About Stafford Loans

What are Stafford Loans?

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 won’t be charged any interest before you begin repayment or during authorized periods of deferment because the federal government “subsidizes” the interest during these periods.

Unlike a subsidized loan, an unsubsidized loan is not based on financial 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 while you are in school or during other periods of nonpayment, it will be capitalized – that is, the interest will be added to the principal amount of your loan, and then additional interest will be based on that higher principal amount.

Who can get a Stafford Loan?

If you’re a student enrolled in an eligible program at least half time, you may receive a Stafford Loan. You must meet other general eligibility requirements as well.

How do I get this loan?

You apply using the FAFSA or Renewal FAFSA, just the way you would for other federal student aid. Then you complete a promissory note that you’ll get here on this Web site, from your lender, or from your school. Your lender may be a bank, credit union, or other financial institution. If your school participates in the federal Direct Loan program, the school will provide the promissory note. The promissory note is a binding legal document; when you sign it you’re agreeing to repay the loan under certain terms. Read the note carefully and save it.

How much can I borrow?

Click here for a complete listing of the amounts students may borrow under the Stafford Loan program.

What is the interest rate on these loans?

The interest rate for subsidized and unsubsidized Stafford loans made after July 1, 2006 is fixed at 6.8%.

The following schedule shows the annual decreases in the fixed interest rates on undergraduate subsidized Stafford loans:

• 6.0% for loans first disbursed between 7/1/08 - 6/30/09
• 5.6% for loans first disbursed between 7/1/09 - 6/30/10
• 4.5% for loans first disbursed between 7/1/10 - 6/30/11
• 3.4% for loans first disbursed between 7/1/11 - 6/30/12

The rate for loans disbursed prior to July 1, 2006 is variable (subject to change each year) but does not exceed 8.25%. Variable interest rates are adjusted each year on July 1. You’ll be notified of variable interest rate changes throughout the life of your loan.

If you have subsidized loans, you won’t 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 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 paid in full, including during in-school, grace, and deferment periods. You can pay 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 a six-month grace period before you must begin repayment.

During the grace period on a subsidized loan, you don’t have to pay any principal and you won’t be charged interest. In contrast, during the grace period on an unsubsidized loan you don’t have to pay any principal but you will be charged interest. You can either pay the interest or it will be capitalized.

After you graduate, leave school, or drop below half-time enrollment, your lender will send you information about repayment and notification of the date it will begin. However, you’re responsible for beginning repayment on time even if you don’t receive this information. Failing to make payments on your loan is likely to have a negative effect on your credit rating.

Sample Repayment Schedule - 6.8%
Loan Amount	# of Monthly Payments	Monthly Payment	Total Paid
$5,000	120	$57.54	$6,904.80
$7,500	120	$86.31	$10,357.20
$10,000	120	$115.08	$13,809.60
$15,000	120	$172.62	$20,714.40
$20,000	120	$230.16	$27,619.20

Sample Repayment Schedule - 8.25%
Loan Amount	# of Monthly Payments	Monthly Payment	Total Paid
$5,000	120	$61.33	$7,359.60
$7,500	120	$91.99	$11,038.80
$10,000	120	$122.65	$14,718.00
$15,000	120	$183.98	$22,077.60
$20,000	120	$245.31	$29,437.20