University of Southern Indiana

Stafford Loans: What You Should Know

The Stafford Loan Process:

þ Step 1 – Request a Stafford Loan on your FAFSA.

þ Step 2 - Accept the Stafford Loan using MyUSI. (Quick Guide to Checking My Financial Aid) This process requires the borrower’s USI username and password.

þ Step 3 - First-time Stafford Loan borrowers must complete loan entrance counseling online at www.usi.edu/finaid/entraDL.asp. This process requires the borrower’s Social Security Number or FAFSA PIN but not both.

þ Step 4 - Stafford Loan borrowers new to the Direct Loan program must sign a Master Promissory Note (MPN) online at www.usi.edu/finaid/mpnstaff.asp. This process requires the FAFSA PIN of the borrower.

NOTES: The promissory note cannot be signed until at least ten days after STEP 2, acceptance of the Stafford Loan, has been completed. Promissory notes are not available prior to July 1 for periods of study beginning in fall.

Loan Amounts:

Disbursements

The maximum amount is the amount for which the student is eligible for the academic year. The Stafford Loan is automatically split between Fall and Spring, unless specified otherwise through a Stafford Loan Adjustment Form.

After July 1, 2008 the Stafford Loan limits will be increasing starting with the 2008-2009 academic year. Students who have a loan as offered or as accepted on MyUSI will receive further notice on how to apply for the additional $2000. More information should be available after July 1.

Dependent Students (Subsidized Loan Amount Depends on Need)

Classification	Hours Earned	Annual Maximum Prior to 7/1/08*	Additional Unsubsidized After 7/1/08	Annual Maximum After 7/1/08
Freshman	0-31	$3,500	$2,000	$5,500
Sophomore	32-62	$4,500	$2,000	$6,500
Junior	63-93	$5,500	$2,000	$7,500
Senior	94+	$5,500	$2,000	$7,500

* A dependent student whose parent is denied a Parent PLUS Loan may be eligible to borrow additional funds under the Stafford Loan Program. A Stafford Loan Request form and verification of the Parent PLUS Loan denial will be required by our office. A USI financial aid counselor can provide information on additional eligibility.

Independent Students (Subsidized Loan Amount Depends on Need)

Classification	Annual Maximum Subsidized Prior to 7/1/08	Annual Maximum Subsidized & Unsubsidized Prior to 7/1/08	Additional Unsubsidized After 7/1/08	Annual Maximum After 7/1/08
Freshman	$3,500	$7,500	$2,000	$9,500
Sophomore	$4,500	$8,500	$2,000	$10,500
Junior	$5,500	$10,500	$2,000	$12,500
Senior	$5,500	$10,500	$2,000	$12,500
Post Graduate Programs
Graduate	$8,500	$20,500*	$0	$20,500

* Most USI Graduate Students are not eligible for the full $20,500 in two semesters based on cost of attendance.

Maximum Total Subsidized and Unsubsidized Stafford Debt (Lifetime Limit)

Classification	Maximum Subsidized Borrowing Prior to 7/1/08	Maximum Combined Borrowing Prior to 7/1/08	Maximum Combined Borrowing After 7/1/08
Dependent Undergraduate	$23,000	$23,000	$31,500
Independent Undergraduate	$23,000	$46,000	$57,500
Graduate/Professional	$65,500	$138,500	$138,500

Subsidized vs. Unsubsidized:

Subsidized Stafford Loan

The government pays the interest on the loan while the student is in school, during the six-month grace period and during any deferment periods. Subsidized loans are awarded based on financial need and may not be used to finance the family contribution.

Unsubsidized Stafford Loan

The government does not pay the interest. The borrower is responsible for the interest on an unsubsidized loan from the date the loan is disbursed, even while the student is still in school. Students may avoid paying the interest while they are in school by capitalizing interest, which increases the loan amount. Unsubsidized loans are not based on financial need and may be used to finance the family contribution.

Interest Rates and Fees:

Stafford Loan Interest Rates

Year	Subsidized	Unsubsidized
7/1/08 - 6/30/09	0% in school 6.0% in repayment	6.8% in school 6.8% in repayment

Origination (Processing) Fees

There is a 1% origination or processing fee deducted from your loan disbursements by the Direct Loan Program under federal guidelines. For example, $1,000 borrowed for one academic year would disburse as $990, $495 at the start of the fall semester and $495 at the start of the spring semester. Note that a 2.5% processing fee applies to your Stafford Loan. However, only 1% is deducted contingent upon the first 12 consecutive payments being on-time when repayment commences.

Graduating and Repayment:

Graduating Students and Final Semester Loans

Loan amounts must be prorated if the loan period includes only the final semester before graduation. The number of semester hours in which the student is enrolled will be divided by 24 to arrive at the percentage which is then multiplied by the maximum annual loan amount. For example, a student taking 12 credit hours would be limited to 50% of the annual amount. Other limitations may reduce the loan further.

Exit Counseling

When a Stafford Loan borrower graduates, drops below half-time enrollment status, or leaves the University, he or she must complete student loan Exit Counseling. USI academic transcripts will be held until the Exit Counseling is completed. Students can complete Exit Counseling by visiting http://www.usi.edu/finaid/exitnew.asp.

Direct Loan Servicing
Direct Loan Servicing including contact information is available online.
Toll free: 1-800-848-0979

Return to Stafford Loan On-Line.

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