Federal Family Education Loan Program


Federal Family Education Loan Program Funding Sources.
Low interest loans for students and parents are available through the Federal Family Education Loan Program (FFELP). Under the FFELP, private lenders, such as banks and credit unions, usually make the loans. The loans are guaranteed for the federal government by TSAC.

What kinds of loans are available?
Students may borrow a subsidized or unsubsidized Stafford Loan. A subsidized loan is awarded on the basis of financial need. Financial need is determined by completing the Free Application for Federal Student Aid (FAFSA). If you qualify for a subsidized loan, the federal government pays interest on the loan ("subsidizes" the loan) until you begin repayment and during authorized periods of deferment thereafter.

An unsubsidized loan is not awarded on the basis of need. You must still, however, complete the FAFSA. If you qualify for an unsubsidized loan, you'll be charged interest from the time the loan is disbursed until it is paid in full. You can choose to pay the interest or allow it to accumulate. If you allow the interest to accumulate, it will be capitalized - that is, the interest will be added to the principal amount of your loan and will increase the amount you have to repay. If you pay the interest as it accumulates, you'll repay less in the long run.

You can receive a subsidized and an unsubsidized loan for the same enrollment period.

Who can get these loans?
If you're a regular (degree seeking) student enrolled in an eligible program of study at least half time, you may receive the loan.

How much may be borrowed?

Stafford Undergraduate Annual Loan Limits:
     
 
Program of Study of at Least a Full Academic Year in Length
Total Eligibility*
     
Dependent Students
     
1st Year Undergraduates    
       
  Base eligibility (subsidized and unsubsidized)
$3,500
     
$5,500
  Additional Unsubsidized eligibility
$2,000
     
2nd Year Undergraduates    
     
Base eligibility (subsidized and unsubsidized)
$4,500
   
$6,500
Additional unsubsidized eligibility
$2,000
 
     
3rd, 4th, & 5th Year Undergraduates    
     
Base eligibility (subsidized and unsubsidized)
$5,500
   
$7,500
Additional unsubsidized eligibility
$2,000
 
 
Independent Students & Dependent Students Whose Parents Cannot Borrow a PLUS Loan
     
1st Year Undergraduates    
     
Base eligibility (subsidized and unsubsidized)
$3,500
   
$9,500
Additional unsubsidized eligibility
$6,000
 
     
2nd Year Undergraduates    
     
Base eligibility (subsidized and unsubsidized)
$4,500
   
$10,500
Additional unsubsidized eligibility
$6,000
 
     
3rd, 4th, & 5th Year Undergraduates    
     
Base eligibility (subsidized and unsubsidized)
$5,500
   
$12,500
Additional unsubsidized eligibility
$7,000
 
     
* The subsidized portion of this amount cannot exceed the base eligibility.

If you are a graduate or professional student, you can borrow up to $20,500 each academic year (only $8,500 of this amount may be in subsidized loans).

The total debt you can have outstanding from all Stafford loans combined is:

  • $31,000 as a dependent undergraduate student (only $23,00 of this amount may be in subsidized loans).
  • $57,500 as an independent undergraduate student (only $23,000 of this amount may be in subsidized loans).
  • $138,500 as a graduate or professional student (only $65,600 of this amount may be in subsidized loans).
  • The graduate or professional debt limit includes any Stafford loans received for undergraduate study.

What is the interest rate?
The interest rate on the subsidized Stafford loan is a fixed rate of 6.0%, and the interest rate on the unsubsidized Stafford loan is a fixed rate of 6.8%.

What fees must be paid?
There is an origination fee of up to 1.0%, which is paid to the Department to help offset the cost of operating the Federal Stafford Loan Program.

There is also a federal default fee of up to 1%, which is paid to a guaranty agency, such as TSAC. TSAC will pay the federal default fee on behalf of students receiving Stafford loans.

When do I pay back these loans?
After you graduate, leave school, or drop below half-time enrollment, you have six months before you begin repayment. This is called a grace period.