Stafford Loans

The Stafford Loan is a low-cost, Federally Guaranteed loan used to help students finance their Higher Education dreams. Stafford loans are available for undergraduate, graduate, and professional students. New Stafford loans have a fixed low interest rate. They require no credit check. Students may have payments deferred while attending school* and for at least 6 months after graduation.

There are two types of Stafford loans: Subsidized & Unsubsidized.

Subsidized Stafford loans are awarded based on financial need. The federal *government pays the interest for the student during the following periods:

• While the student is in school (enrolled at least half-time or 6 credit hours)
• During the 6-month grace period after the student graduates, leaves school, or drops below half-time enrollment
• During authorized periods of deferment (periods when payments are temporarily postponed)

Unsubsidized Stafford loans are not based on financial need. Unsubsidized loans can be used to supplement a student’s subsidized loan or for students who do not qualify for a subsidized Stafford loan. The student is responsible for all interest on unsubsidized loans.

Loan Limits for the Federal Stafford Loan Program

Schools determine how much a student can borrow in Stafford loans, based on federal regulations governing annual and aggregate loan limits. The maximum amount a student can borrow is equal to cost of attendance minus any other financial aid. A loan amount can not exceed the cost of attendance.

The aggregate loan limits for a students’ academic career is:

• Dependent Students = $23,000
• Independent Students = $46,000
• Graduate/Professional Students = $138,500

Disbursement

Loan disbursements are made directly to the school in at least two installments. No installment may exceed one-half of the loan amount. The funds must first be applied to pay for tuition, fees, room and board, and other school charges. If loan money remains, the student will receive the funds by check or in cash, unless the school receives written authorization from the student to hold the funds until later in the enrollment period. Generally, first-year undergraduate students and first-time borrowers cannot receive the first disbursement of their loan until 30 days after the first day of the enrollment period.

Interest rate and fees

• For all Stafford loans first disbursed on or after July 1, 2006, but before July 1, 2008 the interest rate is fixed at 6.8%.
• For all Subsidized Stafford loans disbursed on or after July 1, 2008, but before July 1, 2009 the rate is 6.0%; Unsubsidized Stafford loans for the same loan period will remain fixed at 6.8%
• Federal law requires fees up to 4% of the loan be charged for each loan made, deducted proportionately from each disbursement. A portion of these fees go to the federal government (called an Origination fee), and a portion of goes to the guaranty agency (called a Federal Default fee) to help reduce the cost of the loans. The law specifies the maximum amount of each fee and authorizes both fees to be deducted from the loan amount. When a fee is charged to the borrower, the fee is deducted from the loan proceeds when the money is sent to the student’s school.
• Currently First Service Credit Union and Texas Guaranteed Student Loan Corporation have partnered to pay these fees on behalf of our borrowers. FSCU borrowers with TGSLC will receive their full loan amount.

Loan Qualifications

Stafford loans are available to undergraduate and graduate/professional students who are:

• U.S. citizens or eligible non-citizens
• Enrolled at least half-time in an eligible program at an eligible Title IV school
• Maintain satisfactory academic progress (minimum 2.0 G.P.A.)
• Registered with the U.S. Selective Service System (for males not exempt from registration)

Borrowers may be ineligible if they have adverse credit, currently defaulted on an unpaid education federal loan, owe an overpayment on other federal education aid, have been convicted of a drug-related offense while receiving federal student aid, or are incarcerated. The borrower also may not qualify if, while receiving federal financial aid, they have been convicted of or pled nolo contendere to a crime involving fraud in obtaining Title IV funds and have not completed the repayment of such funds.

Full disclosure on eligibility is provided with the Federal Stafford Loan Master Promissory Note, the form students sign to apply for Stafford loans.

Repayment

No payments of principle or interest are required while the student is enrolled in school at least half-time. After a student graduates, leaves school, or drops below half-time enrollment, a student is given a 6-month grace period before loan repayment begins. Additionally:

• Payments are due monthly.
• Minimum payment is $50.
• The payment amount must be at least equal to the monthly interest due on the loan.
• Borrowers may select the repayment plan that best suits their needs.
• The repayment term is generally 10 years.
• Stafford loan borrowers may have their payments temporarily postponed or reduced under certain conditions (known as entitlements).
• Payments can be made directly to First Service or to our servicing agent Panhandle Plains Student Loan Center (PPSLC).

Payment Plans

• Standard Repayment Plan — Fixed monthly payments and loan is repaid in full within 10 years (not including periods of deferment or forbearance) from the date the loan entered repayment. Payments must be at least $50 a month and will be more, if necessary, to repay the loan within the required time period.
• Graduated Repayment Plan — Lower monthly payments at first and your payments will increase over time. No single payment will be more than three times greater than any other payment. Loan must be repaid in 10 years.
• Extended Repayment Plan — Monthly payments based on fixed annual or graduated repayment amounts over a period not to exceed 25 years. Payments must be at least $50 a month and will be more, if necessary, to repay the loan within the required time period. Borrower must accumulate outstanding FFELP loans exceeding $30,000 to use this repayment plan.
• Income-Sensitive Repayment Plan — Monthly payments will be adjusted annually, based on borrower’s expected total monthly gross income from all sources. Borrower will need to provide all W-2 and 1099 forms. Loan must be repaid in 10 years.
• Consolidation Repayment Plan — Combines several federal loans from a single lender or multiple lenders into one loan so the borrower has only one loan payment to one institution. The interest rate is a fixed rated based on the weighted average of the rates on the loans being combined. Term can be extended up to 30 years thus lowering the monthly payment, but will increase amount of total interest paid.

First Rewards

No Origination fees — First Service understands how expensive college can be; that’s why we pay the Origination fee on behalf of our students for Stafford loans—so you can get all of your loan funds for your educational expenses.

.25% off for electronic payment — After graduation, life expenses can really add up fast—rent, car payment, insurance, food, clothes—it can be real easy to lose track of paying your student loan. First Service makes it easy by providing automatic draft payments from your checking or savings account and we will reduce your interest rate by .25%.

2% interest rate reduction — after making 36 scheduled payments, on time. You pay your bill every month on time and you deserve a reward for it! First Service will reduce your interest rate by 2%, after you make 36 consecutive on-time payments.

$500 dollar forgiveness — You’re coming down the home stretch and after years of making payments on your student loan, it’s almost over. Let First Service give you a boost. Once your loan balance has been paid down to $500, we forgive or relive you of your obligation, by paying off the remainder of your loan.

Student Edge Program — You’re a college student and you have special financial needs. First Service understands what those needs are and has multiple discount offers and special products to give you the financial edge in school.