Federal Stafford Loans are awarded to students who demonstrate financial need. Borrowers who demonstrate need are not charged interest while enrolled at least half-time and during grace and deferment periods.
Note: An entrance counseling session will be required of all first-time Federal Stafford Loan borrowers. This is done when students complete their on-line promissory note.
What kinds of Stafford Loans are available?
Who can get Stafford Loan?
How much can I borrow?
How will I receive my Stafford Loan?
Will I have an opportunity to cancel my loan after I sign the promissory note?
What's the interest rate charged on these loans?
When do I pay back these loans?
Is it ever possible to postpone repayment of my loan?
What kinds of Stafford Loans are available?
Stafford Loans are either subsidized or unsubsidized. You can receive a subsidized loan and an unsubsidized loan for the same enrollment period.
A subsidized loan is awarded on the basis of financial need. You will not be charged any interest before you begin repayment or during authorized periods of deferment. The federal government "subsidizes" the interest during these periods.
An unsubsidized loan is not awarded on the basis of need. You'll be charged interest from the time the loan is disbursed until it is paid in full. If you allow the interest to accumulate, it will be capitalized-that is, the interest will be added to the principal amount of your loan and additional interest will be based upon the higher amount.
NOTE: If your interest is capitalized, it will increase the amount you have to repay. If you choose to pay the interest as it accumulates, you'll repay less in the long run. In addition, the amount of interest you pay during the first 60 months that interest payments are required may be tax deductible.
Who can get a Stafford Loan?
If you're a regular student enrolled in an eligible program at least half time, you may receive a Stafford Loan. You must also meet other general eligibility requirements.
How much can I borrow?
If you're a dependent undergraduate student you can borrow up to:
- $3,500 if you're a first-year student enrolled in a program of study that is at least a full academic year.
- $4,500 if you've completed your first year of study and the remainder of your program is at least a full academic year.
- $5,500 a year if you've completed 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 are unable to get a PLUS Loan, you can borrow up to:
- $6,625 if you're a first-year student enrolled in a program of study that is at least a full academic year (only $2,625 of this amount may be in subsidized loans).
- $7,500 if you've completed your first year of study and the remainder of your program is at least a full academic year (only $3,500 of this amount may be in subsidized loans).
- $10,500 a year if you've completed two years of study and the remainder of your program is at least a full academic year (only $5,500 of this amount may be in subsidized loans).
NOTE: Stafford Loans are not made to students enrolled in programs that are less than one-third of an academic year.
NOTE: The amounts given above are the maximum yearly amounts you can borrow in both subsidized and unsubsidized loans. You may receive less than these yearly maximum amounts if you receive other financial aid that is used to cover a portion of your cost of attendance.
The total debt you can have outstanding from all Stafford Loans combined is:
- $23,000 as a dependent undergraduate student.
- $46,000 as an independent undergraduate student (only $23,000 of this amount may be in subsidized loans).
How will I receive my Stafford Loan?
For a Direct Loan, the U.S. Department of Education will pay you through your school. For a Stafford Loan, the lender will send your loan funds to your school. In most cases, your loan will be disbursed in at least two installments, and no installment will be greater than half the amount of your loan.
Your loan money must first be used to pay for your tuition, fees, room and board. If loan money remains, you'll receive the funds by check or in cash unless you give the school written permission to hold the funds until later in the enrollment period.
Will I have an opportunity to cancel my loan after I sign the promissory note?
Yes. Your school must notify you in writing whenever it credits your account with your Direct or Stafford Loan funds. This notification must be sent to you no earlier than 30 days before, and no later than 30 days after the school credits your account. You may cancel all or a portion of your loan if you inform your school that you wish to do so within 14 days after the date that your school sends you this notice, or by the first day of the payment period, whichever is later. Your school can tell you the first day of your payment period. If you receive Stafford Loan funds directly by check, you may refuse the funds by not endorsing the check.
What's the interest rate charged on these loans?
The interest rate on your loan could change each year of repayment but, by law, it will never exceed 8.25 percent. The interest rate is adjusted each year on July 1. You'll be notified of interest rate changes throughout the life of your loan.
Congress changed the interest rate calculation for
If you have subsidized loans, you will not be charged interest while you're enrolled in school at least half time, during a grace period, or during authorized periods of deferment. Interest will begin to accrue-that is, accumulate-when you enter repayment.
If you have unsubsidized loans, you'll be charged interest from the day the loan is disbursed until it is repaid in full, including in-school, grace, and deferment periods. You may choose to pay the interest during these periods, or it can be capitalized.
When do I pay back these loans?
After you graduate, leave school, or drop below half-time enrollment, you have six months before you begin repayment (you may have longer than six months if you are on active duty with the military). This is called a "grace period."
During the grace period on a subsidized loan, you don't have to pay any principal, and no interest will be charged. During the grace period on an unsubsidized loan, you don't have to pay any principal, but interest will be charged. You can either pay the interest or it will be capitalized.
After you leave school or drop below half time enrollment, you'll receive information about repayment and will be notified of the date repayment begins. However, you are responsible for beginning repayment on time, even if you don't receive this information. Failing to make payments on your loan may have a negative effect on your credit rating.
Is it ever possible to postpone repayment of my loan?
Yes. Under certain circumstances, you can receive a deferment or forbearance on your loan. A deferment allows you to temporarily postpone payments on your loan. If you have a subsidized loan, you will not be charged interest during the deferment. If your loan is unsubsidized, you will be responsible for the interest on the loan during the deferment. If you don't pay the interest as it accrues, it will be capitalized and increase the amount you will have to repay. Deferments are available if you do not have an outstanding balance on a Stafford Loan received before
