About
The Federal Stafford Loan is the most popular low-interest education loan designed
for undergraduate and graduate students. This loan is guaranteed by the federal
government and offers flexible repayment options. Schools that participate in the
Federal Family Education Loan (FFEL) Program or in the William D. Ford Federal Direct
Loan (Direct Loan) Program, or both, offer Stafford Loans.
FFEL Program vs. Direct Loan Program
Schools generally participate in either the FFEL or Direct Loan Program, but some
may participate in both. The eligibility rules and loan amounts are identical under
both programs. Repayment plans, however, differ somewhat.
- FFEL funds will come from a bank, credit union, or other lender that participates
in the program. You will need to choose a lender if you obtain this loan. Schools
that participate in the FFEL Program will usually have a list of preferred lenders.
Borrowers may choose a lender from that list, or choose a different lender they
prefer.
- Direct Loan funds will come directly from the federal government. No lender choices
will need to be made.
Subsidized vs. Unsubsidized Stafford Loans
There are two types of Federal Stafford Loans: subsidized and unsubsidized. Depending
on household income, a student may be eligible for one or both varieties of student loans. The school will
specify the loan type for which the student qualifies.
- Subsidized Stafford Loans are awarded on the basis of financial need. The government
pays the interest while the student is in school, in deferment (if applicable),
and during the grace period before repayment begins.
- Unsubsidized Stafford Loans are not based on income, but not all students will be
eligible for the maximum loan amount. A student’s year in school, their additional
financial aid awards and the estimated cost of attendance will be factored into
the eligibility decision. Student who borrow unsubsidized Stafford Loans are responsible
for all interest that accrues while they are in school, in deferment, and during
the grace period. As long as the student doesn’t exceed yearly Stafford Loan borrowing
limits, they may take out both subsidized and unsubsidized loans.
If you're a dependent undergraduate student, each year you can borrow up to:
- $5,500 (for the 2008-09 academic year) if you're a first-year student enrolled in
a program of study that is at least a full academic year.
- $6,500 (for the 2008-09 academic year) if you've completed your first year of study
and the remainder of your program is at least a full academic year.
- $7,500 if you've completed at least two years of study and the remainder of your
program is at least a full academic year.
If you're an independent undergraduate student or a dependent student whose parents
have applied for but were unable to get a PLUS Loan (a parent loan), each year you
can borrow up to:
- $9,500 (for the 2008-09 academic year) if you're a first-year student enrolled in
a program of study that is at least a full academic year. No more than $3,500 of
this amount may be in subsidized loans.
- $10,500 (for the 2008-09 academic year) if you've completed your first year of study
and the remainder of your program is at least a full academic year. No more than
$4,500 of this amount may be in subsidized loans.
- $12,500 (for the 2008-09 academic year) if you've completed two years of study and
the remainder of your program is at least a full academic year. No more than $5,500
of this amount may be in subsidized loans.
The student is responsible for all interest that accrues while they are in school,
in deferment, and during the grace period. As long as the student doesn’t exceed
yearly Stafford Loan borrowing limits, they may take out both subsidized and unsubsidized
loans.
Borrowing Limits at a Glance (2008-2009 School Year)
Loan amounts vary depending on a student's year in school and on whether they are
considered a financially dependent or independent student. The school's financial
aid office will determine a student's eligibility for a subsidized or unsubsidized
loan. The amount borrowed may not exceed the yearly cost of attendance minus grants
and other financial aid received.
Grade Level
Freshman
Sophomore
Junior/Senior
Graduate
|
Dependent Student*
$5,500
$6,500
$7,500
n/a
|
Independent Student*
$9,500
$10,500
$12,500
$20,500
|
*The government determines dependent and independent student status. Annual limits
may vary depending on your chosen medical discipline
Interest Rates and Fees
- Interest rates on unsubsidized Stafford Loans first disbursed on or after July 1,
2006 are fixed at 6.8% for both undergraduates and graduate school students.
- Interest rates on subsidized Stafford Loans first disbursed between July 1,2006
and June 30, 2008 are fixed at 6.8%. Subsidized Stafford Loans first disbursed on
or after July 1, 2008 are fixed at 6.0 % for undergraduates and 6.8% for graduate
school students.
- Interest rates on Stafford Loans disbursed between July 1, 1998 and June 30, 2006
may vary from year to year but cannot exceed 8.25%. For the 2008-2009 school year,
the interest rate is 4.21%. This rate may be lower during grace and deferment periods.
- In addition to interest rates, a loan fee of up to 4% will be charged. It will be
deducted proportionately from each loan disbursement.
Eligibility Requirements
- Enrolled at least half time at an eligible school and maintaining satisfactory academic
progress
- A U.S. citizen or a permanent resident of the U.S. or an eligible territory
- Not currently in default. Must not owe a refund on any Title IV loan or grant
- Registered with Selective Service (if borrower is a male under age 25)
Loan Repayment
- Students will have a 6 month grace period after graduating, leaving school, or dropping
below half-time status. After this time, payments must be made.
- During the grace period, interest will not be charged on subsidized loans but will
be charged on unsubsidized loans.
- Payments are usually due on a monthly basis.
- Under certain circumstances, e.g. health problems, a student may be eligible for
loan deferment.
For more information on Federal Stafford Loans, please visit www.studentaid.ed.gov.
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