Federal stafford loan
Federal Stafford loans are student loans that must be repaid. They are available to both AUB undergraduate and graduate students except for medical students (there are special laws that govern federal financial aid for students enrolled in medical medical schools located outside the U.S.).
AUB participates in the Stafford loan under the Federal Family Education Loan (FFEL) program, where a private lender provides the funds which are guaranteed by the government (as compared to the Direct Stafford loan where the funds come directly from the federal government).
First-year undergraduates (Freshmen) are eligible for loans up to $3,500, of which a processing fee is subtracted from the proceeds by the lender. Amounts increase for subsequent years of study, with the highest amounts going for graduate students. The interest rate is usually variable, but it never exceeds 8.25 percent. The table below shows the maximum amounts that students may receive for each year of study.
|
|
Undergraduate Student (Dependent) |
Graduate Student |
|
Subsidized Amount |
Unsubsidized Amount* |
|
1st year |
$3,500 |
Each year a student can borrow an additional unsubsidized amount of $2,000 |
Up to $20,500 each academic year (only $8,500 of this amount may be in subsidized loans). |
|
2nd year |
$4,500 |
|
3rd & 4th years |
$5,500 |
|
Maximum Total Debt when Student Graduates |
$23,000 |
|
$138,500 as a graduate or professional student (only $65,500 of this amount may be in subsidized loans).
The graduate debt limit includes the loans received for undergraduate study. |
* This is optional, the student has to ask for the unsubsidized amount and should be aware that the interest will be charged on the student as soon as the amount is disbursed.
What is a subsidized/unsubsidized loan?
For a subsidized Stafford loan, the U.S. Department of Education pays the interest on your loan while you are still at the University, during grace periods, and during any deferment periods while the interest is charged on you during the repayment period. For unsubsidized loans, you are responsible for paying all of the interest during the life of the unsubsidized loan, however, you may choose not to pay the interest while at the university and the accumulated amount will then be added to the principal loan amount when the repayment period starts.
For more specific information about federal student aid, you can explore the U.S. Department of Education's web site at www.studentaid.ed.gov
Maximum annual loan limits chart (aggregate loan limits)—Subsidized and unsubsidized FFEL Stafford loans
| Year |
Dependent Undergraduate Student (except students whose parents are unable to obtain PLUS Loans) |
Independent Undergraduate Student (and dependent students whose parents are unable to obtain PLUS Loans) |
Graduate and Professional Degree Student |
| First Year |
$3,500 plus $2,000 in unsubsidized loans |
$9,500—No more than $3,500 of this amount may be in subsidized loans. |
$20,500—No more than $8,500 of this amount may be in subsidized loans. |
| Second Year |
$4,500 plus $2,000 in unsubsidized loans |
$10,500—No more than $4,500 of this amount may be in subsidized loans. |
| Third and Beyond (each year) |
$5,500 plus $2,000 in unsubsidized loans |
$12,500—No more than $5,500 of this amount may be in subsidized loans. |
| Maximum Total Debt from Stafford Loans When You Graduate (aggregate loan limits) |
$31,000 (maximum $23,000 subsidized) |
$57,500—No more than $23,000 of this amount may be in subsidized loans. |
$138,500—No more than $65,500 of this amount may be in subsidized loans. The graduate debt limit includes Stafford Loans received for undergraduate study. |
NOTE: The amounts shown in the chart above are the maximum amounts that you may borrow for an academic year.* You might receive less than the maximum if you receive other financial aid that’s used to cover a portion of your cost of attendance.* The maximum amount you may borrow will also be less in certain situations, such as if you are an undergraduate student enrolled in a program of study that is shorter than an academic year.* Graduate and professional students enrolled in certain health profession programs may receive additional unsubsidized Stafford Loan amounts beyond those shown above.
Your school can refuse to certify your loan or can certify a loan for an amount less than you would otherwise be eligible for if the school documents the reason for its action and explains the reason to you in writing. The school’s decision is final and cannot be appealed to the U.S. Department of Education.
What’s the interest rate on these loans?
For loans first disbursed on or after July 1, 2008, the interest is 6.0 percent for subsidized* Stafford loans for undergraduate students and 6.8 percent for unsubsidized* Stafford loans for undergraduate and graduate students.
FFEL PLUS Loans first disbursed on or after July 1, 2006 have a fixed interest rate of 8.5 percent.
Over a four-year period beginning July 1, 2008, the interest rate on subsidized Stafford loans made to undergraduate students, with a first disbursement date on or after July 1, 2008, will be reduced as shown in the following chart:
Interest Rate Reductions for Subsidized Stafford loans
| First disbursement of a loan: |
Interest rate on the
unpaid balance |
| Made on or after |
And made before |
| July 1, 2008 |
July 1, 2009 |
6.0 percent |
| July 1, 2009 |
July 1, 2010 |
5.6 percent |
| July 1, 2010 |
July 1, 2011 |
4.5 percent |
| July 1, 2011 |
July 1, 2012 |
3.4 percent |
This change does not affect any prior loans made to these or any other borrowers, the terms and interest rates of those prior loans remain unchanged. These reduced interest rates apply only to subsidized loans made to undergraduate students; any unsubsidized Stafford Loan for the same undergraduate borrower would continue to be made at 6.8 percent. Graduate students have a fixed interest rate of 6.8 percent.
Student Loan Comparison Chart
| Loan Program
| Eligibility
| Award Amounts
| Interest Rates
| Lender/Length of Repayment
|
| FFEL Stafford Loans (subsidized and unsubsidized) |
Undergraduate and graduate students; must be enrolled at least half-time |
Depends on grade level in school and dependency status (see "Maximum Annual Loan Limits Chart—Subsidized and Unsubsidized Direct and FFEL Stafford Loans" chart)
Financial need is required for subsidized loans
Financial need not necessary for unsubsidized loans |
Fixed rate of 6.0 percent for subsidized loans and 6.8 percent for unsubsidized loans made to undergraduate students
Graduate students have a 6.8 percent fixed interest rate
The federal government pays interest on subsidized loans during school and certain other periods
The borrower pays all interest on unsubsidized loans |
Lender is a bank, credit union or other participating private lender
Repay the loan holder or its agent
Between 10 and 25 years to repay, depending on amount owed and type of repayment plan selected |
| FFEL PLUS Loans |
Parents of dependent undergraduate students enrolled at least half-time (see dependency status)
Graduate or professional degree students enrolled at least half-time
Borrower must not have negative credit history |
Student’s cost of attendance
- Other aid student receives
_________________________
= Maximum loan amount |
Fixed rate at 8.5 percent for loans first disbursed on or after July 1, 2006; borrower pays all interest |
Same as for FFEL Stafford Loans above |