The Federal Family Education Loan (FFEL) Program administers the Stafford Loan Program which is a major form of self-help aid for students.  Under the FFEL Program, the funds for your loan are lent to you from a private lender (a bank, credit union, or other lender that participates in the FFEL Program). Your loan would be repaid to the same private lender that made you the loan or to its designated agency.

What are Stafford Loans?

FFEL Stafford Loans have variable interest rates and are for both undergraduate and graduate students.  The loans are either subsidized or unsubsidized. You can receive a subsidized loan and an unsubsidized loan for the same enrollment period.

• A subsidized loan is awarded on the basis of financial need. You won't be charged any interest before you begin repayment or during deferment periods. The federal government "subsidizes" the interest during these periods.
• An unsubsidized loan is not awarded on the basis of need. You'll be charged interest from the time the loan is disbursed until it is paid in full. If you allow the interest to accrue (accumulate) while you are in school or during other periods of nonpayment, it will be capitalized.  This means the interest will be added to the principal amount of your loan, and additional interest will be based upon the higher amount.

Who can get a Stafford Loan?

If you're a regular student enrolled in an eligible program at least half time, you may receive a  FFEL Stafford Loan. You must also meet other general eligibility requirements.

How much can I borrow?

The amounts you can borrow depend on your grade level in school and on the type of student your are:  dependent undergraduate, independent undergraduate or a graduate student.  

NOTE:  For periods of study that are shorter than an academic year, the amounts you can borrow will be less than those listed. Also you might receive less if you receive other financial aid that's used to cover a portion of your cost of attendance.  Talk to your financial aid administrator to find out how much you can borrow.

NOTE: Your school can refuse to certify your loan application, or can certify a loan for an amount less than you would otherwise be eligible for if the school documents the reason for its action and explains the reason to you in writing. The school's decision is final and cannot be appealed to the U.S. Department of Education.

How do I apply for this loan?

You apply by filing the FAFSA application form just the way you would for other federal student aid.  

The Stafford Loan application process:

The loans amounts for which you are eligible are listed on your financial aid award notification.  If you choose to borrow, you must confirm the award amounts you wish to borrow and return one signed copy of the notification to the Office of Student Financial Aid.  If you choose to borrow less than the amount listed, you will need to modify the letter to show the lesser amount you wish to borrow.

• If you have previously completed a Master Promissory Note (MPN) at Washington State University, you are not required to complete a new loan application unless you decide to change your lender.  (The MPN is the legal contract between the borrower and the lender, ensuring that you (the borrower) will repay the loan.)

• If you have not previously completed an MPN at Washington State University, you'll start the loan application process by getting a letter from EdFund, which includes instructions for completing the loan application online at www.edfund.org.  A link to WSU's Preferred Federal Loan Lenders will be available online as well.

How will I receive my Stafford Loan?

The loan funds will be sent to your school. In most cases, your loan will be disbursed in at least two installments, and no installment will be greater than half the amount of your loan.

Your loan money must first be used to pay for your tuition, fees, and room and board. If loan money remains, you'll receive the funds by check or in cash unless you give the school written permission to hold the funds until later in the enrollment period.I

Can I cancel the loan if I change my mind, even if I've signed the promissory note agreeing to the loan's terms?

Yes. Your school must notify you in writing whenever it credits your account with your Stafford Loan funds.  You may cancel all or a portion of your loan if you inform your school that you wish to do so within 14 days after the date that your school sends you this notice, or by the first day of the payment period, whichever is later. (Your school can tell you the first day of your payment period.)  If you receive Stafford Loan funds directly by check, you may refuse the funds by returning the check.

What's the interest rate charged on these loans?

The current interest rate(s) may be found here.

If you have subsidized loans (see above), you won't be charged interest while you're enrolled in school at least half time, during a grace period, or during authorized periods of deferment. Interest will begin to accrue (accumulate) when you enter repayment or a period of forbearance.

If you have unsubsidized loans, you'll be charged interest from the day the loan is disbursed until it is paid in full, including in-school, grace, and deferment periods. You may choose to pay the interest during these periods, or it can be capitalized.

Other than interest, is there a charge to get these loans?

You'll pay a fee of up to 4 percent of the loan, deducted proportionately from each loan disbursement. (Part of this fee is for insurance used to pay off loan defaults; the rest reduces the cost of the loan to the government.)  Because of this deduction, you'll receive slightly less than the amount you're borrowing. 

When do I pay back these loans?

After you graduate, leave school, or drop below half time enrollment, you have a six months grace period before you begin repayment. During the grace period on a subsidized loan, you don't have to pay any principal, and you won't be charged interest. During the grace period on an unsubsidized loan, you don't have to pay any principal, but you will be charged interest. You can either pay the interest or it will be capitalized.

Your lender will send you information about repayment, and you'll be notified of the date repayment begins. However, you're responsible for beginning repayment on time, even if you don't receive this information. Failing to make payments on your loan can lead to default.

How do I pay back my Stafford loans?

You'll repay your Stafford loan to the private lender you borrowed from or to a loan servicer.  The Stafford program offers four repayment options you may choose from, but the terms differ slightly.  You'll receive more detailed information on your repayment options during entrance and exit counseling sessions.  If you do not choose a repayment plan when you first begin repayment, you will be placed under the Standard Repayment Plan.  You can change plans to suit your financial circumstances but you may change only once a year.  Aspects of these plans will vary by lender because the individual lenders can tailor the plans.  Check with the lender for complete information.

