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How to Apply for a Stafford Student Loan

What You Must Do

In short, to borrow a Stafford Student Loan, you must complete a loan application on-line. You can complete a Stafford Student Loan application on-line by visiting the website of any participating lender.

Here is a more detailed explanation of the steps involved:

1. The student and his parents complete a Free Application for Federal Student Aid (FAFSA).
2. The student selects a lender and completes a Stafford Master Promissory Note (MPN) on-line through the Lender's website (see below).
3. The College is notified by the Lender that the student has completed his MPN on-line and the College certifies the appropriate loan amount.
4. The student must attend a "Loan Entrance Counseling Session" offered by the Financial Aid Office at the beginning of the school year.
5. The Lender processes the loan amount that was certified by the College.
6. The Lender deducts any fees and sends a loan disbursement check to Thomas Aquinas College (half each semester).
7. The College verifies student's status and asks student to endorse the check for loan proceeds.
8. The loan check is posted to the student's account for payment of tuition, room and board.

Recommended Lender List

Thomas Aquinas College does not have a "preferred lender list" but many families ask us for lender recommendations, so we have compiled a "recommended lender list" to assist you in applying for a Stafford Student Loan. You are welcome to use any lender that participates in the Federal Family Education Loan Program. You are not limited to the lenders listed on our recommended lender list.

When considering a method and criteria for recommending lenders, we decided the most important consideration is stability, that is, an assurance that the lender is likely to be in business not only this year, but also for the remainder of your college years. Credit markets are very shaky in today's economy. Many small banks are exiting the Federal Family Education Loan Program. We recommend that you select one of the larger lenders so you are not faced with borrowing from one lender this year and another lender next year. Having multiple lenders can make it difficult later, when you are in repayment.

Our recommended lender list contains the seven largest FFELP lenders, determined by loan volume in 2007 (the most recent data available). We included all lenders that had more than $1 billion in loan volume per year and that have no regional or institutional limitations. The loan volume of these lenders is an indication they provide high quality service. If you should have a quality of service issue with any of these lenders, we would appreciate hearing from you.

As a Catholic college, we have incorporated into our recommended lender list a rating that indicates whether or not the lender supports a “culture of life.” We based that determination on the lender’s response to the question of whether their corporation contributes to Planned Parenthood.

The Basics About Stafford Loans

If you qualify for a subsidized Stafford Student Loan, the federal government (U.S. taxpayers) will pay the interest until you enter repayment. Subsidized loan eligibility is based on financial need as determined by the federal need analysis. (Thomas Aquinas College uses a different need analysis to determine your eligibility for institutional aid.) If you are not eligible for a subsidized Stafford Student Loan, you may always apply for an unsubsidized Stafford Student Loan. With an unsubsidized loan, interest begins to accrue while you are in school. Interest on an unsubsidized loan may be paid quarterly, or accrued until the borrower enters repayment. It is possible to receive both a subsidized and an unsubsidized Stafford Student Loan for the same period. The total of your combined Stafford Student Loans may not exceed the annual loan limits for your grade level.

• Repayment is not required until six months after you leave school or drop below half-time status.
• For loans borrowed in 2009-10, the interest rate is a fixed 5.6% for subsidized loans, 6.8% for unsubsidized loans.
• Prepayment may be made at any time without penalty.
• Payments may be deferred, extended, or reduced in cases of economic hardship.

Stafford Student Loans can have an origination fee of up to 0.5% that is paid to the lender to offset program costs and a default fee of up to 1.0% that is paid to the agency that insures the loan. As a consequence, total loan fees may be as high as 1.5%.

Disbursements are made by check, usually in two installments, one each semester. The College will notify you when funds are received.

The Master Promissory Note, or MPN, is a contract between you and the lender. It's a promise to repay the loan and an agreement to the terms and conditions of the loan. Before signing, be sure to read the MPN carefully, along with the instructions and your rights and responsibilities as a borrower. You only need to complete the MPN the first time you borrow. The MPN remains active for 10 years. You will need to complete a new MPN, however, if you change lenders, and you may need to complete a new MPN if you transfer to a different school. Each year you must complete a Free Application for Federal Student Aid (FAFSA) so that the College may determine your eligibility for a Stafford loan.

Your loan amount each year is determined by the loan amount agreed upon in your financial aid package from Thomas Aquinas College, as found in the "Payment Plan & Promissory Note." You may request additional loan amounts by completing a "Loan Adjustment Form" which is available from the Financial Aid Office.

Students are required to begin repaying their Stafford Student Loan six months after they graduate, leave school or drop below half-time attendance. Borrowers generally have 10 years to repay these loans. Under a level repayment plan, the monthly payment on $15,000 in Stafford Student Loans with an interest rate of 5.6% would be $164. With an interest rate of 6.8% the monthly payment would be $173.

For additional information about the Stafford Student Loan program, visit www.studentaid.ed.gov, click on "Federal Student Aid Programs" and then "Stafford Loans." Or call the Financial Aid Office at 800-634-9797, extension 5936. We would be happy to help you.