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 anunsubsidized 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 can I borrow?
Amounts are as follows:

• $2,625 if you're a first-year student enrolled in a program of study that is at least a full academic year
• $3,500 if you've completed your first year of study, and the remainder of your program is at least a full academic year
• $5,500 a year if you've completed two years of study, and the remainder of your program is at least a full academic year

If you're an independent undergraduate student or a dependent student whose parents are unable to get a PLUS Loan, you can borrow up to:

• $6,625 if you're a first-year student enrolled in a program of study that is at least a full academic year.
• $7,500 if you've completed your first year of study, and the remainder of your program is at least a full academic year.
• $10,500 a year if you've completed two years of study, and the remainder of your program is at least a full academic year.

For periods of undergraduate study that are less than an academic year, the amounts you can borrow will be less than those above.

The total debt you can have outstanding from all FFELP Loans is:

• $23,000 as a dependent undergraduate student
• $46,000 as an independent undergraduate student
• $138,000 as a graduate or professional student

What is the interest rate charged on these loans?
The interest rate is variable, but it will never exceed 8.25%.

Is there a charge for these loans?
You'll pay a fee of up to 4 percent, deducted proportionately from each disbursement of your loan. A portion of this fee goes to the federal government to help reduce the cost of the 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.