Graduate Stafford Loan FAQs

What is the Graduate Stafford Loan interest rate?

For the 2007-08 School Year, the interest rate on a new Graduate Stafford loan is fixed at 6.8%. As of July 2006, all new Federal Stafford Loans will have fixed interest rates. Please note, that interest rates on Federal Stafford Subsidized and Unsubsidized Loans change yearly but will never exceed 8.25%.

What can I use a Graduate Stafford Loan for?

Stafford Loans can be used towards the total cost of education - tuition, room and board, books, and other education-related expenses.

Where can I use a Graduate Stafford Loan?

Stafford Loans can be used at any eligible school which accepts them. Take a look at the Student Loan Network School Directory for information about which schools accept which loans.

What are the deadlines for Graduate Stafford Loans?

There is no single set deadline for Graduate Stafford Loan application. You should contact your school's financial aid office for specific deadlines for your institution.

Why was the amount of my student disbursements was less than I was awarded by the school?

Lenders are allowed to retain a percentage of the amount you borrow in "guarantee fees" and/or "origination fees". Guarantee fees are used by the lender in creating a reserve to protect the loan program in instances when borrowers default on their loans. Origination fees are a processing fee retained by lenders.

The Department of Education determines the maximum percentage for guarantee and origination fees for Federal Stafford, PLUS and Direct loans. The maximum origination fee in these programs is 3%, the maximum guarantee fee is 1%. Lenders and guarantee agencies are not required to charge this fee, and some have recently have developed 0% guarantee fee programs.

For private graduate student loan programs, there is generally no maximum fee rate. Fees for private loans can range from 0% to 10% or more depending on the credit worthiness of the borrower and risk associated with the loan.

If we have resources to pay tuition and do not need to access any Stafford loans for that particular semester, can we skip a semester of borrowing the Graduate Stafford loan?

You can't skip a semester, but you can skip a year. If you receive funds and you don't need them, call your lender and arrange for a payment back to the lender.

Are there penalties for early payment, or if the loan is paid in full before scheduled payments begin?

There are never early payment penalties for federal student loans.

I was wondering if I had to apply for a loan every year after I used the money or does it replenish every year?

A very common question. You have to apply every year because each year, the amount of aid you are eligible for is determined by your FAFSA. Federal student loans do not "renew" automatically.

How soon after I sign my MPN will the loan money be dispersed to the school?

Stafford loans are disbursed by the school, so it's up to the individual school to decide when funding is released. Check with the school financial aid offices for disbursement dates. If the bills are already due and the loan isn't available, a private graduate student loan is a good option to bridge the gap.

Can you can direct me to online courses which accept the Graduate Stafford loan?

Online courses offered through an accredited Title IV school may be eligible; check with the school's financial aid office. Search the Online Education Directory of programs and courses for a prpgram that suits your needs.

How is my EFC Calculated?

The federal government proscribes an official federal EFC calculation. This calculation determines family resources available from a family's income (less allowances for taxes and living expenses) and assets (less allowances for retirement). A percentage of these available amounts are earmarked as EFC.

Why do some schools use an EFC that differs from what my Federal EFC (on my SAR) says?

Some schools use an Institutional EFC calculation to determine eligibility for non-Federal sources of financial aid. This calculation usually considers additional family resources, like home equity, that are not part of the Federal EFC calculation. Click here to learn all about the financial aid award process.

Can I get a Stafford Loan if I have bad credit or declared bankruptcy?

Yes, the Stafford Loan is not a credit-based loan. The Stafford Loan is a need-based loan and your eligibility for it is governed by your FAFSA.

How do I manage the difference between the school's cost and the amount of financial aid I was awarded?

There are three main options available to students and families:

• Contributions from Savings: A family might consider using savings or investments to meet educational costs. Families with assets that can be liquidated for educational expenses generally have less reliance on financial aid and pay less in fees and interest expenses.
• Contributions from Income Some families might be able to meet educational expenses by allocating funds from their current budget. This options requires a family to closely analyze their income and expenses and determine an amount that they can pay on an ongoing basis. Adjustments may have to be made to existing household expenses to afford an amount to allocate from Income.
• Contributions from Private Student Loans: Some families must consider private graduate student loans as a means to meet educational costs. While these options typically require the lowest monthly payments, but also require the student and family to pay interest and/or finance charges in addition to the amount borrowed.

What should I do if my family circumstances changed since submitting my financial aid applications?

Financial aid officers have some latitude in determining what data is used to calculate a family's EFC. You should contact your school's financial aid office with any circumstance that affect your family's income or expenses.

If you are able to document such circumstances (for example the unemployment of a family member or medical expenses that the family has incurred), the financial aid officer might be able to incorporate these circumstances and recalculate your EFC.

How should I prioritize the many educational financing options that are available?

Generally speaking, prioritize based on total cost, repayment options, and flexibility. We believe the following order makes the most sense for most the students:

1. Scholarships
2. Stafford Loans
3. PLUS Loans
4. Private Student Loans
5. Consumer Debt

Which student loan programs are best?

While there are no absolute ways to determine which loan programs are best, there are some general guidelines and areas that will help to help you choose the most affordable loan option.

• Interest Subsidy – Subsidized loans (in which the government or other agency) are far better than unsubsidized loans (in which interest must be paid by the borrower from the loan's disbursement).
• Lowest Cost – The loan's interest rates and fee structure determine the amount of a loan's finance charges. Some loans (like mortgages) allow you to pay up-front fees in exchange for a lower interest rate. You should consider this feature in relation to how long you plan to repay the loan. The loans with a longer repayment period are often less expensive with lower interest charges and a slightly higher up-front fee.
• Interest rate options – Programs offer different interest rate options. Some are fixed and stay the same over the life of the loan. Some are variable and tied to the Prime interest rate (or other index). When the interest rate changes also varies among programs. Some change annually, some quarterly and some as often as monthly.
• Flexibility – Consider the repayment options offered. Are payments required during repayment? Can the principal be deferred? Are alternative repayment programs (graduate repayment or income sensitive, for example) offered?

How to choose a private graduate student loan program?

There are many ways to compare private loan programs. And oftentimes, a student's and family's unique circumstances will determine what loan program makes the most sense. Private graduate student loan programs differ in who the borrower is (the student, parent or other co-applicant). You should refer to the page on private student loans for more information.

I am the Director of the Collège International de Cannes (private higher education founded in 1931) for French language and civilization, and I would like to know how the Collège can be listed by your institution. One of our students just asked for a loan, and she was told that the Collège was not listed. Thank you in advance for your answer.

Any school can apply for Title IV certification, but schools outside the United States stand an extremely SMALL chance of getting approved - those that do are usually affiliated with a US university. It's somewhat easier for international schools to be TERI-approved. Call 1-800-255-TERI to get a school certification program started.

Can I get a U.S. student loan to refinance student loan debt from a foregign bank?

Because the loan is through an international bank, there's no way to apply federal student aid directly to it - it's seen as a private debt, essentially. The only option is a private student loan, which does not require school certification as long as you're enrolled in a TERI-approved school. Get the private student loan if you can, and use it to pay off the international loan.