Stafford Loans
Stafford Loans are one of the most common and lowest-cost ways to pay for school. These federal loans do not require credit checks and have low, fixed interest rates. There are two kinds of Stafford Loans: subsidized and unsubsidized.
Subsidized Stafford Loans are awarded on the basis of need and thus the interest will not accrue while the student is in school. Loan repayments do not begin until 6 months after the student leaves school or drops below half-time enrollment.
Unsubsidized Stafford Loans are available to almost any student regardless of need. Loan repayments do not begin until 6 months after the student leaves school or drops below half-time enrollment, but interest does accrue on these loans while the student is in school.
How Much Can You Borrow?
The amount of money you can borrow depends on your year in school and whether you have a subsidized or unsubsidized Stafford Loan. The following chart provides annual and aggregate loan limits for Stafford Loans disbursed on or after July 1, 2008.
| Dependent Student Limit | Independent Student Limit** | |
|---|---|---|
| Freshman | $5,500 Total $3,500 Subsidized |
$9,500 Total $3,500 Subsidized |
| Sophomore | $6,500 Total $4,500 Subsidized |
$10,500 Total $4,500 Subsidized |
| Junior | $7,500 Total $5,500 Subsidized |
$12,500 Total $5,500 Subsidized |
| Senior | $7,500 Total $5,500 Subsidized |
$12,500 Total $5,500 Subsidized |
| Grad Student Annual Limit | N/A | $20,500 Total $8,500 Subsidized |
| Undergrad + Grad Total Limit | N/A | $138,500 Total $65,500 Subsidized |
| Undergrad + Grad Student Enrolled in Approved Health Professional Programs - Total Limit | N/A | $224,000 $65,500 Subsidized |
The aggregate total for each year includes both subsidized and unsubsidized loans. For instance, if the student has been awarded a $2,700 subsidized Stafford Loan in the freshman year, total eligibility for an unsubsidized Stafford Loan is limited to the total eligibility for that year or, in this case, $2,800 ($5,500 minus $2,700).
** These limits also apply to dependent students whose parents do not qualify for PLUS Loans.
Key Facts about Stafford Loans
- You MUST complete a FAFSA to receive a subsidized and/or unsubsidized Stafford Loan.
- The fixed interest rate for subsidized Stafford Loans is 4.5% for the 2010-2011 academic year for undergraduate students. The subsidized Stafford Loan rate for graduate students is 6.8%. The unsubsidized Stafford Loan rate for both undergraduate and graduate students is 6.8%.
- Both subsidized and unsubsidized loans have deferment and forgiveness possibilities if the student attends school half-time, chooses to teach in a designated low-income school, works in a public service job, or faces economic hardship due to health or other issues. Always keep in contact with the lender in any event of a personal financial crisis. They will usually work with you.
How to Apply
- Complete the FAFSA.
- Enroll in a school that participates in the federal financial aid system.
- Review your financial aid award from your school to see if there are any Stafford Loans in the award letter. If you weren't granted a subsidized Stafford Loan, you are still eligible for an unsubsidized Stafford Loan.
- Call the school's financial aid office and request the paperwork for a Stafford Loan.
FAQs
You should fill out the FAFSA as soon as you can after January 1st of each year. Because the FAFSA asks for tax information from the previous calendar year, you may want to wait until your family has all of the necessary paperwork or has filed their income taxes. You can file the FAFSA before filing your income taxes using estimates, but you will need to go back later and correct any discrepancies.
The only deadline for filling out the FAFSA is June 30th at the end of the school year for which you are filing. In other words, for the 2010-2011 school year, the FAFSA will be available on January 1, 2010. You can file the FAFSA anytime between then and June 30, 2011. However, many states and schools allocate funds on a first-come, first-served basis, and some states have deadlines for filing the FAFSA to be eligible for certain kinds of aid. Please visit the Department of Education’s Student Aid on the Web for more information.
How long the FAFSA takes to be process depends on how it is submitted – and if it is complete and correct when submitted. If it's done online with an e-signature, it can take 3-5 days to see its status; if it's done on paper via mail, it can take 7-10 days. The status will indicate if you completed the application properly or if more information is necessary before the FAFSA is sent to the school). Please visit the Department of Education’s Student Aid website for more information.
Keep in mind that the most common federal student loan – the Stafford Loan – is available regardless of need or income, but you MUST complete the FAFSA to qualify. It is worth the effort to complete the FAFSA.
It is a common misconception that someone can be "ineligible" for financial aid because they make too much money. Everyone qualifies for unsubsidized federal loans, regardless of income.
People who do not qualify for federal aid include those without a high school diploma or GED, who are not U.S. citizens or eligible non-citizens, do not have a SSN, are not registered with the Selective Service (and are male), are not enrolled in an eligible program, or who are in default on a federal loan. Please visit the Department of Education’s Student Aid on the Web for more information.
After you graduate, leave school, or drop below half-time, there is a six-month grace period before you have to make a payment on your Stafford Loan(s). During this time, you will receive information about repayment and your first payment due date. You are responsible for repaying your loan(s) on time, even if you don't receive this information. Payments are usually due monthly.
During the grace period on a subsidized loan, you don’t have to make any payments, and you won’t be charged interest. During the grace period on an unsubsidized loan, you don’t have to make any payments, but you will be charged interest. You can choose to pay the interest during the grace period, or, if you defer all payments until after the grace period, the interest on an unsubsidized loan will be capitalized, or added to your principal loan balance, increasing the total amount you owe.
How long does it take for the FAFSA application to be processed?
What makes a person ineligible to receive FAFSA monies?
When do I have to begin repaying a Stafford Loan?
You should fill out the FAFSA as soon as you can after January 1st of each year. Because the FAFSA asks for tax information from the previous calendar year, you may want to wait until your family has all of the necessary paperwork or has filed their income taxes. You can file the FAFSA before filing your income taxes using estimates, but you will need to go back later and correct any discrepancies.
The only deadline for filling out the FAFSA is June 30th at the end of the school year for which you are filing. In other words, for the 2010-2011 school year, the FAFSA will be available on January 1, 2010. You can file the FAFSA anytime between then and June 30, 2011. However, many states and schools allocate funds on a first-come, first-served basis, and some states have deadlines for filing the FAFSA to be eligible for certain kinds of aid. Please visit the Department of Education’s Student Aid on the Web for more information.
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Federal Loan Information
All colleges participate in the Direct Lending program, which means a student enrolled at that school receives their federal student loans (including Stafford, PLUS and GradPLUS loans) directly from the school instead of from a lender.
