Young Golfers of America Association

Yfer of America Association
Established in 1990

YGAA
4701 Keniston Ave.
Los Angeles, CA
90043
ph - 323.292.7030

YGAA EDUCATION CENTER

STAFFORD LOANS

What are Stafford Loans?
Direct and FFEL Stafford Loans are either subsidized or unsubsidized. You can receive a subsidized loan and an unsubsidized loan for the same enrollment period.

A subsidized loan is awarded on the basis of financial need (see financial need page). You won’t be charged any interest before you begin repayment or during authorized periods of deferment). The federal government “subsidizes” the interest during these periods.

An unsubsidized loan is not awarded on the basis of need. You’ll be charged interest from the time the loan is disbursed until it’s paid in full. If you allow the interest to accrue (accumulate) while you’re in school or during other periods of nonpayment, it will be capitalized—that is, the interest will be added to the principal amount of your loan, and additional interest will be based on that higher amount.

NOTE: If your interest is capitalized, it will increase the amount you have to repay. You can choose to pay the interest as it accumulates; if so, you’ll repay less in the long run.

Who can get a Stafford Loan?
If you’re a regular student* enrolled in an eligible program* at least half time,* you may receive a Direct or FFEL Stafford Loan. You must also meet other general eligibility requirements (see eligibility page).

How do I get this loan?
You apply using the FAFSA or Renewal FAFSA (see “Applying,”), just the way you would for other federal student aid. Then, you sign a promissory note* that you’ll get from your lender, for FFEL Stafford Loans, or from your school, for Direct Loans. The promissory note* is a binding legal document; when you sign it, you’re agreeing to repay your loan under certain terms. Read the note carefully and save it.

How much can I borrow?
If you’re a dependent undergraduate student (see “Dependency Status,”), you can borrow annually up to

$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 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 (see page 24), you can borrow annually 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* (only $2,625 of this amount may be in subsidized loans).
$7,500 if you’ve completed your first year of study and the remainder of your program is at least a full academic year* (only $3,500 of this amount may be in subsidized loans).
$10,500 if you’ve completed two years of study and the remainder of your program is at least a full academic year* (only $5,500 of this amount may be in subsidized loans).

For periods of study that are less than an academic year,* the amounts you can borrow will be less than those listed. Check with your school’s financial aid office to find out how much you can borrow.

NOTE: Stafford Loans are not made to students enrolled in programs that are less than one-third of an academic year.*

Generally, if you’re a graduate student, you can borrow up to $18,500 each academic year.* (Only $8,500 of this amount may be in subsidized Stafford Loans.)

NOTE: The amounts given above are the maximum yearly amounts you can borrow in both subsidized and unsubsidized loans. You might receive less than these amounts if you receive other financial aid that is used to cover a portion of your cost of attendance.*

Generally, the total debt you can have outstanding from all Stafford Loans combined is

$23,000 as a dependent undergraduate student.
$46,000 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 $65,500 of this amount may be in subsidized loans). The graduate debt limit includes any Stafford Loans received for undergraduate study.

NOTE: Your school can refuse to certify your loan application or can certify a loan for an amount less than you would otherwise be eligible for if the school documents the reason for its action and explains the reason to you in writing. The school’s decision is final and cannot be appealed to the U.S. Department of Education.

How will I receive my Stafford Loan?
The loan funds will be sent to your school. In most cases, your loan will be disbursed in at least two installments, and no installment will be greater than half the amount of your loan.

Your loan money must first be used to pay for your tuition, fees, and room and board. If loan funds remain, you’ll receive them by check or in cash, unless you give the school written permission to hold the funds until later in the enrollment period.

If you’re both a first-year undergraduate student and a first-time borrower, your first disbursement can’t be made until 30 days after the first day of your enrollment period. That way, you won’t have to repay the loan if you withdraw during the first 30 days of classes. (However, you might owe money to the school for a portion of tuition or other fees.)

Can I cancel the loan if I change my mind, even if I’ve signed the promissory note*
agreeing to the loan’s terms?
Yes. Your school must notify you in writing whenever it credits your account with your Stafford Loan funds. This notification must be sent to you no earlier than 30 days before, and no later than 30 days after, the school credits your account. You may cancel all or a portion of your loan if you inform your school within 14 days after the date your school sends you this notice, or by the first day of the payment period, whichever is later. (Your school can tell you the first day of your payment period.) If you receive Stafford Loan funds directly by check, you may refuse the funds by returning the check.

What’s the interest rate on these loans?
The interest rate is variable (might change each year) but does not exceed 8.25 percent. For July 1, 2002 to June 30, 2003, the interest rate for loans in repayment was 4.06 percent. Interest rates are adjusted each year on July 1. You’ll be notified of interest rate changes throughout the life of your loan.

Congress changed the interest rate calculation for Stafford Loans made on or after July 1, 1998. If you have loans first disbursed before that date, your interest rate might be different. For interest rates on a FFEL Stafford Loan, check with your lender. For interest rates on a Direct Stafford Loan, check with the Direct Loan Servicing Center.

If you have subsidized loans, you won’t be charged interest while you’re enrolled in school at least half time,* during a grace period, or during authorized periods of deferment. Interest will begin to accrue (accumulate) when you enter repayment.

If you have unsubsidized loans, you’ll be charged interest from the day the loan is disbursed until it’s paid in full, including in-school, grace, and deferment periods. You can pay the interest during these periods, or it can be capitalized.

Other than interest, is there any charge to get the loans?
You’ll pay a fee of up to 4 percent of the loan, deducted proportionately from each loan disbursement. For a FFEL Stafford Loan, a portion of this fee goes to the federal government, and a portion goes to the guaranty agency* to help reduce the cost of the loans. For a Direct Stafford Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, if you don’t make your loan payments when scheduled, you may be charged collection costs and late fees.

