Loan Type
You can choose from two types of Federal Stafford Loans for students, both available from Chela:

Subsidized Federal Stafford Loans
To qualify for a subsidized Federal Stafford Loan, you must demonstrate financial need. The federal government pays all of the interest that accrues (accumulates) on the loan while you're enrolled in school at least half-time and during grace and deferment periods.

Unsubsidized Federal Stafford Loans
Because an unsubsidized Federal Stafford Loan is not based on financial need, you're responsible for the interest that accrues on the loan while you're in school and during grace and deferment periods. You may opt to make interest payments during these periods. If you decide to wait, the interest is capitalized (accumulated and added to the principal balance of your loan).

Eligibility
To determine your eligibility for Stafford loans, you'll need to complete a Free Application for Federal Student Aid, or FAFSA. The FAFSA is available through your financial aid office or on the web at www.fafsa.ed.gov. You must also meet eligibility criteria.

Loan Amount
Your school determines the amount of money you can borrow, based on cost of education, other available financial aid sources, and your/your family's ability to contribute financially (in the case of a subsidized loan).

For maximum loan amounts, see the chart below:

* Loan limits for independent undergraduate students also apply to dependent students whose parents don't qualify for PLUS Loans. "Independent" generally refers to a person who is either married or at least 24 years old, an orphan, a state ward, a U.S. Armed Forces veteran, or has a legal dependent other than a spouse.

Interest Rate
The interest rate you pay on your Stafford Loan is determined by when you take out the loan, so if you have multiple loans, they may have different interest rates.

The interest rates on Stafford Loans effective July 1, 2006 are:

Stafford loans carry a fixed interest rate of 6.8%,which is fixed for the life of the loan.

Grace Period
The grace period is the six-month period before you begin repaying your loan, during which time you are not required to make loan payments. Your grace period begins on the date you graduate, fall below half-time attendance, or drop out of school.

Repayment
Getting a Stafford Loan is a serious step. Before you borrow, consider other ways to fund your education, such as scholarships, grants, and college work-study programs. Then, if you must take out a loan, borrow only what you need and can afford.

Repayment Terms
You may select from the following four repayment options:

Standard Payment Plan - Sets equal monthly payments throughout your repayment term, each covering the principal and interest due that month. Your final payment may be slightly more or less than your other payments. Of all the options available, this plan is most likely to result in the lowest aggregated interest costs over the life of your loan.

Graduated Payment Plan - Reduces the amount of your monthly payments during the first years of repayment. If you select this option, during the first 2 years your monthly payments will be interest-only payments or higher depending on your loan balance. After the first 2 years of reduced payments you may have the option to renew the graduated payment plan for an additional 2 years. Although your initial monthly payments are reduced, the aggregated interest repaid over the life of your loan and your later monthly payments will increase. This plan will not extend your repayment term. Minimum loan amounts and other eligibility restrictions may apply.

Income-Sensitive Payment Plan - This repayment option allows you to pay between 4-25% of your gross monthly income (not to drop below the monthly accrued interest on your loan(s)). The income-sensitive payment is offered for a year at a time, up to a total of five years over the life of your loan. The remaining terms follow a standard payment plan. Eligibility and income documentation (i.e. pay stubs for the past 2 months) must be verified annually. Additional documentation may be required.

Extended Payment Plan - If you received your first Stafford Loan, Supplemental Loan for Students (SLS), or PLUS Loan on or after October 7, 1998 and the outstanding balance of these loans totals more than $30,000, you can opt to repay your loan over a 25-year term instead of a 10-year term.

Loan Funds
Your financial aid office will disburse your Stafford Loan funds from Chela to you in scheduled payments over the academic year. Funds usually become available early in the school term, depending on factors such as when you completed your application. Some schools will deposit these funds directly into your bank account, while others may mail them to you or ask you to pick up a check from their office.