Review the terms and conditions of the student loan. The student has agreed to these conditions by signing the Promissory Note.

Federal Stafford Loan Program (Subsidized) Loan Limits:
A dependent undergraduate student may borrow:

• First academic year-up to $2,625.
• Second academic year-up to $3,500.
• Third and subsequent academic years-up to $5,500.

The aggregate maximum that a dependent undergraduate student may borrow is $23,000. Tell students the maximum amount that they can expect to borrow, based upon their program of study, and the typical number of quarters required to complete the program.

Origination Fee
An origination fee may be deducted proportionately from each loan disbursement. The origination fee is turned over to the federal government to help offset the cost of the federal student-loan program. For loans first disbursed on or after July 1, 2006, the maximum origination fee is 2 percent.

Federal Default Fee
The guarantor must collect a federal default fee, which may be deducted from each loan disbursement.

For loans guaranteed on or after July 1, 2006, the federal default fee is 1 percent.

Interest Rate
For loans first disbursed on or after July 1, 2006, the interest rate if fixed at 6.8 percent. For loans disbursed prior to July 1, 2006, the interest rate is variable and may change every July 1. For borrowers who received their first Federal Stafford Loan on or after July 1, 1994, but prior to July 1, 2006, the maximum variable interest rate is 8.25 percent. On subsidized Stafford loans, the federal government pays the interest while the student is in school and during the grace period.

Give students the current interest rate.

Disbursement of Loan Proceeds
Typically, each loan is disbursed in two or three disbursements.

Loan proceeds often are distributed to schools via Electronic Funds Transfer. The students receive a receipt from the accounting department when the EFT disbursement is credited to their accounts.

Loan checks are mailed directly to the school, and the student will be contacted to endorse the check when each disbursement is received.

Federal Stafford Loan Programs (Unsubsidized)
Terms and conditions of the unsubsidized and subsidized Federal Stafford Loan programs are the same with a few exceptions.

Loan Limits (Unsubsidized)
For most dependent students, the combined total of both programs (subsidized and unsubsidized) cannot exceed the Federal Stafford Loan Program annual limits.

For independent students and for dependent students whose parents cannot borrow a PLUS loan, the combined total of the subsidized and unsubsidized Federal Stafford loans cannot exceed $6,625 for the first academic year, $7,500 for the second academic years, and $10,000 for the third and subsequent academic years. The aggregate maximum that a student in this situation may borrow is $46,000.