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F.A.Q.s About Student Loans

• Am I eligible for a student loan?
• How much can I borrow?
• What schools am I eligible to attend with a student loan?
• What expenses do these student loans cover?
• If I receive a scholarship, grant, or other financial assistance, am I still eligible for a student loan?
• Can the student earn other income from working while going to school and receiving the loan?
• When should I apply for financial aid and the loan?
• Is there a fee for applying?
• How do I apply?
• Since a bank will provide the funding for the loan, will I need to personally come to the bank to sign loan papers?
• Will my student loan help me establish credit?
• After I am approved for the loan, when do I receive the money?
• Do I have to re-apply for a student loan each year?
• When must the loan be repaid?
• How long do I have to repay the loan?
• What is the interest rate?
• Tell me about the LoanSTAR^SM Student Loan Program.

Am I eligible for a student loan?

In most cases, eligibility requirements are easy to meet. We've listed most of the general guidelines below. The school's financial aid officer will determine your financial need for a Subsidized Stafford Student Loan based upon factors such as the cost of attending school, family income, and the number of dependents in the family. Unsubsidized Stafford Loans are also available to students who do not qualify for Subsidized Stafford Loans or their Subsidized Stafford Loan eligibility does not meet the amount you financially need (up to the annual or aggregate loan limit).

Stafford Loan Guidelines:

1. The student must be a U.S. citizen, but in some cases non-citizens are also eligible.
2. The student must be enrolled, or accepted for enrollment on at least a half-time basis, at an eligible school located in the United States. This includes study abroad programs approved by an eligible school in the United States.
3. The student must be enrolled in a degree or certificate program, or a program required for professional accreditation, and must demonstrate satisfactory academic progress.
4. The student must have applied for a Federal Pell Grant.
5. The student must be willing to certify his or her intent to use the loan proceeds for educational purposes only.
6. The student must not have defaulted on any other federally guaranteed education loan or owe any refund on a federal education grant or scholarship.
7. Male students must be registered with the U.S. Selective Service if required to register by the school. In addition, students receiving loans may not be incarcerated.

PLUS Loan Guidelines:

1. The student and parent must be U.S. citizens, but in some cases non-citizens are also eligible.
2. The student must be enrolled, or accepted for enrollment on at least a half-time basis, at an eligible school located in the United States. This includes study abroad programs approved by an eligible school in the United States.
3. The student must be in good standing with the eligible school and continue to make satisfactory academic progress at a post-secondary school (which includes community or junior colleges, colleges, or universities).
4. The student must be enrolled at least half-time.
5. The student and parent must not have defaulted on any other federally guaranteed education loan, or owe any refund on a federal education grant or scholarship.
6. The parent must not have an adverse credit history.
7. Male students must be registered with the U.S. Selective Service if required to register by the school. In addition, students receiving loans may not be incarcerated.

How much can I borrow?

Independent students (those students who are not listed as a dependent of another individual such as a parent or guardian) may borrow up to $46,000 under the Stafford Loan Program for undergraduate studies. An additional amount of up to $92,500 may be borrowed for graduate or professional studies - for a lifetime aggregate maximum loan amount of $138,500. Please note: the amounts listed below are effective as of January 1996 and are subject to change in the future without notice.

Maximum Annual Loan Amounts

* For dependent students whose parents cannot borrow under the Federal PLUS program, the amount a student can borrow under the unsubsidized program is the same as for an independent student.

**Independent students who are not eligible for a full Subsidized Federal Stafford Loan may borrow their remaining subsidized eligibility under the unsubsidized program (example: a first year undergraduate receives $2,000 of $2,625 total eligibility under the Subsidized Federal Stafford Loan Program; the borrower may apply for the remaining $625 under the Unsubsidized Federal Stafford Loan Program, making the total amount of unsubsidized eligibility $4,625).

Maximum Aggregate Loan Amounts*

*The Department of Education may increase the aggregate borrowing limits when the program of study is deemed exceptionally expensive.

What schools am I eligible to attend with a student loan?

You can use your student loan to attend most universities, colleges (including junior colleges) or vocational schools (including business or trade schools or technical institutions) that limit enrollment to high school graduates (or persons with equivalency certificates or who are beyond the age of compulsory school attendance) and that are accredited by a nationally recognized accrediting agency or association approved by the Federal government. If you have any questions about the eligibility of a particular school, you may call us at 1-800-829-4599 toll free.

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What expenses do these student loans cover?

Most expenses related to the cost of an education are allowable: tuition, fees, books, supplies, room and board, and even transportation to and from school.

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If I receive a scholarship, grant, or other financial assistance, am I still eligible for a student loan?

