Stafford Loans Subsidized. Today s Agenda. FFELP Basics. FFELP Players. Today s Agenda. Stafford Loans 3/23/2009. Mandy Spohholtz USA Funds Services

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1 FFELP Basics Mandy Spohholtz USA Funds Services and Staf f ord Loans. Loans.. FFELP Players Federal gov ernment. Schools. Guarantors. Lenders. Serv icers. Secondary markets. Borrowers. and Staf f ord Loans. Loans.. 1 Loans Borrower Eligibility Requirements U.S. citizen or eligible noncitizen. High school diploma, equivalent or ability-to-benefit. Valid Social Security Number. Enrolled at least half-time. Making satisfactory academic progress. Not in default or owe an overpayment. Registered with Selective Service. Not incarcerated. Not pled guilty or not contested, or convicted of a crime of Title IV fraud. Not convicted of certain drug offenses. Cost of Attendance - Expected Family Contribution - Estimated Financial Aid = Eligibility Loans Need-based. Gov ernment pay s interest: In school. Grace period. Repay ment begins: After six-month grace period. Immediately, if grace period expired previously

2 Loans Cost of Attendance - Estimated Financial Assistance - Eligibility = Eligibility Non-need-based. Borrower responsible f or interest: From disbursement. Can pay or postpone. Minimum award amount is at lender s discretion. Repay ment begins: After six-month grace period. Immediately, if grace period expired previously. Preparatory Coursework for Enrollment in Undergraduate Programs Base loan eligibility Additional loan $2,62 $2,62 N/A $6,000 Annual $2,62 $8,62 3 First-Year Undergraduate Base loan eligibility Additional loan $3,00 $3,00 $2,000 $6,000 Annual $,00 $9,00 Second-Year Undergraduate Base loan eligibility Additional loan $,00 $,00 $2,000 $6,000 Annual $6,00 $10,00 Third-Year and Subsequent-Years Undergraduate Base loan eligibility Additional loan $,00 $,00 $2,000 $6,000 Annual $7,00 $12,00 Preparatory Coursework for Enrollment in Graduate/Professional Programs Base loan eligibility Additional loan $,00 $,00 N/A $7,000 Annual $,00 $12,00 2

3 Teacher Certification Base loan eligibility Additional loan $,00 $,00 N/A $7,000 Annual $,00 $12,00 Graduate and Professional Students Base loan eligibility Additional loan N/A $8,00 N/A $12,000 Annual N/A $20,00 Dependent Undergraduate Student Independent Undergraduate Student or Whose Parent Is Ineligible for Graduate/Professional Student* Aggregate *Higher limits may apply to certain health professions students. $31,000 No more than $23,000 of which may be subsidized. $7,00 No more than $23,000 of which may be subsidized. $138,00 No more than $6,00 of which may be subsidized. Example Eligibility Calculations Kev in Dependent student. Fourth-year student for Enrolled full time. EFC = $,000. Karen Independent student. First-year student for Enrolled full time. EFC = $7,000. Example Answer Eligibility Calculations Loan Eligibility Kevin: Fourth-Year, Dependent Undergraduate COA $1,000 EFC - $,000 Need $10,000 Merit Aid -$2,000 State Aid -$,000 Scholarship -$1,000 Unmet Need $3,000 COA $1,000 Merit Aid -$2,000 State Aid -$,000 Scholarship -$1,000 Loan -$3,000 Unmet COA $,000 Example Answer Eligibility Calculations Loan Eligibility Karen: First-Year, Independent Undergraduate COA $1,000 EFC - $7,000 Need $8,000 Scholarship -$2,000 Unmet Need $6,000 Loan $3,00 COA $1,000 Scholarship -$2,000 Loan -$3,00 Unmet Need $9,00 Loan $6,000 Loan $3,000 Loan $,00 6 3

