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The Federal Subsidized Stafford loan is a federally
sponsored student loan available at schools
participating in the FFELP. A lender like Brazos
Student Lending, banks, credit union, savings
and loan association or in rare cases the school
itself can make the loan. The school's primary
role is to certify your eligibility. A guarantor,
a state agency or non-profit corporation, insures
the loan, which means you can make the loan
just on your signature. The guarantor may charge
a fee for this insurance.
This loan was created specifically for students
after high school and has many benefits not
ordinarily found in credit cards or other loan
products. You choose the lender. Keep in mind
that this is the beginning of a long-term relationship.
It is a good idea to use the same lender throughout
your college career. Multiple lenders can cause
increased monthly payments and complicate repayment.
A Federal Subsidized Stafford loan is awarded
on the basis of financial need. Eligibility
is determined in the analysis of the submitted
FASFA
(Free Application for Federal Student Aid)
data and by the school. The school will offer
you the loan in an award letter if you qualify.
TERMS:
| 1. |
The interest rate for the
SUBSIDIZED Stafford Loan will be a fixed
rate of 6.0% effective 7/1/2008. (The interest
rate for Subsidized Stafford Loans disbursed
between 7/1/2006 and 6/30/2008 is a fixed
rate of 6.8%). |
| 2. |
Prior to July
1, 2006, Stafford loans were subject to
variable interest rates that were adjusted
each year on July 1. Borrowers will be notified
of interest rate changes throughout the
life of the loan. |
| 3. |
You may be required to pay
an origination fee equal to 1.0% (effective
for loans with first disbursements on/after
July 1, 2008) of the principal balance.
This fee will be deducted proportionately
from each loan disbursement you receive
and will be paid to the Department of Education.
Depending on the guarantor, you may also
be required to pay a Federal Default Fee
of 1% of the principal loan balance. The
borrower is responsible for paying this
fee when it is not waived by the guarantor.
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| 4. |
Repayment begins six months
after you graduate, withdraw, or drop below
half-time attendance and you have up to
10 years to repay. The minimum payment amount
is $50 per loan. |
| 5. |
Many lenders offer up-front
discounts or repayment incentives that affect
the over-all cost of the loan. You should
examine these options carefully when choosing
a lender. You may get more money up-front,
but actually pay more in the long-term. |
APPLICATION PROCESS:
Complete
the Free Application for Federal Student Aid
(FAFSA) found at http://www.fafsa.ed.gov/,
which will start the financial aid application
process at your school. Your school may also
have an institutional application you must complete.
If the school offers and you accept a Federal
Subsidized Stafford loan, you will receive a
Master Promissory Note that you must sign and
return as instructed.
OBTAINING YOUR LOAN MONEY
Normally, loans are disbursed in two equal disbursements,
at the beginning and middle of the academic
period. Schools disburse Stafford Loans in one
of two ways:
- Electronic funds transfer (EFT), which allows
your lender to transfer your money directly
to a school's bank account and subsequently
to your student account.
- Paper check made payable to you and your
school and sent directly to the school for
endorsement.
| For more information,
contact us at: |
Academic Finance
Corporation
One West Boylston Street, Chadwick Court
Worcester, MA 01605
TOLL FREE: 1-877-232-4322 |
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