Stafford Loans

Because of its low interest rate and reasonable repayment options, the Stafford Loan is a popular choice among students. Your educational institution participates in one of two Stafford Loan programs. No matter which program funds your loan, you can use a Stafford Loan to help pay your educational costs.

If your school participates in the Federal Family Education Loan Program (FFELP), you would borrow a Stafford Loan from a bank or other lending institution. If your school participates in the William D. Ford Federal Direct Loan Program, the government is the lender for Stafford Loans.

Stafford Loans Borrowing Details
Every year you spend in your educational program, the annual maximum amount of Stafford Loan you can borrow increases. If you are a dependent student, you may qualify for a Stafford Loan of up to $2,625 during your first year of school, $3,500 during your second year, and up to $5,500 for each successive year until you earn your bachelor's degrees. If you are an independent student, you can qualify for a larger loan amount, ranging from $6,625 to $18,500 depending on your year of study.

The amount you borrow in Stafford Loans cannot exceed $23,000 during your undergraduate career as a dependent student. If you choose to pursue schooling beyond your bachelor's degree, the maximum amount of Stafford Loan you can borrow increases to $138,500 for your entire academic career. Your Stafford Loan's interest rate is fixed at a competitive market rate at the time your loan is disbursed, and can never exceed 8.25%. Some FFELP lenders may offer discounted interest rates if you consistently make payments on time or participate in online or automatic payments. Check with your lender to see if they offer any discounts.

Subsidized Stafford Loans
You may qualify for a subsidized Stafford Loan if you meet your school's requirements for financial need. The Federal government pays the interest on a subsidized Stafford Loan while you are in school, enrolled at least half time, and for a six month grace period after you leave school, which makes the Stafford Loan a good deal.

Unsubsidized Stafford Loans
The interest on an unsubsidized Stafford Loan begins to accrue immediately after loan disbursement. It is possible to defer payment of the loan principle, but if you do not pay interest on the loan while you are in school, it will be added onto your loan principle.

Students who qualify 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.