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Stafford Loans

The Federal Stafford Loan is the most popular low-interest federal loan. Stafford loans are for undergraduate and graduate students. The loan is insured by the federal government and offers flexible repayment options. Schools that participate in the William D. Ford Federal Direct Loan (Direct Loan) Program offer Stafford Loans.

Subsidized vs. Unsubsidized Stafford Loans

There are two types of Federal Stafford Loans: subsidized and unsubsidized. Depending on household income, a student can be eligible for one or both varieties of student loans. The school specifies for which loans the student is eligible. Due to rates and repayment policy, Stafford Loans are the second thing a student should pursue, after conducting a scholarship search. If you aren't able to completely fund your college education with scholarships, the Stafford is the first loan option you should consider.

  • Subsidized Stafford Loans are need-based loans. 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 and not all students are eligible for the maximum loan amount. Eligibility is determined by the student’s year in school, other financial aid awards, and the estimated cost of attendance. Students who borrow unsubsidized Stafford Loans are responsible for all interest that accumulates while they are in school, in deferment, and during the grace period. Students can take out both subsidized and unsubsidized loans as long as they don’t exceed yearly Stafford Loan borrowing limits.

Each year, dependent undergraduate students can borrow up to:

  • $5,500 for first-year students enrolled in a program of study that is at least one full academic year. Only $3,500 of that can be subsidized loans.
  • $6,500 if you've completed your first year of study and the remainder of your program is at least one full academic year. Only $4,500 of that can be subsidized loans.
  • $7,500 if you've completed at least two years of study and the remainder of your program is at least one full academic year. Only $5,500 of that can be subsidized loans.

Each year, independent undergraduate students or a dependent students whose parents were unable to get a PLUS Loan can borrow up to:

  • $9,500 if you're a first-year student enrolled in a program of study that is at least one full academic year. Only $3,500 of that can be in subsidized loans.
  • $10,500 if you've completed your first year of study and the remainder of your program is at least one full academic year. Only $4,500 of that can be in subsidized loans.
  • $12,500 if you've completed two years of study and the remainder of your program is at least one full academic year. Only $5,500 of that can be in subsidized loans.

The student is responsible for all interest that accumulates while they are in school, in deferment, and during the grace period. Students can take out both subsidized and unsubsidized loans as long as they do not exceed Stafford yearly borrowing limits.

$20,500 (unsubsidized only) for graduate/professional students who are independent students. There are no dependent loan options for graduates.

$31,000 for dependent students where no more than $23,000 can be subsidized loans for subsidized and unsubsidized aggregate loan limits.

-$57,500 for independent students where no more than $23,000 can be subsidized loans - is the limit for undergraduates when it comes to subsidized and unsubsidized aggregate loan limits. $138,500 for graduate or professional students where no more than $65,500 can be subsidized loans – is the limit for independent students for subsidized and unsubsidized aggregate loan limits.

Interest Rates and Fees

  • Interest rates on current subsidized Stafford Loans at the undergraduate level, first disbursed on or after July 1, 2015 and before July 1, 2016 are fixed at 4.29%.
  • Interest rates on current unsubsidized Stafford Loans at the undergraduate level, first disbursed on or after July 1, 2015 and before July 1, 2016 are fixed at 4.29% Interest rates for unsubsidized Stafford Loans at the graduate or professional level are fixed at 5.84%
  • In addition to interest rates, there are loan fees charged to 1.073% for loans first disbursed on or after Oct. 1, 2014 and before Oct. 1, 2015 and 1.068% for loans first disbursed on or after Oct. 1, 2015, and before Oct. 1, 2016.

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 have a six-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 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, visit www.studentaid.ed.gov.

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Last Reviewed: April 2020