To encourage lenders such as banks, credit unions,
savings and loan associations, pension funds, insurance companies, and schools
to make loans to vocational, undergraduate, and graduate students enrolled at
eligible postsecondary institutions to help pay for educational expenses. The
loans are insured by a State or private nonprofit guaranty agency and
reinsured by the Federal government.
TYPES OF ASSISTANCE:
Guaranteed/Insured Loans. Place Cursor Here for Definition
USES AND USE RESTRICTIONS:
To help defray costs of education at a participating school only. Repayment on
Federal Stafford loans begins six months after the student ceases to carry at
least one-half the normal full-time academic workload. Repayment of principal
and interest on PLUS loans generally begins within 60 days of disbursement of
the last installment, and within 60 days after the proceeds of a Consolidation
Loan have been used to discharge the liability of the borrower on the loans
selected for consolidation. Deferments and forbearance of payment may be
granted for certain authorized periods.
ELIGIBILITY REQUIREMENTS:
Applicant Eligibility: Under the Federal Stafford
Loan Program, any U.S. citizen, national, or person in the United States for
other than a temporary purpose, who is enrolled or accepted for enrollment in
a degree or certificate program on at least a half-time basis as an
undergraduate, graduate, or professional student at a participating
postsecondary school may apply. An otherwise eligible student is eligible for
loans during a single 12-month period in which the student is enrolled in a
non-degree/non-certificate course of study that the school has determined is
necessary in order for the student to enroll in a program leading to a degree
or certificate. Under the Federal PLUS program, parents may borrow for
dependent students. Under the Federal Unsubsidized Stafford program, graduate
or professional students, and independent undergraduate students may apply;
under certain extenuating circumstances, a dependent undergraduate student may
apply for an Federal Unsubsidized Stafford loan. Students who are enrolled at
an eligible institution on at least a half time basis in a program that is
required by a State for elementary or secondary teacher certification are also
eligible for Federal Family Education Loan Program (FFELP) aid (Stafford,
Unsubsidized Stafford and PLUS). Under the Federal Consolidation Loan Program,
a borrower may have his or her Stafford, Unsubsidized Stafford, PLUS, Perkins
(formerly NDSL), and Health Professions Student Loans consolidated, provided
that the borrower is in a grace period or repayment status on all loans being
consolidated, or is a delinquent or defaulted borrower who will reenter
repayment through consolidation, and does not have another application for a
consolidation loan pending. Married couples may consolidate eligible loans.
Only U.S., citizens or nationals may receive a loan to attend eligible foreign
postsecondary schools. A student that is presently enrolled at a participating
institution must be maintaining satisfactory academic progress in the course
of study he/she is pursuing. Also, the borrower may not owe a refund on any
Title IV grant or be in default on any Title IV loan received for attendance
at any school. The borrower must also file a statement of registration
compliance (Selective Service). In order to receive a subsidized Stafford
Loan, all borrowers must undergo a financial need analysis to determine
eligibility for Federal interest and special allowance benefits. Unsubsidized
Federal Stafford, PLUS, or Consolidation Loans are non-need based programs. A
Stafford loan applicant who is an undergraduate student who attends a school
that participates in the Pell Grant Program must receive a determination of
his or her Pell Grant eligibility or ineligibility before the school may
certify an application for a loan. If the applicant is determined to be
eligible for a Pell Grant, the applicant must apply for a Pell Grant for the
enrollment period before the institution may certify an application for a
FFELP loan. An unsubsidized Stafford loan applicant must also receive a
determination of need for a loan under the Stafford Loan Program and, if
eligible, must apply for a Stafford loan prior to the school's certification
of the Unsubsidized Stafford application. As of July 1, 1994, the SLS loan
program was terminated for new Unsubsidized Stafford.
Beneficiary Eligibility: Generally, for the
Federal Stafford, Unsubsidized Stafford, and PLUS programs, any U.S. citizen,
national, or person in the United States for other than a temporary purpose,
who is enrolled or accepted for enrollment in a degree or certificate program
on at least a half-time basis as an undergraduate, graduate, professional, or
vocational student at a participating postsecondary school benefits. If a
student is enrolled in a non-degree/non- certificate course of study, the
student may be eligible for Stafford or Unsubsidized Stafford loans for one
consecutive twelve-month period, if the school determines that the course of
study is necessary in order for the student to enroll in a program leading to
a degree or certificate. A student enrolled on at least a half-time basis in a
program that is required by a State for a professional credential or
certificate for employment as a teacher in an elementary or secondary school
located in that State is eligible to receive aid under the Stafford Loan,
Unsubsidized Stafford, and PLUS programs. Consolidation loan borrowers need
not be enrolled in any school to be eligible.