• The Standard Repayment Plan:  
  • You pay a fixed amount each month--at least $50--for up to 10 years, not including deferment and forbearance periods.  
  • The length of your repayment period depends on your loan amount.
• The Extended Repayment Plan:  
  • You repay your loan over a period that is generally 12 to 30 years, depending on the loan amount.  
  • Your monthly payment might be lower than under the Standard Repayment Plan, but you'll repay a higher total amount of interest over the life of the loan because the repayment period is longer.  
  • The minimum monthly payment is $50.
• The Graduated Repayment Plan:  
  • Your payments will be lower at first and then increase, usually every two years.  
  • The length of your repayment period will generally range from 12 to 30 years, depending on your loan amount.  
  • Your monthly payment will never increase to more than 1.5 times what you'd pay under the Standard Repayment Plan.  
  • You'll repay a higher total amount of interest, though, because the repayment period is longer than under the Standard Repayment Plan.
• The Income Contingent Repayment Plan:  
  • Your monthly payment is based your yearly income, family size, interest rate, and loan amounts.  
  • As their income rises or falls, so do the payments.  
  • After 25 years, any remaining balance on the loan will be forgiven, but the borrower will have to pay taxes on the amount forgiven.

(See Sample Repayments for more information on comparing repayment plans.)

Are there any tax incentives available for paying back these loans?

• Yes, there are tax incentives for certain higher education expenses, including a deduction for student loan interest for certain borrowers.  This benefit applies to all loans taken out to pay for postsecondary education costs.  The maximum deduction is $2,500 a year.
• IRS Publication 970, Tax Benefits for Higher Education, explains these credits and other tax benefits.  You can find our more at www.irs.gov  or by calling the IRS at 1-800-829-1040.  TTY callers can call 1-800-829-4059.

Are there any tax credits available for paying back student loans?

Two federal income tax credits-dollar-for-dollar reductions in tax liability-are available for higher education expenses. The Hope tax credit, worth up to $1,500 per student, is available to first- and second-year students enrolled at least half time. The Lifetime Learning tax credit is a tax benefit equal to 20 percent of a family's tuition expenses, up to $5,000, for virtually any postsecondary education and training, including subsequent undergraduate years, graduate and professional schools, and even less than half time study.

For more information on the Hope and Lifetime Learning tax credits, and other tax benefits for postsecondary students, see the Internal Revenue Service's (IRS) Publication 970. You can get a copy of Publication 970 Tax Benefits for Higher Education by calling 1-800- TAX-FORM (1-800-829-3676). You can also view or download the publication from the Internet at

www.irs.gov/formspubs/index.html

Interest that you pay on your student loans might be tax deductible.

Is it ever possible to postpone repayment of my loan?

Yes. Under certain conditions, you can receive a deferment or forbearance on your loan. A deferment allows you to temporarily postpone payments on your loan. If you have a subsidized loan, you will not be charged interest during the deferment. If your loan is unsubsidized, you will be responsible for the interest on the loan during the deferment. If you don't pay the interest as it accrues, it will be capitalized and increase the amount you will have to pay. See Borrower Responsibilities for a list of deferments available.

For information on deferments available to borrowers with outstanding loans received prior to that date, FFEL Stafford borrowers should contact the lenders or agencies holding the loans. Direct Stafford Loan borrowers should contact the Direct Loan Servicing Center at:

The Direct Loan Servicing Center
Borrower Services: 1-800-848-0979 or 1-315-738-6634
Fax: 1-800-848-0984
TTY: 1-800-848-0983
www.dlssonline.com

You can't receive a deferment if your Stafford Loan is in default.

If you are temporarily unable to meet your repayment schedule but are not eligible for a deferment, you might receive forbearance for a limited and specified period. During forbearance, your payments are postponed or reduced. Whether your loans are subsidized or unsubsidized, you will be charged interest. If you don't pay the interest as it accrues, it will be capitalized.

For example, you might be granted forbearance if you are

• unable to pay due to poor health or other unforeseen personal problems.
• serving in a medical or dental internship or residency.
• serving in a position under the National Community Service Trust Act of 1993 (forbearance may be granted for this reason for a Direct or FFEL Stafford Loan, but not for a Stafford Loan).
• obligated to make payments on certain federal student loans that are equal to or greater than 20 percent of your monthly gross income.

Deferments and forbearances are not automatic. If you have a Direct Stafford Loan, you must contact your Direct Loan Servicing Center to request either option. If you have a FFEL Stafford Loan, you must contact the lender or agency that holds your loan. For either program, you might have to provide documentation to support your request. You must continue making scheduled payments until you receive notification that the deferment or forbearance has been granted. Failing to make payments on your loan might have a negative effect on your credit rating.

Can my loan be discharged (canceled)?

Yes, in certain circumstances. A discharge releases you from all obligations to repay the loan. To see a complete listing of cancellation provisions click here.

Your loan can't be canceled because you didn't complete the program of study at the school (unless you were unable to complete the program because the school closed), didn't like the school or the program of study, or didn't obtain employment after completing the program of study.

Repayment assistance (not a discharge but another way to satisfy your obligation to repay) might be available if you serve in the military. For more information, contact your recruiting officer.