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The Federal Unsubsidized Stafford loan is a
federally sponsored student loan available at
schools participating in the FFELP. A lender
like Brazos Student Lending, bank, 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. Many students combine subsidized loans
with unsubsidized loans to borrow the maximum
amount permitted each year. 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.
Federal Unsubsidized Stafford Loan is awarded
as a "final option" after consideration
of financial need. This is not a need-based
loan. Anyone, regardless of having a financial
need or not, may be eligible for a Federal Unsubsidized
Stafford Loan. The amount of 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.
Federal Unsubsidized Stafford loans have annual
maximum limits that vary depending on your year
in school and whether you are classified as
a dependent or independent student by definition
of the program. They also have cumulative maximum
limits that cap the total amount you can borrow
overall.
*For Independent Undergraduate
Students AND Dependent Students whose parents
cannot borrow a PLUS loan, there are additional
unsubsidized loan funds available (see examples
below):
Example #1: A dependent freshman whose parent
has access to PLUS borrowing (whether or not
the parent is actually willing to borrow)
could previously have borrowed $3,500 in a
subsidized loan. If the student did not have
need for the full $3,500, the student could
have borrowed a subsidized loan for the amount
of demonstrated need and the difference between
that amount and the $3,500 base limit in an
unsubsidized loan. Under the new law, that
student will be able to borrow a total of
$5,500, no more than $3,500 of which may be
subsidized.
Example #2: A dependent freshman whose parents
are unable to borrow PLUS could previously
have borrowed a total of $7,500, no more than
$3,500 of which could be subsidized. Under
the new limits, that student can borrow a
total of $9,500, no more than $3,500 of which
can be subsidized (that is, the base limit
of $3,500 plus the new additional unsubsidized
limit of $6,000). The amount a student can
actually borrow may not exceed cost of attendance
minus other assistance (or, for subsidized
loans, other assistance plus the EFC). The
same limits apply to a freshman who is an
independent student.
TERMS:
| 1. |
The interest rate for the
UNSUBSIDIZED Stafford Loan is a fixed rate
of 6.8%. |
| 2. |
The interest rate on a Federal
Stafford Unsubsidized loan cannot exceed
8.25%. |
| 3. |
You may be required
to pay an origination fee of up to 1.5%
(1.0% for loans disbursed on or after July
1, 2008) of the principal balance. This
will be deducted from the loan disbursement
you receive which is then 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. |
| 4. |
Interest is accruing (or
accumulating) while you are in school. You
will be given a choice of paying your interest
while in school or deferring payment until
you leave school. If you choose to make
interest payments, you may reduce your payments
and the overall cost of your loan. |
| 5. |
If you do not make interest
payments, the interest on the loan accrues
and will be added to your principal balance
(called "capitalization") at the
time you enter repayment. |
| 6. |
A TIP. When you fill out
your Master Promissory Note, you can choose
to defer interest payments, therefore you
have a choice to make interest-only payments,
or not make payments of any kind during
the deferment period. |
| 7. |
Repayment begins six months
after you graduate, withdraw, or drop below
half-time attendance and you may have up
to ten years to repay. The minimum payment
amount is $50 per loan. |
| 8. |
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
Unsubsidized 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 Unsubsidized
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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