Get a Student Loan

Federal Stafford Loans

The Federal Stafford Loan is available to help students cover the cost of educational expenses. The college determines your eligibility for a loan. Participating lending institutions make the loans, which are guaranteed by a guarantor, such as EAC. Here are some facts about Stafford loans:

• You, the student, are the borrower.
• Your college determines your eligibility for a loan.
• A default fee and an origination fee may be withheld from your disbursement amount. The fees you are charged will be disclosed on your Notice of Guarantee and Disclosure Statement.
• A credit evaluation is not required.

Stafford loans are either subsidized or unsubsidized.

Subsidized
If you are eligible for a subsidized Stafford loan, the federal government will pay the interest on the loan while you:

• attend college at least half time.
• are in your six-month grace period after you graduate or cease at least half-time attendance.
• are in an authorized deferment.

1 These limits are the total amounts a student may borrow in Stafford Loans under the FFELP and the Federal Direct Loan Program. Certain health professions students may qualify for higher limits.
2 All undergraduate annual loan limits are subject to proration.
3 A borrower who does not have financial need for a subsidized Federal Stafford Loan using expected family contribution (EFC) may receive up to and including this amount in unsubsidized Federal Stafford Loans if otherwise eligible.
4 These limits also apply to a dependent undergraduate student whose parents are unable to borrow under the PLUS program.
5 A borrower who has reached the aggregate limit in subsidized Federal Stafford Loans may receive up to and including this amount in unsubsidized Federal Stafford Loans if otherwise eligible.

• Complete the Free Application for Federal Student Aid (FAFSA).
• After you have completed the FAFSA, your college will determine your loan eligibility.
• Choose a lender to make the loan.
• Complete the Master Promissory Note (MPN) that is provided to you. Follow the directions carefully.
• Contact your college or EAC if you need assistance completing the promissory note.
• EAC will process the guarantee on your loan and notify you of:
  • the full amount of the loan.
  • the interest rate.
  • the date you must start repaying the loan (based on your anticipated graduation date).
  • information about the maximum repayment periods and minimum repayment amount.
  • an explanation of default and its consequences.
  • an explanation of available options for consolidating or refinancing your loan.
  • a statement that you can prepay your loan at any time without penalty .
    
• Your lender will disburse your loan and send the proceeds to your college.
• Before your college releases your first loan funds to you, you must go through Entrance Counseling to help you understand your loan.

Current Stafford Interest Rate

Undergraduate Subsidized Stafford loans with a first disbursement:

• On or after July 1, 2008 and before July 1, 2009: 6.0%
• On or after July 1, 2006 and before July 1, 2008: 6.8%, fixed
• On or after July 1, 1998 through June 30, 2006 and in school, grace, or deferment status: 3.61%, variable
• On or after July 1, 1998 through June 30, 2006 and in repayment status: 4.21%.

• On or after July 1, 2006: 6.8%, fixed
• On or after July 1, 1998 through June 30, 2006 and in school, grace, or deferment status: 3.61%, variable
• On or after July 1, 1998 through June 30, 2006 and in repayment status: 4.21%.

Completing Your Stafford MPN

The Promissory Note used in the Federal Stafford Loan Program is called a Stafford Master Promissory Note (MPN).

You must sign an MPN before receiving your first Stafford loan. In many instances, one MPN will cover all of your additional Stafford loans. In some cases, however, you may need to sign an MPN every academic year.

Your college determines if a single MPN is allowed for multiple loans, or if a new MPN is required yearly.

A Promissory Note:

• is a contract between you and your lender.
• is your promise to repay the full amount of the loan.
• is a legal document that describes the terms of your loan.
• provides you with information on repayment options.
• must be signed before funds can be disbursed.

Tips to completing your MPN

• Read directions carefully.
• Fill out your MPN completely.
• Select a lender.
• Don't forget to sign your MPN.
• Remember this is your promise to repay any loan taken out under it.
• Keep a copy for your records.
• Follow your college's directions about where to mail the form.

Electronic MPN Completion

Your school may allow you to complete your MPN online. If so, you can save time by signing your MPN electronically. To do this, you will need to know your Department of Education Personal Identification Number (PIN), available at www.pin.ed.gov.

To find out if your school offers the electronic MPN signature process, contact the financial aid office.

