Stafford loans are for students to help cover the costs of their school
expenses. These loans can be subsidized or unsubsidized. Stafford Loans are
loans that students can take out to pay for education expenses. They are part
of the William D. Ford Federal Direct Loan (Direct Loan) Program.
Note: Prior to July 1, 2010, some Stafford Loans were through private
lenders under the Federal Family Education Loan (FFELSM) Program. This program
has been discontinued.
Are Stafford Loans subsidized?
Stafford Loans can be subsidized or unsubsidized. You can receive a subsidized
loan and an unsubsidized loan for the same enrollment period.
What is the difference between a subsidized and an unsubsidized
student loan?
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. (Deferment is a period during which a borrower who meets certain
criteria may suspend making loan payments.) 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. (Disbursement
is the release of loan funds to the school for delivery to the borrower.)
In other words, your interest can grow while you're in school.
If you allow the interest to accumulate while you are in school or during
other periods of nonpayment, it will be capitalized. This means that the interest
will be added to the principal amount of your loan and additional interest
will be based upon this higher amount. The total amount of your loan will
be bigger!
If you choose to pay the interest as it accumulates while you're still
in school, you'll pay less in the long run.
Who can get a Stafford Loan?
Undergraduate and graduate students may receive a Stafford Loan. You must
be a regular student enrolled in an eligible program at least half time. You
must also meet other general eligibility requirements.
How do I apply for a Stafford Loan?
You apply using the Free Application for Federal Student Aid (FAFSA) or
Renewal FAFSA, just the way you would for other federal student aid.
After you receive your loan for the first time, you sign a promissory note
that you'll get from your school. A promissory note is a legal document listing
the terms and conditions of the loan. It is binding -- when you sign it, you're
agreeing to repay your loan under these terms. You'll want to read the note
carefully and save it for reference.
How much money can I borrow each year?
If you're a dependent undergraduate student, you can borrow annually
up to:
- $5,500 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)
- $6,500 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)
- $7,500 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)
If you're an independent undergraduate student, or a dependent
student whose parents are unable to get a PLUS Loan, you can borrow annually
up to:
- $9,500 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 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 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)
Generally, if you're a graduate student, you can borrow up to $20,500
each academic year. (No more than $8,500 of this amount may be in subsidized
Stafford Loans.)
If your period of study is less than an academic year, the amounts
you can borrow will be less than those listed. Check with your school's financial
aid office to find out how much you can borrow. (Stafford Loans are not made
to students enrolled in programs that are less than one-third of an academic
year.)
Note that the amounts given above are the maximum yearly amounts you can
borrow in both subsidized and unsubsidized loans, individually or in combination.
You might receive less than these amounts if you receive other financial
aid that you use to cover a portion of your costs.
How much money can I borrow in total over the years?
Generally, the total debt you can have outstanding from all Stafford Loans
combined is:
- $31,000 as a dependent undergraduate student (no more than $23,000 of
this amount may be in subsidized loans)
- $57,500 as an independent undergraduate student (no more than $23,000
of this amount may be in subsidized loans)
- $138,500 as a graduate or professional student (no more than $65,500 of
this amount may be in subsidized loans). The graduate debt limit includes
any Stafford Loans received for undergraduate study.
Can the school refuse the loan application?
Your school can refuse to certify your loan application or can certify
a loan for a smaller amount than you would otherwise be eligible for.
The school must document the reason for its decision and explain the reason
to you in writing. The school's decision is final and cannot be appealed to
the U.S. Department of Education.
What's the interest rate on Stafford Loans?
For all subsidized Stafford loans disbursed between July 1, 2010 and June
30, 2011, the interest rate is fixed at 4.5 percent.
For all subsidized Stafford loans disbursed between July 1, 2011 and June
30, 2012, the interest rate is fixed at 3.4 percent.
The interest rate for subsidized Stafford loans for graduate and professional
degree students is fixed at 6.8 percent
For unsubsidized Stafford loans for both graduate and undergraduate students,
the interest rate is fixed at 6.8 percent.
Other than interest, is there a charge to get a Stafford Loan?
For Stafford loans first disbursed between July 1, 2010 and June 30, 2011,
you will pay a fee of one percent of the loan. This fee is deducted proportionately
each time a loan disbursement is made. Also, if you don't make your loan payments
when scheduled, you may be charged collection costs and late fees.
How will I receive my Stafford Loan?
The loan funds will be sent to your school. In most cases, your loan will
be disbursed in at least two installments. No installment will be more than
half the amount of your loan.
Your loan money must first be used to pay for your tuition, fees, and room
and board. If loan money remains, you'll receive it by check or in cash, unless
you give the school written permission to hold the funds until later in the
enrollment period.
If you're both a first-year undergraduate student and a first-time borrower,
your first disbursement can't be made until 30 days after the first day of
your enrollment period. That way, you won't have to repay the loan if you
withdraw during the first 30 days of classes. (However, you might owe money
to the school for a portion of tuition or other fees.)
I've changed my mind! Can I cancel the loan, even after I've signed
the promissory note?
Don't panic! It's possible to cancel the loan if you meet certain conditions.
Your school must notify you in writing whenever it credits your account
with your Stafford Loan funds. This notification must be sent to you within
30 days of the date the school credits your account.
You may cancel all or a portion of your loan if you inform your school
within 14 days after the date 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 returning the check.
When do I pay back these loans?
After you graduate, leave school, or drop below half-time enrollment, you
will have six months before you begin repayment. This period of time is called
a grace period.
During the grace period on a subsidized loan, you don't have to pay any
of the principal loan amount, and you won't be charged interest.
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, which means the interest will be added to the principal
amount.
After you leave school or drop below half-time enrollment, you will receive
information about repayment and you'll be notified of the date repayment begins.
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, so stay on top of this! If you don't hear from your
loan servicer, contact them.
You can check your interest rate, servicer information and other financial
aid history by visiting the National Student Load Data System. (http://www.nslds.ed.gov/nslds_SA/
How do I pay back my loans?
When you first receive the loan, you will be contacted by your loan servicer.
Your loan servicer will provide updates on the status of your current loan,
as well as any additional federal loans you receive. You can check find out
who your loan servicer is by visiting the National Student Load Data System.
(http://www.nslds.ed.gov/nslds_SA/)
What if I have trouble repaying the loan?
Under certain circumstances, you can receive a deferment or forbearance
on your loan. To qualify, your loan must not be in default already.
A deferment means no payments are required. You won't be charged interest
on a subsidized Direct Stafford Loan. If you have an unsubsidized Stafford
Loan, you are responsible for the interest that accumulates during deferment.
During forbearance, loan payments are postponed or reduced. Your loan servicer
might grant you forbearance for a limited and specified period under certain
circumstances. For example, you may be temporarily unable to meet your repayment
schedule due to poor health or other unforeseen personal problems, but you're
not eligible for a deferment.
Can my Stafford Loan ever be discharged (canceled)?
Yes, but only under a few conditions.
The following reasons are not good enough to cancel your Stafford
Loan:
- You didn't complete your program of study at your school (unless you couldn't
complete the program for a valid reason, for example, the school closed)
- You didn't like the school or the program of study
- You didn't obtain employment after completing the program of study
How can I get more information?
For more information on Student Financial Assistance Programs, contact
the Federal Student Aid Information Center:
Internet :http://studentaid.ed.gov
Phone : 1-800-4-FED-AID (1-800-433-3243)
TTY : 1-800-730-8913
(Spanish speakers are available)