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Federal Family Education Loans

Published on AidPage by IDILOGIC on Jun 24, 2005

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How to apply...

Application Procedure:

Applications for the Federal Stafford Loan, Unsubsidized Stafford, and PLUS Loans are obtained from a participating lender, guaranty agency, or 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.

Note: Each program will indicate whether applications are to be submitted to the Federal headquarters, regional or local office, or to a State or local government office.

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.

Note: Grant payments may be made by a letter of credit, advance by Treasury check, or reimbursement by Treasury check. Awards may be made by the headquarters office directly to the applicant, an agency field office, a regional office, or by an authorized county office. The assistance may pass through the initial applicant for further distribution by intermediate level applicants to groups or individuals in the private sector.