Deciding Whether to Borrow

If your school tells you that you are eligible to borrow a loan, you should seriously think about whether that's what you need to do. Always keep in mind that student loans must be repaid. That can take a long time and will reduce the amount of money you are able to spend on a house, car, vacations, and other things. Think very carefully before borrowing and accept only the student loan funds you really need.

Deciding on a Lender

Once you decide that you need to borrow a loan, you'll next decide which lender to use. This could be a tougher decision than you might think.

Your school may provide you a list of lenders. The list may be very lengthy, showing many lenders that participate in the student loan programs. Or it might be fairly short, called a "preferred lender list." If your school gives you a preferred lender list, there are a few things to keep in mind:

• Schools should base their list on the lenders they believe best serve their students.
• You are not required to select from the school's preferred list.
• You should do your own research to determine which lender's loan will best meet your needs.
• Ultimately, it's your choice, and the school will process the loan for whichever lender you choose.

• Search by lender name or code
• Search by state

• What fees will be subtracted from your loan before you get the money? Lenders are authorized to charge an origination fee and guarantors are allowed to charge a default fee, but these fees may be paid on your behalf in what is called a "front end benefit." Find out from the lenders you are considering how much you will be charged.
• What interest rate will you pay? Although the maximum rate is set by law, some lenders may in fact charge a lower amount. But be cautious.
  • Some of the interest rate reductions have special requirements. For example, they might require you to authorize automatic payment from your checking or savings account; or they might require you to make all payments on time or you lose the benefit; or they may require you to make a certain number of payments before you receive the benefit. So make sure you understand the requirements of receiving the lender's "back end benefits."
  • Find out how many of the lender's borrowers actually receive the "back end benefits." In some instances, very few borrowers actually meet the requirements to get the "back end benefit." A "back end benefit" is only of value if you actually get to take advantage of it.
  • Find out whether the lender sells their loans to a secondary market. If they do, make sure that the "back end benefits" continue after the sale.
• What kind of customer service will you receive? Is the application process easy? Will the money be there when you need it? Will you be able to get your questions answered promptly and conveniently? Will you be treated with dignity and respect if you get into repayment difficulties?
• Do you and your parents already have a trusted customer relationship with a lender? If so, you might want to at least put that lender on your list to research further.
• Keep in mind that a lender's benefits might vary from year to year. So, the benefits that you receive for the loan you get your freshman year may be different than the benefits promised for the loan you get your sophomore year. Generally, it's to your advantage to stay with the same lender for all of your borrowing, because it makes it much easier to keep track of your loans and to make your payments. However, each year you may want to check to make sure that the lender you initially chose continues to provide the benefits you want.

It's your choice. Do the research. Select the lender that best meets your needs.

Getting Your Stafford Loan Funds

Disbursement Information
After your loan is guaranteed by EAC, your loan proceeds are sent to your college. Check out these commonly asked questions about Stafford disbursement:

How do I receive my loan funds?

• By check; or
  A check is sent to your college for delivery to you.
  • Your college may keep the amount you owe.
  • Remaining funds are released to you.
  • You and your school are both required to endorse the check if the check is copayable.
• By Electronic Funds Transfer (EFT)
  Funds are electronically sent to your college to be applied to the amount you owe. The college will distribute excess funds to you.

When does the disbursement occur?
The lender disburses the funds according to the schedule provided by your college.
In some instances, your college may be required to delay the delivery of your loan funds to you until at least 30 days after your college period begins.

Why is my disbursement less than the amount of the loan I requested?

• Student loans are normally disbursed in two or more equal disbursements.
• Origination and default fees may be deducted from each disbursement.

When you sign your student loan Master Promissory Note, you agree that you will use the loan only for educational purposes at the college that certifies your loan.

Eligible educational expenses include:

• Tuition and fees
• Room and board
• Books, supplies, and equipment
• Transportation and commuting expenses
• Dependent childcare
• Other documented, authorized costs

Completing Your Student Loan Entrance Counseling

Before your college may deliver your first loan to you, you must complete Student Loan Entrance Counseling. Your college will notify you whether your counseling will be in person or by electronic means.

EAC, as a sponsor of Mapping Your Future, provides electronic Student Loan Entrance Counseling. Click here to find out if your college uses this electronic Entrance Counseling.

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