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What Types of Federal Student Loans are Available?
How do Students and Parents Apply for Student Loans?
What are the Interest Rates for Federal Stafford and PLUS Loans?
How Much Can Students Borrow in Federal Stafford Loans?
When Does Repayment Begin on Student Loans?

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What Types of Federal Student Loans are Available?
The Federal Family Education Loan Program (FFELP) offers three types of federal loans:

• Federal Subsidized Stafford Loans are low-interest loans that are based on financial need. Interest is paid by the federal government while the borrower is attending school, during the six-month grace period following graduation or a change in enrollment status, and during specified loan deferment periods.

• Federal Unsubsidized Stafford Loans are low-interest loans that are not based on financial need. The borrower is responsible for all interest accrued on unsubsidized loans from the date the loan is disbursed, including the time that the borrower attends school and also during grace periods and any type of loan deferment.

• Federal PLUS Loans are low-interest loans made to parents of dependent undergraduate students and to graduate or professional students. (Parents must be the natural or adoptive parent of their dependent.) PLUS loans are not based on financial need. A PLUS loan’s repayment period begins within 60 days of the final disbursement of the loan, and the borrower is responsible for all interest that accrues.

How do Students and Parents Apply for Student Loans?
To receive a Federal Stafford loan, the student must attend an eligible school at least half-time and must be a U.S. citizen or an eligible non-citizen. To apply for a student loan (including federal grants and work-study), the student must complete a Free Application for Federal Student Aid (FAFSA). >>Go to “Applying for Aid” for more information.

After the FAFSA has been completed and sent to the U.S. Department of Education, the student will receive a Student Aid Report (SAR). After the student reviews the SAR to ensure that all information submitted is correct, the information will be sent electronically to the school(s) listed on the FAFSA application. After all application materials are complete, the financial aid office will notify the student of his or her eligibility for federal student aid, including any loan eligibility.

To apply for a Federal PLUS loan, applicants should contact their lender or the financial aid office. Applicants do not have to show financial need to qualify. However, applicants with unfavorable credit histories are usually not eligible for a Federal PLUS loan.

What are the Interest Rates for Federal Stafford and PLUS Loans?
Interest rates on federal student loans can either have a fixed interest rate or a variable interest rate. New loans first disbursed on or after July 1, 2006, will have a fixed interest rate.

Therefore, loans disbursed prior to July 1, 2006, will continue to have a variable interest rate. The interest rate may be adjusted each year on July 1. As a result, the interest rate may change annually, but it will never exceed 8.25 percent for Federal Stafford loans and 9.00 percent for Federal PLUS loans.

The current interest rates for July 1, 2007 through June 30, 2008 are as follows:

Loans first disbursed on or after July 1, 2006 (Fixed Rate)

Federal Stafford Loans

6.80%

Federal PLUS Loans

8.50%

Loans first disbursed between July 1, 1998 and June 30, 2006 (Variable Rate)

Federal Stafford Loans

6.62% during in-school, grace and deferment
7.22% during repayment

Federal PLUS Loans

8.02%

 

How Much Can Students Borrow in Federal Stafford Loans?
The following charts show the maximum loan amounts for a full academic year. The financial need, other sources of aid, cost of attendance and length of academic year may affect the amount that can be borrowed.

Dependent Student - Annual Loan Limit

Grade Level	Total Subsidized & Unsubsidized
First Year	$3,500
Second Year	$4,500
Third-Fifth Year	$5,500
Graduate/Professional	N/A

 

Independent Student - Annual Loan Limit

Grade Level	Subsidized Limit	Unsubsidized Limit Less amount borrowed under Subsidized Loan Program
First Year	$3,500	$7,500
Second Year	$4,500	$8,500
Third-Fifth Year	$5,500	$10,500
Graduate/Professional	$8,500	$20,500
Health Professions	$8,500	$47,167

Note: The student's annual Federal Stafford loan eligibility is determined by each school's financial aid office. Please contact the financial aid office with eligibility questions. The additional amount of an unsubsidized Federal Stafford loan that a health professions student may borrow annually is based upon the student's academic program and the length of the enrollment period (9 or 12 months).

In addition to the maximum annual amounts, Federal Stafford loans have an overall total aggregate limit that cannot be exceeded.

Classification - Total Aggregate Loan Limit

Classification	Total Loan Limit
Dependent Undergraduate	$23,000
Independent Undergraduate	$46,000
Graduate and Professional	$138,500
Health Professions	$189,125

 

When Does Repayment Begin on Student Loans?
Repayment on Federal Stafford loans begins six-months after the student graduates or drops below half-time enrollment. This six-month period, called a grace period, gives the student time to find a job.

Repayment begins on Federal PLUS loans within 60 days after full disbursement of the loan unless the borrower qualifies for a deferment.

Contact the financial aid office or lender for more information about repayment of student loans. There are several repayment options for consideration. Borrowers should contact their lender immediately if they have problems making their monthly payments because they may be able to delay their payments by getting a deferment or forbearance.