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You can borrow up to the maximum Stafford amount available for your grade level. The federal government pays interest on subsidized Stafford loans while you are enrolled half-time in school and for a six-month grace period afterward. If you aren't fully eligible for need-based subsidized funding, you may get an unsubsidized Stafford loan for any remaining Stafford eligibility. However, you will be responsible for all interest that accrues on your unsubsidized loan from the date of disbursement. The interest may be capitalized (added to your principal loan amount) to be paid once you enter repayment.
Various lenders are listed in a comparison chart showing their individual benefits and incentives for Stafford and PLUS loans. General Stafford loan information is presented below.
| Loan Program | Available For | Annual Limits | Interest Rates & Fees | Repayment Options | Repayment Term |
| Subsidized Federal Stafford Loan | Undergraduate, graduate, and professional students with proven financial need enrolled at least half time. |
Year 1:
$2625 |
Variable rate not to exceed 8.25%, adjusted annually. During in-school and grace periods the government pays the interest. The federal government charges a 3% origination fee. | Begins 6 months after graduation or enrollment drops below half time. | Maximum of 10 years exclusive of periods of deferment and forbearance. |
| Unsubsidized Federal Stafford Loan | Students enrolled at least half time who don't qualify for subsidized Stafford Loan awards, and independent students eligible for additional funds. | Dependent
Students Same as subsidized Stafford Loan limits minus any amount received under that program Independent Students Same as subsidized Stafford Loan limits minus any amount received under that program plus Years 1&2: $4000 Years3-5: $5000 Grad/Prof: $10,000 |
Variable rate not to exceed 8.25%, adjusted annually. Borrower responsible for interest from date of last disbursement. The federal government charges a 3% origination fee. | Begins 6 months after graduation or enrollment drops below half time. | Maximum of 10 years exclusive of periods of deferment and forbearance. |
TERM The length of time you have to repay your loan (five years, ten years, etc.)
INTEREST What you are charged for borrowing. It is figured as a percentage of the balance for the term of your loan. The interest rate on federally backed student loans is variable and adjusted annually.
ACCRUED INTEREST If you postpone repaying the interest, it will accumulate -- accrue -- alongside the balance.
CAPITALIZED INTEREST Accrued interest that is added to your balance -- so you repay interest on the interest.
PRINCIPAL The amount you borrow. The principal includes the actual money you (or your school) received, plus the origination and guarantee fees.
ORIGINATION FEE A charge by the U.S. Department of Education to help offset the cost of the federal student loan program.
GUARANTEE FEE A charge for "insurance" that goes to an independent agency or department of state government which will pay off your loan in case of default, death or permanent disability.
DEFAULT Failure to repay your loan according to the terms agreed upon when you signed the promissory note.
PROMISSORY NOTE The legal document that obligates you to repay a loan. It is usually part of the loan application.
NOTICE OF LOAN GUARANTEE AND DISCLOSURE STATEMENT This document specifies the terms and conditions of your loan, and the disbursements of money to you. It includes the origination and guarantee fees deducted from the gross amount of the loan.
GRACE PERIOD The period between the time you cease half-time enrollment and the time you begin to repay your loan. The grace period lasts six months for Stafford loans.
Many lenders offer special programs that can actually reduce the amount of your loan over time. These programs offer qualified borrowers lower interest rates or rebates on fees when the required number of scheduled payments are made on time or if you allow monthly payments to be electronically deducted from a checking or savings account. Depending on the amount you borrow, these savings can add up to several thousand dollars.
Remember that borrowing is simply renting somebody else's money You must repay your student loan to your lender, according to the repayment schedule, unless you have obtained a deferment, a forbearance or forgiveness. If you fail to make your payments required by the repayment schedule your loan will go into default. Default is a very serious matter and can seriously affect your ability to borrow money in the future. ff you need help or information, ask your lender.
Deferments
You may temporarily postpone your
student loan payment if your situation falls into government established
categories. Some of the most common deferments include:
* Half-time enrollment at an eligible school or approved graduate fellowship
program
* A period of unemployment
* Economic hardship--earning below minimum wage or the poverty level.
There are other situations that may qualify for a deferment. Ask your lender for
details.
Forbearance
Your student loan payment may be postponed or reduced if you are willing but temporarily unable to meet your repayment obligations. You can also request forbearance if your debt burden (in federal student loans only) is equal to or greater than 20% of your gross income.
Repayment
Standard repayment
requires you to pay a set amount monthly (with a minimum of $50) for up to 10
years. However, this set amount may be changed depending on your interest rate,
number of payments and total principal balance.
Income sensitive repayment is adjusted yearly -- for up to 10 years --
according to your annual income and the amount of your loan.
Graduated repayment begins with smaller monthly payments, and then
enlarges the payments over 10 years. The amount of your loan determines how
often and by how much your monthly payments increase.
Use this chart to find out approximately how much your loan repayments will be each month.
| Interest Rate | Loan Amount | Repayment Factor | Monthly Payment | ||
| 7.00% | x | .011611 | = | ||
| 7.25% | x | .011740 | = | ||
| 7.50% | x | .011870 | = | ||
| 7.75% | x | .012001 | = | ||
| 8.00% | x | .012133 | = | ||
| Example 8.25% |
$12,000 | x | .012265 | = | $147.18 |
|
Assumes a
10-year (120 month) repayment period. |
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