The Federal Family Education Loan Program (FFELP) is composed of three loans—Federal Stafford Loan (subsidized and unsubsidized), Federal PLUS Loan (for parents of dependent undergraduate students and for graduate/professional students), and Federal Consolidation Loan.  To fill out your promissory note, you may fill one out online at http://www.kheaa.com/website/kheaa/esignloan?main=3 or you may request one from you financial aid counselor.

The Federal Stafford Loan Program provides financial assistance through lenders to expand higher education opportunities for undergraduate, graduate, and professional students attending postsecondary schools on at least a half-time basis.

Students must show financial need to qualify for the subsidized loan. The federal government, on behalf of the borrower, pays the interest that accrues while the student is in school, during authorized deferment periods, and for six months after the student ceases to be enrolled at least half-time. The borrower begins paying the interest when the loan enters repayment.

Students are not required to show financial need to qualify for the unsubsidized loan. Unlike the subsidized loan, the borrower must pay all interest that begins to accrue immediately upon disbursement regardless of enrollment status or loan deferments. Interest can be paid monthly or quarterly or be capitalized (added to the principal balance).

The Federal Stafford Loan amount for an academic period cannot exceed the student's cost of attendance (as determined by the educational institution) less the student's estimated financial assistance and, if the loan is a subsidized Stafford Loan, expected family contribution.

Eligibility Criteria

To be eligible for either of these loans, the student must:

• Be enrolled or accepted for enrollment at least half-time in an eligible degree or certificate program at an eligible institution.
• Have a high school diploma or its equivalent.
• Be in good standing and making satisfactory academic progress if currently enrolled.
• Be a citizen, permanent resident, or eligible noncitizen of the United States.
• Not be in default or owe a refund on any federal education grant or loan unless satisfactory arrangements have been made to repay the outstanding debt.

Financial need is determined for the Subsidized Federal Stafford Loan before eligibility is determined for the Unsubsidized Federal Stafford Loan. Schools will determine the student's eligibility.

Loan Limits

A borrower may receive a subsidized loan, an unsubsidized loan, or a combination of both for an academic period. However, the amount of one loan or a combination of both loans may not exceed the loan limits for an academic year based on the borrower's dependency status and grade level and the length of the program of study in which the borrower is enrolled.

Federal Stafford Annual Loan Limits

Grade Level	Dependent Status	Independent Status
First Year	$3,500	$7,500
Second Year	$4,500	$8,500
Each Remaining Year of Undergraduate Study	$5,500	$10,500
Each Year of Graduate or Professional Study	$8,500	$18,500

The total maximum outstanding debt allowed is:

Federal Stafford Aggregate Loan Limits

Dependent Undergraduate	$23,000
Independent Undergraduate	$46,000
Graduate or Professional Student*	$138,500

*Includes any Federal Stafford Loan and/or Federal Supplemental Loans for Students received as an undergraduate.

Interest Rate

Interest for subsidized loans is generally paid by the Department of Education while you are in school. The student is responsible for interest upon loan disbursement for unsubsidized loans. Interest rates for the period July 1, 2006, to June 30, 2007 is fixed at 6.8%. Borrowers qualify for interest subsidy during the in-school, deferment and six-month grace period.

Fees Paid by the Borrower

A 1.5% origination fee may be charged to the borrower on a Federal Stafford Loan, and a 1% federal default fee will be charged. Any fees are deducted from the principal before your loan is disbursed. Some lenders may not charge the origination fee and may pay this default fee on your behalf.

The origination fee for Stafford Loans for the 2007-2008 academic year is 1.5%. The fee will decrease each year by 0.5% until the fee is eliminated in 2010.

Lenders may also offer discounted interest rates. Check with your lender to determine applicable fees.

Repayment

Six months after the borrower leaves school or drops below half-time status, repayment begins on a subsidized Federal Stafford Loan. Repayment on an unsubsidized loan begins immediately upon disbursement but may be delayed until six months after the borrower leaves school or drops below half-time status; however, interest begins to accrue upon disbursement.

Borrowers have at least 5 years, but no more than 10 years, to repay their loans under the standard, graduated, or income-sensitive repayment options. For new borrowers on or after October 7, 1998 (borrowers who have no outstanding balance on loans made before this date), an extended repayment plan is available if student loan debt is in excess of $30,000. Under the extended repayment plan, the repayment term can extend up to 25 years depending on the amount of indebtedness.

Use the Loan Payment Calculator to get an idea of what your monthly loan payment will be when you enter repayment.

Insurance

KHEAA insures Federal Stafford Loans made by participating lenders against default, death, or total and permanent disability; false certification of the loan; and, under certain conditions, bankruptcy, school closure, or partial discharge for failure to make a refund. The holder of the loan files a claim with KHEAA and receives reimbursement for principal and interest pursuant to an executed Contract of Insurance. In case of default and bankruptcy, this insurance only repays the lender for its loss on the loan and does not relieve the borrower of his/her obligation to repay.

Eligible Lenders

Lenders may include:

• National and state-chartered banks.
• Mutual savings banks.
• Savings and loan associations.
• Stock savings banks.
• Credit unions and pension funds.
• Insurance and trust companies.
• State agencies.
• Other entities authorized under the Higher Education Act of 1965, as amended.

Applications and More Information

First complete the Free Application for Federal Student Aid (FAFSA), available from financial aid offices at participating postsecondary schools, participating lenders, high school counselor offices, KHEAA or online. A Master Promissory Note should also be completed and mailed or taken to your lender for processing.