tudent oans Federal Stafford, PLUS and Grad Plus For Loan Period July 1, 2008-June 30, 2009

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1 Your guide to tudent oans Federal Stafford, PLUS and Grad Plus For Loan Period July 1, 2008-June 30, 2009 Lender Code:

2 orrower enefits * 0% Origination Fee for Stafford Loans Allegiance Credit Union borrowers will have the 1% Origination Fee paid for them on Stafford loans. 0% Federal Default Fee Allegiance Credit Union borrowers will have the 1% Federal Default Fee paid for them. This is a benefit that other student loan lenders may not offer to their borrowers..25% EZ Pay Discount Allegiance Credit Union borrowers will receive a.25% reduction to their interest rate by signing up for auto debit a savings available from day one of repayment. *Borrower benefits are subject to change. Details at Allegiance Credit Union participates in the Federal Family Education Loan Program (FFELP) offering Federal Stafford loans, Parent Loans for Undergraduate Students (PLUS) and Graduate PLUS loans. Stafford Loans Federal Stafford loans are available to undergraduate, graduate and professional students. Qualifying for a Stafford loan is not dependent on credit history or credit worthiness, but a borrower must be enrolled in school at least on a half-time basis and must meet certain other federal financial aid eligibility criteria. Completion of the Free Application for Federal Student Aid (FAFSA) is required to determine eligibility. There are two types of Stafford loans Subsidized and Unsubsidized. Subsidized Stafford loans are need based with loan amounts determined by the school s financial aid office using federal financial aid guidelines. On Subsidized Stafford loans, the government pays the interest until repayment begins. Some students are eligible to receive an Unsubsidized Stafford loan to help pay their cost of attendance regardless of need. On Unsubsidized Stafford loans, the borrower is responsible for all interest that accrues on the loan. Most Unsubsidized Stafford borrowers allow their in-school interest to be added to their loan balance (capitalized) rather than paying it while in school. The school financial aid office determines whether the student s loan will be Subsidized, Unsubsidized or a combination. The Stafford loan interest rate is fixed at 6% for undergraduate subsidized loans. The Stafford loan interest rate is fixed at 6.8% for graduate subsidized and unsubsidized as well as undergraduate unsubsidized loans. Repayment on Stafford loans is not required until six months after the student is no longer enrolled on at least a half-time basis. Generally, a Stafford loan must be repaid within a 10-year period to the loan holder.

3 Fees The federal government requires the borrower to pay an Origination Fee up to 1% of the amount of the loan. This fee is paid by Allegiance Credit Union on your behalf (some exceptions may apply). The guarantor of your loan may collect an additional 1% Federal Default Fee. If you get your loan through Allegiance Credit Union, the Oklahoma Student Loan Authority (OSLA) will pay the Federal Default Fee for you if it is not paid by the loan guarantor. Loan Limits For , Stafford loans are subject to the following annual loan limits: Dependent Students Except Students Whose Parents Cannot Borrow PLUS Loan First-Year Student $5,500 Second-Year Student $6,500 Third Year and Beyond Student $7,500 Independent Students & Dependent Students Whose Parents Cannot Borrow A PLUS Loan First-Year Student $9,500 Second-Year Student $10,500 Third Year and Beyond Student $12,500 Graduate & Professional Students $20,500 Maximum Total Debt Undergraduate Dependent Students $31,000 Undergraduate Independent Students $57,500 Graduate & Professional Students $138,500 PLUS The Parent Loan for Undergraduate Students (PLUS) program allows parents to borrow the entire cost of attendance (less other aid) for each dependent child when enrolled at least half-time. For example, if the cost of attendance is $12,500 and the student receives $4,000 in other aid, the PLUS Loan amount may be up to $8,500. The Graduate PLUS Loan (Grad PLUS) program allows graduate and professional students to borrow under the PLUS loan program up to their total cost of attendance minus financial assistance received through other financial aid programs including the Subsidized and Unsubsidized Stafford loan programs. Applicants for the Grad PLUS loan must complete the FAFSA and must first exhaust any funds available under the Stafford loan program before applying for the Grad PLUS loan. The interest rate for PLUS loans (Parent and Graduate) is fixed at 8.5%. A credit check is performed on all PLUS loan applications. If the parent borrower has an adverse credit history, they may be denied a loan. If this occurs, the student may be eligible to borrow additional amounts in their own name under the Unsubsidized Stafford loan program. A Grad PLUS applicant may also be denied a loan due to an adverse credit history. The federal government requires the PLUS borrower to pay an Origination Fee of 3%. The guarantor may collect an additional 1% Federal Default Fee. If you get your loan through Allegiance Credit Union, OSLA will pay the Federal Default Fee for you if it is not paid by your loan guarantor. Repayment on Grad PLUS loans begins within 60 days after the loan is fully disbursed. Grad PLUS borrowers receive an In-School Deferment and defer payments until a drop in enrollment below half time. The Parent PLUS borrower may choose to begin repayment 60 days after funds have been disbursed. Or, they may choose to enter repayment six months and one day after the date the dependent student for whom the loan was borrowed drops below half-time enrollment. 5