Credentials/Documentation: For the Federal
Stafford Loan, Unsubsidized Stafford, and PLUS programs, the student will need
certification of eligibility from the school, and may be required to supply
documentation to verify the accuracy of data used in the Stafford Loan need
analysis. This program is excluded from coverage under OMB Circular No. A-87.
Pre-application Coordination: Information regarding
application procedures may be obtained from lenders, schools, Education
Department, State, or private guaranty agencies. This program is excluded from
coverage under OMB Circular No. A-102. This program is excluded from coverage
under E.O. 12372.
Application Procedure: Applications for the
Federal Stafford Loan, Unsubsidized Stafford, and PLUS Loans are obtained from
a participating lender, guaranty agency, or a school. Consolidation loan
applications are obtained from lenders. The borrower completes his or her
portion of a Stafford, Unsubsidized Staffords, or PLUS loan application and
submits it to the school. The school must certify that the student meets the
eligibility requirements for the loan, including a certification that the
student is enrolled, or accepted for enrollment as at least a half-time
student, and that the student is making satisfactory progress. The school must
also certify the type and amount of loan the student is eligible to receive.
The lender then completes its portion of the application and forwards it to
the guarantor for commitment. In some States, the guarantor issues the notice
of guarantee prior to sending the application to the lender. This program is
excluded from coverage under OMB Circular No. A-110.
Award Procedure: If the lender agrees to make the
loan, the application is forwarded to the guarantor for insurance. The lender
disburses the proceeds of a Stafford, Unsubsidized Stafford, or PLUS Loan to
the school or, if the student is attending a foreign school, directly to the
borrower. Consolidation Loan proceeds are disbursed directly to the holders of
the loans selected for consolidation. In most cases, a loan must be disbursed
in more than one installment over the length of the period of enrollment for
which the loan was intended, based on a disbursement schedule provided to the
lender by the school on behalf of the borrower. This multiple disbursement
requirement does not apply to Consolidation Loans. The borrower may be
required to pay an insurance premium of up to one percent of the principal
amount of a subsidized Stafford Loan, Unsubsidized Stafford, or PLUS Loan. The
charging of the insurance premium and the amount is determined by the
guarantor. In addition, for a subsidized Stafford, Unsubsidized Stafford, or
PLUS Loan, the borrower is required to pay a three percent "origination
fee" (on loans disbursed on or after July 1, 1994) which is used to help
defray program costs. All of these fees are normally deducted proportionately
from each disbursement of the loan proceeds.
Deadlines: None.
Range of Approval/Disapproval Time: Varies.
Appeals: Not applicable.
Renewals: Not applicable.
ASSISTANCE CONSIDERATIONS:
Formula and Matching Requirements: None.
Length and Time Phasing of Assistance: Applicants
may apply for a loan for any year of school. Repayment generally is made over
a period of 5 to 10 years for Federal Stafford, and PLUS Loans, excluding
periods of authorized deferment and forbearance. The repayment period for a
Consolidation Loan depends on the amount of the loan and may be up to 30
years, exclusive of periods of authorized deferment and forbearance.
POST ASSISTANCE REQUIREMENTS:
Reports: Lenders submit quarterly reports of loans
outstanding in order to receive interest benefits and special allowance
payments. Additional operational reports are required for specific purposes.
Audits: Lenders, schools (except foreign
schools), and guaranty agencies are subject to examination and program review
by the Department of Education. Generally, program reviews are performed on a
fiscal year basis. Participating schools must have an independent audit of all
Stafford Loan Program transactions at least annually. Guaranty agencies must
have independent financial and compliance audits annually. Guaranty agencies
must conduct annual reviews of the ten largest loan volume lenders in their
areas as well as schools with default rates above 20 percent that do not have
a default management plan approved by the Secretary.
Records: Lenders must maintain records to support
and identify loan transactions, interest billings, and/or special allowance.
Guaranty agencies must maintain complete records to support and identify their
activities. Federal regulations specify administrative and fiscal records
required to be maintained by schools.
FINANCIAL INFORMATION:
Account Identification: 91-0230-0-1-502.
Obligations: (Loan volume net of consolidations)
FY 01 $33,949,000,000; FY 02 est $34,866,000,000; and FY 03 est
$35,390,000,000. FFEL Consolidation volume: FY 01 $9,255,000,000; FY 02 est
$8,335,000,000; and FY 03 est $6,877,000,000.
Range and Average of Financial Assistance: Varies
depending on the type of loan.
Over 6 million loans were made in fiscal year 2001.
REGULATIONS, GUIDELINES, AND LITERATURE:
34 CFR 682.
INFORMATION CONTACTS:
Regional or Local Office: See list of Regional
Offices listed in Appendix IV of the Catalog. Each State with an operating
guaranty agency maintains an office in its respective State. A list of
guaranty agency addresses is available from the address below.
Headquarters Office: Office of Student Financial
Assistance, Department of Education, Washington, DC 20202. Telephone: (800)
433- 3243.
