Stafford Loans

A Stafford Loan is a popular method to pay for a graduate or doctoral degree, in part because of its low interest rate and reasonable payment plans.

Your educational institution participates in one of two Stafford Loan programs: either the William D. Ford Direct Loan Program or the Federal Family Education Loan Program (FFELP). The two programs are essentially the same; the main difference is that the government acts as the lender for the Direct Loan program and a bank or other lending institution acts as the lender for the FFELP.

Graduate/Doctoral Stafford Loan Limits
The maximum amount of Stafford Loan for which you can apply increases every year. As a graduate or doctoral student, it is possible to borrow up to $20,500 annually with some restrictions. Graduate and professional students have a lifetime Stafford Loan limit of $138,500.

The Stafford Loan's interest rate is fixed at a competitive market rate at the time of loan disbursement, not to exceed 8.25%. Some FFELP lenders offer discounted interest rates if you consistently make payments on time or set up online payment plans. Check with your lender for possible rate discounts.

Stafford Loan Varieties
Stafford Loans can be subsidized or unsubsidized. If you meet your school's guidelines for financial need, you may qualify for a subsidized Stafford Loan. The Federal government pays the interest on a subsidized Stafford Loan as long as you remain enrolled at least half time in your graduate or doctoral degree program. You have a six-month grace period before you have to begin repayment on your Stafford Loan after you leave school or drop below half-time status

Stafford Loans, not based on financial need, are unsubsidized. The interest on an unsubsidized Stafford Loan begins to accrue immediately after your loan disbursement. You can defer payment of the loan principle while you are enrolled, but there is no grace period, and you must either make interest payments or the interest is added onto your loan principle.

Additionally, qualified students can combine a subsidized Stafford Loan with an unsubsidized Stafford Loan to cover educational expenses. Complete a FAFSA online and your school's financial aid office will determine your eligibility for this popular loan.