4 hould You orrow? The reality is that with the cost of college tuition rising, it is likely that you will need to borrow at least some money to cover your college costs. Research has shown that individuals with a bachelor s degree earn 75 percent more than those with only a high school education. Those with graduate or professional degrees may earn even more. Keep in mind that what you borrow must be paid back. Defaulting on a student loan will affect your credit history and your ability to make major credit purchases not to mention the burden of additional collection costs for re-establishing payment on a defaulted loan. Generally, Stafford and PLUS loans must be paid off within 10 years. Make an estimate of what resources you will have available to repay your loans and do not borrow more than you can afford to pay back. Stafford Application Process Step 1 Complete the Free Application for Federal Student Aid (FAFSA). This form is available online at www. FAFSA.ed.gov. You must also apply for a FAFSA PIN number. This PIN number is required to complete the online application. Go to to apply. If you self-select your PIN, you may immediately begin completing your FAFSA. Step 2 You and the school(s) indicated on your FAFSA will receive a Student Aid Report (SAR). Check your SAR for accuracy and make any changes or corrections immediately. Step 3 You will receive a Financial Aid Award Letter from your school notifying you of the financial aid that has been awarded to you including eligible loan amounts. Respond immediately to this letter as instructed by the school. If you choose to borrow through the Stafford or PLUS loan programs, you will be required to choose a lender. Your lender code will be for Allegiance Credit Union. Step 4 Sign your Stafford loan Master Promissory Note (MPN) with an electronic signature at www. allegiancecu.org or according to instructions issued to you by your school. First-time Stafford loan borrowers are also required to participate in Student Loan Entrance Counseling. 6

5 PLUS Application Applying for a PLUS loan is basically the same as for a Stafford loan. A credit check will be performed. However, financial need is not evaluated in determining a parent s eligibility for this loan. Parents should complete a PLUS Master Promissory Note which may be done electronically at according to instructions issued by the school. Applicants for the Grad PLUS loan must first apply for a Stafford loan before applying for the Grad PLUS loan. Additional Tips Financial aid is any financial resource that a student may receive to assist in meeting the cost of attending college. In addition to student loans, these resources include need-based aid (federal and state grants and student employment) awarded based upon the student s and the family s ability to meet college costs. Scholarships are usually based on academic merit or talent. Students must apply for financial aid annually and demonstrate financial need as determined by regulations established by the U.S. Federal Government. To determine your eligibility for federal aid and many of the state and institutional need-based aid programs requires completion of the FAFSA. This should be completed as soon after January 1 as possible for the following school year. The FAFSA is available from high school counselors, college financial aid offices or online at Grants and scholarships are limited so find out each school s financial aid application deadline and do not miss it. Defining the terms Accrued Interest Interest that accumulates on unpaid Unsubsidized Stafford loan balances while the borrower is in school. Borrower Fees Fees which the borrower has to pay to get a student loan. The federal government stipulates the amount of the fees to be withheld from loan disbursements. Capitalized Interest Addition of unpaid interest to a loan balance which increases the total debt. Most Unsubsidized Stafford borrowers allow their in-school interest to be added to their loan balance rather than paying it while in school. Cost of Attendance An estimate of the total amount it will cost each year to go to school. This cost varies by school and includes tuition and fees, room and board, books, supplies, transportation, etc. Default Failure to repay a loan according to the terms of a promissory note or from failure to submit requests for deferment or cancellation on time. If you default, the lender, servicer, guarantor or federal government will take legal action to recover the loan Deferment A period when a borrower who meets certain criteria may suspend loan payments. On Subsidized Stafford loans, the federal government pays the loan interest during deferments. Unsubsidized Stafford borrowers are responsible for the interest during deferment. Deferment is a tool available to borrowers to help avoid default.

6 Disbursement The release of student loan funds to borrowers by the school. The Financial Aid Office determines the disbursement date. A student loan may have multiple disbursement dates. Entrance/Exit Interview Important information sessions the student borrower must attend before receiving most federal student loans and again before leaving school. Expected Family Contribution (EFC) The amount of money a student and/or family is expected to contribute toward a student s cost of attendance. The EFC can be financed with Unsubsidized Stafford and PLUS Loans. Forbearance A temporary suspension of student loan payments available to borrowers when they are having problems making their regularly scheduled student loan payments. Forbearance is a tool available to borrowers to help avoid default. Grace Period The six month period after the Stafford loan borrower is no longer enrolled on at least a half-time basis when loan payments are not required. Repayment of Stafford Loans begins after the grace period has expired. There is not a grace period for Grad PLUS loans; the first payment is due within 60 days when the loan is fully disbursed. Parent PLUS loans holders may choose to begin repayment 60 days after the loan is fully disbursed or six months after the dependent student drops below half-time enrollment, as determined the school. Guarantor An agency that insures student loans against default and helps the federal government administer the student loan program. Loan Holder The owner of the loan. The holder may not be the lender which originally made the loan. Most lenders will sell their loans to secondary markets such as OSLA. Notice of Loan Guarantee and Disclosure Notification from the lender acknowledging loan approval and listing the dates for loan disbursements, the loan interest rate, the amount of borrower fees and the net amount of the loan disbursement. Master Promissory Note (MPN) The binding legal document signed for a student loan. It lists the conditions under which monies are borrowed and the terms under which the loan is paid back. It also includes information about the loan interest rate as well as deferment and cancellation provisions Oklahoma Student Loan Authority, OSLA Student Loan Servicing, OSLA A secondary market for your student loan through Allegiance Credit Union. Secondary Market An organization that buys student loans from lenders. Most lenders sell their student loans. Allegiance Credit Union may sell our loans. For more information about student loans, go to

7 Lender code: Equal Opportunity Lender Mailing address for all locations: Allegiance Credit Union P.O. Box Oklahoma City, OK Telephone number for all locations: or Main Office 4235 N. Meridian Post Office Downtown Branch 215 Dean A. McGee Avenue, Suite 343 Corporate Tower Downtown Branch 101 N. Robinson, Suite 210 South Oklahoma City Branch S. Western Edmond Branch 1925 S. Kelly Avenue Student loans through Allegiance Credit Union may be sold. 12