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Stafford Loans

Like other types of financial aid, your Stafford Loan is determined by financial need, as demonstrated through information from your FAFSA. Keep in mind that the Stafford Loan needs to be repaid, but offers low interest rates and a variety of payment plans.

In order to qualify for a Stafford Loan, you need to be enrolled at least half time, not be in default on any other educational loan, or owe a refund on an education grant. Schools participate in one of two Stafford Loan programs--the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan Program (FFELP) are essentially the same. The federal government acts as the lender for the Direct Loan Program and banks or other lending institutions act as the lender for the FFEL Program.

Subsidized and Unsubsidized Stafford Loans
For a subsidized Stafford Loan, the federal government pays the interest while you are enrolled at least half time. Additionally, you have a six-month grace period, after you leave school or drop below half-time status, before you have to begin repaying your Stafford Loan. The amount of subsidized Stafford Loan for which you are eligible depends on your financial need.

If your subsidized Stafford Loan amount does not meet all of your expenses, or if you do not demonstrate financial need, you might be eligible to receive an unsubsidized Stafford Loan. With an unsubsidized loan, you can defer payments while you are enrolled in school, but interest does accrue during this time. Therefore, if you borrow an unsubsidized Stafford Loan, you can choose to make interest payments while you are in school.

Stafford Loans Particulars
The maximum amount you can borrow from a Stafford Loan depends on whether you are a dependent or independent student, and increases with each year you advance in school. If you are a dependent undergraduate student, you are eligible for a maximum of:

  • $2,625 year 1
  • $3,500 year 2
  • $5500 years 3 + 4
  • $23,000 total

For an independent student, the maximums are:

  • $6,625 year 1
  • $7,500 year 2
  • $10,500 years 3 + 4
  • $46,000 total (of which no more than $23,000 can be subsidized)

For loans disbursed on or after July 1, 2006, the interest rate is fixed at 6.8%.