<<< DIRECT AND FEDERAL STAFFORD LOANS

FFEL Stafford Loans to Students

The processes of applying for a loan as well as the methods of repayment differ somewhat for Direct Stafford Loans and FFEL Stafford Loans.

How do you apply for a FFEL Stafford Loan?

First, you must complete the Free Application for Federal Student Aid (FAFSA) or Renewal FAFSA. After your FAFSA is processed, your school will review the results and will inform you about your loan eligibility.

Next, you must complete the FFEL Stafford Loan Application and Promissory Note, available from your school, a lender, or your state guaranty agency. Remember, the promissory note is a legal document requiring you to repay the loan. Read it carefully before you sign.

Finally, you must take your completed FFEL Stafford Loan Application and Promissory Note to the school you plan to attend. After the school completes its portion of the application, you (or the school on your behalf) must send the application to a lender for evaluation.

How can you find a lender?

The right and responsibility to select a lender is up to you, the borrower. You may contact your school or the guaranty agency that serves your state. For your agency's address and telephone number, and for more information about borrowing, call the Federal Student Aid Information Center's toll-free number:

1-800-4-FED-AID (1-800-433-3243)

A directory of guaranty agencies is available at:

wdcrobcolp01.ed.gov/Programs/EROD/org_list.cfm?category_ID=SGA

How do you pay back your FFEL Stafford Loan?

There are three repayment plans that are available to borrowers of FFEL Stafford Loans if your first FFEL Program Loan was disbursed on or after July 1, 1993. All the repayment plans require you to repay the loan within 10 years. The repayment plans will be explained in more detail during entrance and exit counseling sessions at your school. The repayment chart shows examples of estimated monthly payments for various loan amounts under each of the plans. Aspects of these repayment plans will vary by lender. Check with the lender for complete information.

In some cases it may be beneficial for you to consolidate one or more of your FFEL Stafford Loans into a consolidation loan.

You may choose one of the following repayment plans:

• A Standard Repayment Plan requires you to pay a fixed amount each month – at least $50 or the interest that has accrued.
  
  
• Under a Graduated Repayment Plan, your payments will be lower at first and then increase over time. No scheduled payment may be more than three times greater than any other of your scheduled payments.
  
  
• An Income-Sensitive Repayment Plan bases your monthly payment on your yearly income and your loan amount. As your income rises or falls, so do your payments. No single required payment may be more than three times greater than any other of your required payments. Each of your payments must at least equal to the interest accrued on the loan between scheduled payments.

If you are a new FFEL borrower after October 7, 1998, with FFEL loans totaling more than $30,000, you can choose an Extended Repayment Plan. Under an Extended Repayment Plan, your payments will be fixed or graduated (lower at first and then increased over time) over a period of up to 25 years.

You are allowed to pick a different repayment plan once a year. Your repayment plan will not change unless you request a change. If you do not choose a repayment plan when you first begin repayment, you will repay under a Standard Repayment Plan.

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