When do I pay back these loans?(1)
After you graduate, leave school, or drop below half time* enrollment, you have six months before you begin repayment. This period of time is called a grace period.

During the grace period on a subsidized loan, you don’t have to pay any principal, and you won’t be charged interest. During the grace period on an unsubsidized loan, you don’t have to pay any principal, but you will be charged interest. You can either pay the interest or it will be capitalized.

After you leave school or drop below half time* enrollment, your lender will send you information about repayment and you’ll be notified of the date repayment begins. However, you’re responsible for beginning repayment on time, even if you don’t receive this information. Failing to make payments on your loan is likely to have a negative effect on your credit rating.

1. The U.S. Department of Education (ED) has issued special guidance for those called to active duty as a result of the September 11 terrorist attacks. If a borrower’s loans are in an in-school status, in-school deferment status, or in a grace period when the borrower is ordered to active duty or reassigned, the loan holder must maintain the loans in that status during the period of the borrower’s active duty service or reassignment, plus the time necessary for the borrower to resume enrollment in the next regular enrollment period reasonably available to the borrower. The maintenance of loan status may not exceed a total of three years, including the period of time necessary for the borrower to resume enrollment.

For a borrower whose loans are in repayment, the loan holder must grant a forbearance (temporary suspension of repayment) for the expected period of the borrower’s active duty status, beginning on the first day of active duty, not to exceed one year. Forbearance beyond the initial period will require supporting documentation and a written agreement by the borrower.

For more information about loan repayment options that might be available to a borrower in this situation, the loan holder should be contacted directly.

Are there any tax credits available for paying back these loans?
Yes, there are tax incentives for certain higher education expenses, including a deduction for student loan interest for certain borrowers. This benefit applies to federal and nonfederal loans taken out to pay for postsecondary education costs. The maximum deduction is $2,500 a year. IRS Publication 970, Tax Benefits for Higher Education, explains these credits and other tax benefits. You can find out more by calling the IRS at 1-800-829-1040. TTY callers can call 1-800-829-4059.

Is it ever possible to postpone repayment of my loan?
Yes, under certain conditions, you can receive a “deferment” or “forbearance” on your loan, as long as the loan isn’t in default.* A deferment allows you to temporarily postpone payments on your loan. If you have a subsidized loan, you won’t be charged interest during the deferment. If your loan is unsubsidized, you’ll be responsible for the interest during the deferment. In that case, if you don’t pay the interest as it accrues (accumulates), it will be capitalized and the amount you’ll have to pay will increase.

For information on deferments available to borrowers with outstanding loans received before that date, FFEL Stafford borrowers should contact the lenders or agencies holding the loans. Direct Stafford Loan borrowers can contact the Direct Loan Servicing Center at

The Direct Loan Servicing Center
Borrower Services: 1-800-848-0979 or 1-315-738-6634
Fax: 1-800-848-0984
TTY: 1-800-848-0983
www.dl.ed.gov

If you’re temporarily unable to meet your repayment schedule, but you’re not eligible for a deferment, your lender might grant you forbearance for a limited and specified period. During forbearance, your payments are postponed or reduced, or your repayment period might be extended. Whether your loans are subsidized or unsubsidized, you’ll be charged interest during a period of forbearance. If you don’t pay the interest as it accrues, it will be capitalized.

You might be granted forbearance if you are

unable to pay due to poor health or other unforeseen personal problems.
serving in a medical or dental internship or residency.
serving in a position under the National Community Service Trust Act of 1993 (forbearance may be granted for this reason for a Direct or FFEL Stafford Loan, but not for a PLUS Loan).
obligated to make payments (on certain federal student loans) that are equal to or greater than 20 percent of your monthly gross income

This is not a complete list of conditions that might qualify you for forbearance but offers
some examples.

Deferment and forbearance are not automatic. If you have a Direct Stafford Loan, you must contact your Direct Loan Servicing Center to request either option. If you have a FFEL Stafford Loan, you must contact the lender or agency that holds your loan. You might have to provide documentation to support your request. You must continue making scheduled payments until you’re notified that the deferment or forbearance has been granted. Not making payments on your loan is likely to have a negative effect on your credit rating, and your loan could go into default.*

Is it ever possible to have my Stafford Loan discharged (canceled)?
Yes, in certain circumstances. A discharge releases you from all obligations to repay the loan. A complete list of cancellation provisions is given on the next page.

Your loan can’t be canceled because you didn’t complete the program of study at the school (unless you couldn’t complete the program for a valid reason—because the school closed, for example), you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.

For more information about discharge, Direct Stafford Loan borrowers should contact the Direct Loan Servicing Center. FFEL Stafford Loan borrowers should contact the lenders or agencies holding their loans.

Repayment assistance (not a discharge but another way to satisfy your obligation to repay) might be available if you serve in the military. For more information, contact your recruiting officer.

Another type of repayment assistance (again, not a discharge) is available through the U.S. Department of Health and Human Services’ Nursing Education Loan Repayment Program (NELRP). This program will help repay student loans for registered nurses in exchange for their service in eligible facilities located in areas experiencing a shortage of nurses. All NELRP participants must enter into a contract agreeing to provide full-time employment in an approved eligible health facility (EHF) for 2 or 3 years. In return, the NELRP will pay 60 percent of the participant’s total qualifying loan balance for two years or 85 percent of
the participant’s total qualifying loan balance for three years. For more information, call NELRP, toll-free, at 1-866-813-3753 or visit www.bhpr.hrsa.gov/nursing/loanrepay.htm

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For information or additional news, contact the editor at ygaa@pacbell.net