Federal Direct Stafford Loan Information
Federal Direct Loans are low-interest loans for students and parents to help pay for the cost of a student's education. The lender for the Federal Direct Stafford Program is the U.S. Department of Education.
Eligibility
Student must:
- Be fully admitted as a degree seeking student at ISU.
- Be enrolled at least half – time when the loan is expected to be disbursed.
- Maintain Satisfactory Academic Progress standards.
- Student must be either a U.S. Citizen or eligible non-citizen (as defined by federal financial aid regulations).
- Must not be in default on an educational loan or owe an overpayment on a federal education grant, or other federal debt, or you have made satisfactory arrangements to repay that debt.
- Must be an undergraduate, graduate, or professional student.
Steps to apply for a Federal Direct Stafford Loan
- File the 2009-2010 Free Application for Federal Student Aid (FAFSA).
You can file the FAFSA at https://www.fafsa.ed.gov. All requested documents will need to be submitted to the Financial Aid Office. - Complete the Federal Direct Stafford Loan Request Form.
The Federal Direct Stafford Loan Request Form must be completed and signed. Please mail or fax this form back to the Office of Student Financial Aid. - Complete the Federal Direct Stafford Master Promissory Note (MPN).
All borrowers (new and returning) must complete a Master Promissory Note (MPN). This process requires the Federal Student Aid PIN of the borrower. If you don’t have your federal PIN, go to https://www.pin.ed.gov to request a new or duplicate PIN. - Complete the Federal Direct Stafford Student Loan Entrance Counseling Session.
All Stafford borrowers (new and returning) must complete an Entrance Counseling Session. This process requires either the borrower’s Social Security Number or Federal Student Aid PIN.
Subsidized vs. Unsubsidized Federal Stafford Loans
If you are eligible for a Federal Subsidized Stafford Loan:
- The interest on your loan will be paid by the federal government while you are enrolled at least half-time.
- No payment is required while you are in school. Your payments will begin six months after you graduate or you fail to be enrolled at least half-time.
If you are eligible for a Federal Unsubsidized Stafford
Loan:
- Interest will accrue beginning with the date you received the loan.
- You may choose to pay the interest only or capitalize the interest until six months after you graduate or fail to be enrolled at least half-time.
Interest Rates for 2009-2010
| LOAN TYPE | GRADE LEVEL | INTEREST RATE |
| Subsidized Loans | Undergraduate | 5.60 |
| Graduate | 6.80 | |
| Unsubsidized Loans | Undergraduate | 6.80 |
| Graduate | 6.80 |
Loan fees for 2009-2010
Stafford Loans require a 1% origination fee and a 1% guarantee fee. There’s an up-front rebate of 1.5%, so the net disbursement is 99.5% of the gross loan amount. The borrower must make the first 12 payments on time to keep the rebate.
Stafford Loan Limits
The Federal Stafford Subsidized and Unsubsidized Loan programs carry both annual and cumulative (lifetime) limits. Your SAR (Student Aid Report) lists your cumulative loans, but it is important that you also keep records of all your loan transactions. You can also look up your loan history online at: https://www.nslds.ed.gov.
Dependent Students *
| Grade Level | Base Subsidized Amount | Additional Unsubsidized Amount |
Annual Maximum | Aggregate Loan Limits |
| Freshman | $3,500 | $2,000 | $5,500 | $31,000 (maximum $23,000 in Subsidized) |
| Sophomore | $4,500 | $2,000 | $6,500 | |
| Junior/Senior | $5,500 | $2,000 | $7,500 |
*Dependent students whose parents are denied a PLUS loan should refer to the Independent Student chart. A new Federal Direct Stafford Request Form and verification of the Parent PLUS loan denial will be required by our office.
Independent Students or Dependent Students whose
parents were denied a PLUS
| Grade Level | Base Subsidized Amount | Additional Unsubsidized Amount |
Annual Maximum | Aggregate Loan Limits |
| Freshman | $3,500 | $6,000 | $9,500 | $57,500 (maximum $23,000 in Subsidized) |
| Sophomore | $4,500 | $6,000 | $10,500 | |
| Junior/Senior | $5,500 | $7,000 | $12,500 | |
| Graduates | $8,500 | $12,000 | $20,500 | $138,500 (maximum $65,500 in Subsidized |
Method of payment
- Loan funds are sent directly to Indiana State University from the U.S. Department of Education and credited directly to your student’s account.
- If you apply for a full academic year loan, half of the amount you apply for is disbursed at the start of the fall semester and the other half at the start of the spring semester.
- Funds will first cover any charges on the student’s account. Any excess funds are released to the student via direct deposit or sent to student’s permanent address.
Repayment
To find out more about repayment options before receiving a Direct Loan, borrowers may contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).