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FAQs |
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What is a Federal Stafford Loan?
Federal Stafford Loans are low-interest loans made to undergraduate or graduate students attending school on at least a half-time basis. These loans are made with private capital and guaranteed by the Federal government.
What is the difference between a Subsidized Stafford and an Unsubsidized Stafford Loan?
The Subsidized Federal Stafford Loan is awarded on the basis of the student’s financial need. The borrower is not required to pay interest on this loan until he ceases to be enrolled at least half-time at an eligible institution and then uses his Grace Period. The interest is paid by the Federal government during the In-school and Grace Periods.
The Unsubsidized Federal Stafford Loan may be awarded to any student, regardless of their family income. The student is responsible for paying the interest that accrues during the In-school and Grace Periods, however, the student has the option to make quarterly interest payments or to request that the interest be capitalized (added to the principal balance). Interest will be capitalized one time at the beginning of the Repayment Period.
What are the Origination and Insurance Fees?
The Origination Fee is a 3% fee charged by the U.S. Department of Education; however ASLA began paying 1% of this fee for Stafford loan borrowers for loans disbursed after 07/01/99. After 7/1/2006 the Origination Fee will be 2%. ASLA will continue to pay 1% of the fee.
The Default Fee is a 1% fee charged by the Student Loan Guarantee Foundation of Arkansas
What is the interest rate for Federal Stafford Loans?
The interest rates are variable rates, adjusted each year on July 1. These rates are based on the 91-day Treasury-bill and have a maximum of 8.25%. Interest accrues at a slightly lower rate for Unsubsidized Stafford Loan borrowers while they are in their In-school or Grace Period.
After 7/1/2006 all Stafford student loans will be a fixed rate of 6.8%.
How much can a student borrow?
Maximum amounts are set by Federal regulation for Dependent and Independent students. The school financial aid office will determine the specific loan amount based on the individual’s financial need and the maximum amount allowed.
How does a student receive the loan funds?
Disbursements are sent to the financial aid office by EFT or check on the date that the school requests the funds. Funds are normally disbursed at the beginning of each semester but can be disbursed anytime before the end of the semester.
What are the repayment terms?
Repayment begins six months after the student ceases to be enrolled on at least a half-time basis. The borrower has 10 years to repay the loan and monthly payments must be at least $50. Borrowers with a loan balance of $30,000 or more are eligible for an extended repayment term of 25-years.
What is a Federal PLUS Loan?
The Federal Parent Loan for Undergraduate Students (PLUS) is a low interest loan made to parents of dependent undergraduate students attending school on at least a half-time basis. Eligibility is not based on financial need. These loans are made with private capital and guaranteed by the Federal government.
What are the Origination and Insurance Fees?
The Origination Fee is a 3% fee charged by the U.S. Department of Education.The Insurance Fee is a 1% fee charged by the Student Loan Guarantee Foundation of Arkansas.
What is the interest rate for Federal PLUS Loans?
The interest rates are variable rates, adjusted each year on July 1. These rates are based on the 91-day Treasury-bill and have a maximum of 9%. Interest begins accruing immediately upon disbursement of the proceeds.
Parent PLUS loans are a fixed rate of 8.5%.
How much can a parent borrow?
The parent may borrow the student’s total cost of attendance minus other financial aid. There is not a maximum dollar amount.
How does the parent receive the loan funds?
Disbursements are sent to the financial aid office by EFT or check on the date that the school requests the funds. Funds are normally disbursed at the beginning of each semester but can be disbursed anytime before the end of the semester. Funds are made co-payable to the parent and school.
What are the repayment terms?
Repayment begins with the first payment due within 60 days of the final disbursement. The parent has 10 years to repay the loan and monthly payments must be at least $50. |
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