Federal Direct Stafford Loans are loans awarded by SIUC from funds lent directly to the student by the federal government. Federal Direct Stafford Loans may be subsidized (awarded on the basis of financial need) or unsubsidized (not awarded on the basis of financial need.) Interest on subsidized loans will not be charged to the borrower until repayment is begun; interest on unsubsidized loans will be charged from the time the loan is disbursed.

In order to apply for a Federal Direct Stafford Loan, the student must complete and submit the Free Application for Federal Student Aid (FAFSA) for the academic year he or she plans to attend. A student is eligible to be considered for the Federal Direct Stafford Loan if they have a valid EFC on file in the Financial Aid Office; are a regular student enrolled in an eligible program on at least a half-time basis; have not already borrowed the maximum aggregate Federal Direct Stafford Loan amount; and are not ineligible for other reasons.

If you're a dependent undergraduate student, you can borrow up to:

$3,500 a year ($5,500, effective July 1, 2008) if you are a Freshman

$4,500 a year ($6,500, effective July 1, 2008) if you are a Sophomore

$5,500 a year ($7,500, effective July 1, 2008) if you are a Junior, Senior or Senior with Degree.

A total debt limit of $31,000 from all Stafford loans combined (no more than $23,000 of which can be subsidized).

If you're an independent undergraduate student, you can borrow up to:

$7,500 a year ($9,500, effective July 1, 2008) if you are a Freshman

$8,500 a year ($10,500, effective July 1, 2008) if you are a Sophomore

$10,500 a year ($12,500, effective July 1, 2008) if you are a Junior, Senior, Senior with Degree or professional

A total debt limit of $57,500 from all Stafford loans combined (no more than $23,000 of which can be subsidized).

If you're a graduate or professional student, you can generally borrow up to:

$20,500 a year.

A total debt limit of $138,500 for all Stafford loans combined from all undergraduate, graduate and professional study (no more than $65,000 of which can be subsidized).

An Award Letter will be posted on SalukiNet for eligible students who are being offered a Federal Direct Stafford Loan. The student must accept or reject the initial loan offered for an academic year. The first time a loan is accepted, the student must complete a Master Promissory Note by accessing the Electronic Master Promissory Note web page. The loan will then be credited to the student's SIUC account, divided into two payments for the academic year. The student will also be required to participate in an Entrance Loan Counseling session by accessing the Entrance Counseling web page. The student can cancel all or part of the loan within 90 days of the date the school notifies the student that the loan has been credited to their account. Loan funds will first be used to pay for tuition, fees, room and board. If funds remain after these charges have been paid, the student will receive the remaining funds by check.

Fees of up to 3% will be charged for Federal Direct Stafford Loans, and deducted proportionately from each loan disbursement to the student's account. The fee goes to the government to help reduce the cost of the loan. Interest rates on Federal Direct Stafford Loans will be 6.8% effective July 1, 2006. Interest rates on subsidized Federal Direct Stafford Loans for undergraduate students will be 6.0% effective July 1, 2008.

When a student graduates, withdraws or stops attending on at least a half-time basis, a six-month grace period begins before the student must start repaying the Federal Direct Stafford Loans. At that time Exit Loan Counseling to explain the student's debt and repayment options is required.

At the end of the grace period, the student must begin repaying the loans directly to the Direct Loan Servicing Center. The monthly payment amount will depend on the size of the debt and the Repayment Plan. (See the "Repaying Your Loan" section for an explanation of Repayment Plans and examples of monthly repayment amounts) The student will receive repayment information from the Direct Loan Servicing Center and be notified of the date repayment begins. However, even if this information isn't received, the student is still responsible for beginning repayment at the end of the grace period. Payments may be mailed to:

Loan payments can sometimes be postponed (i.e. a deferment or forbearance may be granted) for specific reasons. A deferment allows the borrower to temporarily postpone payments on a loan. (See the "Repaying Your Loan" section for information on available deferments for Direct Stafford Loans.) A forbearance may be granted when a student is not eligible for a deferment but is temporarily unable to meet the repayment schedule. During forbearance, loan payments are postponed or reduced. Some reasons for which a forbearance may be granted include poor health or other unforeseen personal problems, service in a medical or dental internship or residency, service in a position under the National Community Service Trust Act of 1993, or repayment obligations equal to or greater than 20% of monthly gross income. Deferments and forbearance must be requested! In certain instances (e.g. total permanent disability, child care providers serving in a low income community) a loan may be discharged (forgiven) which releases the borrower from all obligation to repay the loan. Contact the Direct Loan Servicing Center at 800/848-0979 or www.dlservicer.ed.gov for more information on these options.