4 Loans Interest Rates - Fixed Loans Interest Rates - Variable First Disbursement Interest on Fixed-Rate Loans Undergraduate Borrowers Graduate Borrowers 7/1/2006-6/30/ % 6.8% 6.8% 6.8% 7/1/2008 6/30/ % 6.8% 6.8% 6.8% 7/1/2009 6/30/2010.6% 6.8% 6.8% 6.8% 7/1/2010 6/30/2011.% 6.8% 6.8% 6.8% 7/1/2011 6/30/ % 6.8% 6.8% 6.8% First Disbursement Interest on Variable-Rate Loans July 1, 2008 to June 30, 2009 In-School, Grace and Deferment Periods Repayment 7/1/1998 6/30/ % 3.61%.21%.21% 7/1/199 6/30/1998.1%.1%.01%.01% 10/1/1992 6/30/199.01%.01%.01%.01% 7 7 Case Study Interest Rate Reduction Dependent student. In senior y ear f or Enrolled Sept. 1 - May 1 ev ery year. Borrowed maximum loans each y ear unsubsidized Staf f ord). Academic Year Case Study Answer Interest Rate Reduction Loan Amounts $1,62 $1, $1,000 $2, $1,800 $3, $2,200 $,300 Interest Rates (prior to repayment) Variable or Fixed? Interest Rates (during repayment) Sub Unsub Sub Unsub Sub Unsub Sub Unsub 91-day 91-day T-Bill + 1.7* T-Bill + 1.7* Var. Var. 91-day 91-day T-Bill + 2.3* T-Bill + 2.3* 6.8% 6.8% Fixed Fixed 6.8% 6.8% 6.8% 6.8% Fixed Fixed 6.8% 6.8% 6.0% 6.8% Fixed Fixed 6.0% 6.8% * Interest rate varies each year on July 1, not to exceed 8.2% 8 Loans Fees First Disbursement Made on or After July 1 Origination Fee Federal Default Fee % 1.0% % 1.0% % 1.0% % 1.0% and Staf f ord Loans. Loans.. 9

5 Loans Eligible Borrowers Loans Parents of Dependent Students Natural parent. Adoptiv e parent. Stepparent, if considered in EFC. Graduate/Professional Students File FAFSA. Determine loan eligibility. Prov ide comparison of loan terms. Borrower Eligibility Requirements U.S. citizen or eligible noncitizen. Valid Social Security Number. Not in default or owe an overpayment. Not pled guilty or not contested, or convicted of a crime of Title IV fraud. No adverse credit or apply using an endorser, if lender permits endorsers Loans Eligibility Cost of Attendance - Estimated Financial Assistance - Eligibility - Eligibility = Eligibility Non-need-based. No f ederal interest subsidy. Borrower responsible f or interest: From disbursement. Can pay or postpone. Loans Repay ment Repay ment begins within 60 day s of final disbursement, unless borrower requests def erment. No grace period. May delay repayment until six months after qualifying student is no longer enrolled at least half-time. Interest may be paid or capitalized at repayment Loans Loans Interest Rates Disbursed July 1, 2008 to June 30, 2009 Fixed or Variable Rate No annual limits. No aggregate limits. On or After 7/1/06 8.0% Fixed 7/1/98 6/30/06.01% 7/1/9 6/30/98.67% 10/1/92 6/30/9.67% Prior to 9/30/92.82% capped at 9.0% capped at 9.0% capped at 10.0% capped at 12.0% 11 12

6 Loans Fees First Disbursement Made on or After July 1 Origination Fee Federal Default Fee % 1.0% Origination f ee: Collected by lender to pay to ED. Cannot be paid by lender on borrower's behalf. Federal def ault f ee: Guarantor deposits into reserve fund. Lender or guarantor may pay on borrower's behalf from nonfederal sources. and Staf f ord Loans. Loans.. 12 Eligible Loans FFELP and Direct. and loans. loans. Consolidation loans. Federal Perkins loans. Federal Nursing Student Loans. Health Professions Student Loans. Health Education Assistance Loans. Federal Supplemental Loans for Students. Eligibility Determined by status of qualifying loan. Student Borrowers Grace period. Repayment. Deferment. Forbearance. Default.* * At lender s discretion. Parent Borrowers Fully disbursed. Repayment. Deferment. Forbearance. Default.* Eligibility Interest Rate No minimum. No maximum. Lenders may set minimum consolidation amount

7 Fees No application f ees. No origination f ees. No prepay ment penalties. and Staf f ord Loans. Loans.. 1 Repayment Options Standard. Graduated. Income-sensitive. Extended. USA Funds is the nation s leading education-loan guarantor. A nonprofit corporation, USA Funds works to enhance postsecondaryeducation preparedness, access and success by providing and supporting financial and other valued services. 1 7