Yes! However, the total amount of the student loan might be affected based upon other aid you are receiving. After you complete the Free Application For Federal Student Aid (FAFSA), you will have a better idea of the specific amounts available.

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Can the student earn other income from working while going to school and receiving the loan?

Yes, but again, the amount of the student loan might be affected by the amount of income the student is earning while in school.

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When should I apply for financial aid and the loan?

We recommend you begin the process at this time. The length of time can vary, but generally the entire loan process requires 3-4 months because your school, a local bank and the LoanSTAR^SM Student Loan Program all participate in the process. So, to avoid delays, we recommend you begin the application process as soon as possible.

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Is there a fee for applying?

No. The school, lender or government cannot charge you for processing your application; however, there are guarantee and origination fees charged by the guarantor and the government for insuring your loan. Fees charged for the government guarantee and the government origination fee are deducted from the loan, so there are no out-of-pocket expenses or loan application fees of any kind.

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How do I apply?

Applying is a simple six-step process:

1. Complete the Free Application For Federal Student Aid (FAFSA).

2. Next, you should contact the financial aid office of the school you plan to attend and request that they send you the school's financial aid package.

3. After completing the "FAFSA" and any additional requirements of the school you plan to attend, mail these forms to their proper destinations. The school's financial aid officer will notify you of the aid you qualify for via an awards letter.

4. When the loan has been awarded, you will be notified by the school. In some cases the school will send you a Stafford and/or PLUS Student Loan Application partially completed for you. If you do receive these forms you must use them. If you are not mailed these forms, then please contact our office for a Student Loan Application.

5. Make sure your bank's name and lender number are inserted in the Borrower Section of the application and that you have signed in all the appropriate places. Then mail the Student Loan Application back to the school. The school will forward the Student Loan Application to the LoanSTAR^SM Student Loan Program after their review and certification; however, if the school should return the application to you, you should mail it to:
• LoanSTAR^SM Student Loan Program
  P.O. Box 4940
  Bryan, TX 77805-9875
  
  
6. Make sure you keep a copy of your application and the promissory note for your records.
   LoanSTAR^SM Student Loan Program will then mail you a disclosure form informing you of the approved loan amount, the disbursement schedule, as well as additional information and disclosures.

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Since a bank will provide the funding for the loan, will I need to personally come to the bank to sign loan papers?

Good News! Through the LoanSTAR^SM Student Loan Program, the processing of your loan will be completed by mail. So there is no need to visit with the bank in person.

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Will my student loan help me establish credit?

Yes. As with most loans, your student loan will be reported to a national credit bureau and an excellent payment record will help establish a good credit rating.

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After I am approved for the loan, when do I receive the money?

The school you are attending will specify the dates that the loan proceeds should be disbursed. Most loans are funded in two installments at the beginning of each semester and are usually disbursed directly to the school according to their procedures. Your school can give you more information about their policies.

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Do I have to re-apply for a student loan each year?

Yes, you will need to complete the FAFSA and loan application each year you borrow money; however, you are not required, in any way, to continue borrowing each year.

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When must the loan be repaid?

Repayment of a Stafford Loan begins about six months after graduation, or six months after the student becomes enrolled less than half-time. PLUS Loan repayments begin within 60 days of the final disbursement. Certain repayment deferments are available if you qualify. While most borrowers repay their loans as agreed, there are severe penalties for non-payment. Defaulting on a loan will be reported to the credit bureau and will prevent you from receiving additional financial assistance and will probably prevent you from receiving other types of loans for cars, credit cards and even a mortgage loan. If you default on the loan, the Internal Revenue Service may hold your tax refund and your employer can garnish your wages.
It is important to remember that most individuals with undergraduate and/or graduate degrees earn substantially higher incomes than do individuals without higher education degrees. So, in addition to earning a degree, college graduates have the opportunity to earn far more money during their lifetime, which makes loan repayment easier to afford.

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How long do I have to repay the loan?

Loan repayment terms can be up to ten years, but a minimum monthly payment of $50 is required. Loan consolidation and longer terms are available under certain circumstances.

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What is the interest rate?

Interest rates are reset on July 1st of each year. So contact us and we'll provide you with current interest rates. However, you'll find that the interest rates for both Stafford and PLUS Loans are very, very affordable. Rates are based on the 91-Day Treasury Bill for Stafford Loans and the 52-Week Treasury Bill rate for PLUS Loans.

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Tell me about LoanSTAR^SM Student Loan Program Lenders.

The LoanSTAR^SM Student Loan Program is sponsored by a non-profit company which works directly with local banks who fund the loans. The LoanSTAR^SM Student Loan Program has over 20 years of experience with student lending. Therefore, we understand your needs and we take the time to help you every step of the way.