Education Loans
Federal Stafford Loans
Federal Supplemental Loans For Students (SLS)
Federal Parent Loans for Undergraduate Students (PLUS)

Stafford loans are low-interest (7.43% through 6/30/95) loans made to students attending school at least half-time. Stafford loans are made by a lender such as a bank, credit union, or savings and loan association. Sometimes a school acts as a lender. These loans are insured by the state guaranty agency and then reinsured by the federal government. The US Department of Education also offers simlar loans through its Direct Student Loan program. The only difference is that the U.S. Department of Education will act as the lender; you will make loan payments directly to the department.

Stafford loans are available regardless of need. However, you can't borrow more than the cost of education at your school minus any other financial aid you receive. Dependent undergraduates can borrow up to $2,625 in their first year, $3,500 in their second, and $5,500 in the third and remaining years of study. The maximum Stafford loan debt as an undergraduate is $23,000.

Independent undergraduates may borrow up to $6,625 in their first year, $7,500 in their second year, and $10,500 in their third and remaining years. Note that subsidization is available for only $2,625 the first year, $3,500 the second, and $5,500 thereafter. The total Stafford loan debt you can have outstanding as an independent undergraduate is $46,000. (Note: these amounts take the place of the old Supplemental Loans for Students (SLS) program.)

Graduate students can borrow up to $18,500 per year, with $8,500 per year available for subsidization, up to a maximum total of $138,500 (including undergraduate debt).

Subsidized Stafford loans are available to those who qualify based on financial need. In a subsidized loan, the federal government pays the interest while you are in school. Non-need-based loans are not subsidized, meaning you will be responsible for interest charges from the start of the loan.

If you get a subsidized loan, you'll pay an 'origination fee' of 3% -- deducted proportionately from each loan disbursement made to you. The origination fee is passed on to the government to help reduce the government's costs for these loans. The lender may also collect an insurance premium of up to 1% payable in the same way. The origination fee for FDSLP loans is 4%, comparable to the commercial lender's 3% plus 1% insurance premium.

To apply for a Stafford loan, see a lender or get an application from your school or state guaranty agency. State agencies are listed in Chinook's State Info page. You fill out your part of the application, then turn it in to your school for determination of need, certification of enrollment, etc. The school then submits it to your chosen lender, who gets the approval of the guaranty agency and forwards the loan amount to your school.

Repayment begins no more than six months after you graduate or drop to below half-time. You may be allowed up to 10 years to repay. If you skip a payment, if it's late, or if you make less than a full payment, you'll have to pay a late charge plus any collection costs.

You may apply for a deferment (postponement of payments) if you are in an approved graduate fellowship program or a rehabilitation training program for the disabled, unable to find full-time employment, or can show an economic hardship. If your total annual US Department of Education student loan debt is at least 20% of your gross income, you may also qualify for forbearance. If you allow the loan to go into default, you are no longer eligible to apply for deferment.

Stafford loans may also be cancelled under certain conditions, meaning the balance is forgiven. These are conditions for cancellation:

Total and permanent disability or death of borrower
Bankruptcy (if 7 years have passed since the date the loan came due)

The following conditions for cancellation may apply in the future; but funding has not been provided at this time:
  • Full-time teacher in a designated elementary or secondary school serving students from low-income families
  • Full-time teacher of math, science, foreign languages, bilingual education, or in other fields designated as teacher shortage areas
  • Full-time nurse
  • Service as a Peace Corps or VISTA volunteer
  • Return to school for teaching certificate
PLUS LOANS
Federal Parent Loans for Undergraduate Students (PLUS) are similar to unsubsidized Stafford loans. PLUS loans are available to parents with good credit histories to borrow for each dependent child who is enrolled at least half-time. The interest rate is 6.64% through 6/30/94.

PLUS loans carry an "origination fee" of 3%, deducted proportionately from each loan disbursement made. In addition the lender may collect an insurance premium of up to 1% of the principal, deducted from disbursements in the same fashion.

To apply for a PLUS loan, see a lender or get an application from your school or state guaranty agency. State agencies are listed in Chinook's State Info page. You fill out your part of the application, then turn it in to your school for determination of need, certification of enrollment, etc. The school then submits it to your chosen lender, who gets the approval of the guaranty agency and forwards the loan amount to your school.

Repayment begins no more than sixty days after the final loan disbursement. You may be allowed up to 10 years to repay. If you skip a payment, if it's late, or if you make less than a full payment, you'll have to pay a late charge plus any collection costs.

You may apply for a deferment (postponement of payments of principal only) if you are in an approved graduate fellowship program or a rehabilitation training program for the disabled, unable to find full- time employment, or can show an economic hardship. If you allow the loan to go into default, you are no longer eligible to apply for deferment.

PLUS loans are eligible for cancellation only upon total and permanent disability or death of the borrower (or student for whom a parent borrowed).



Official Federal Student Aid Information Center
.



Call our toll free numbers:

Federal Student Aid Information Center (FSAIC)
1-800-4-FED-AID (1-800-433-3243)

TTY users (for the hearing-impaired) can call:
1-800-730-8913

Callers in locations without access to 800 numbers may call
1-319-337-5665 (this is not a toll free number)

 



  FASTaiD 1998 CEE       All rights reserved. Do not copy or redistribute in any form.         Mail: Editor