Federal Stafford Loans are the most common source of education loan funds and are available to both graduate and undergraduate students. There are two types: Federal Subsidized and Federal Unsubsidized. Read about your rights and responsibilities as a Stafford Loan borrower and apply.
Subsidized
Subsidized loans are need-based. The federal government pays the
interest on these loans while the student is in school and during
the grace period before repayment begins.
The terms and conditions of the program are explained below.
Eligibility:
You must be a U.S. citizen or permanent resident; full- or half-time
undergraduate or graduate student. A credit check is not required.
Loan limits:
| Annual limits: | |
| Year 1 | $2,625 |
| Year 2 | $3,500 |
| Years 3 and 4 | $5,500 per year |
| Graduate student | $8,500 per year |
Interest rate:
Annual limits are variable and may change on July 1. For loans disbursed
on or after July 1, 1998, rates are set:
- During in-school, grace, or deferment, rate based on 91 day T-bill rate + 1.70%.
- During repayment periods, based on 91 day T-bill + 2.30%.
- Capped at 8.25%.
- Based upon current rates.
Repayment term:
Up to 10 years.
Minimum payment:
$600 per year ($50 per month per FFELP loan account). If you take
out Stafford loans from more than one lender you may be required
to make more than one minimum payment.
Interest subsidy:
The federal government pays interest on the loan while you are in
school or during any grace period.
Repayment begins:
Following a six-month grace period after leaving school.
Unsubsidized
Unsubsidized loans are not need-based. You, the borrower, are responsible
for the interest on the loan as soon as it is taken out. Most
of the terms and conditions of subsidized and unsubsidized Stafford
loans are the same.
Eligibility:
- U.S. citizen or permanent resident
- Full- or half-time undergraduate or graduate student
- Not need-based
- No credit check required
Loan limits:
Independent students are allowed to borrow more than dependent undergraduate
students.
| Annual limits: | |
| Year 1 | $2,625 (dependent) $6,625 (independent) |
| Year 2 | $3,500 (dependent) $7,500 (independent) |
| Years 3 and 4 | $5,500 per year (dependent) $10,500 per year (independent) |
| Graduate student | $18,500 per year (less amount of subsidized Stafford loan awarded) |
Cumulative loan limits differ for undergraduate and graduate/professional students.
For undergraduate students:
- Dependent—$23,000 between subsidized and unsubsidized Stafford loans
- Independent—$46,000 (up to $23,000 may be in subsidized Stafford loans)
For graduate and professional students:
- $138,500 (up to $65,500 may be in subsidized Stafford loans)
Annual limits are variable and may change on July 1. For loans disbursed on or after July 1, 1998, rates are set:
- During in-school, grace or deferment, rate based on 91 day T-bill rate + 1.70%.
- During repayment periods, based on 91 day T-bill + 2.30%.
- Capped at 8.25%.
- Based upon current rates.
Unpaid interest will be capitalized at the start of repayment and at the end of any deferment. If borrowers obtain forbearances, interest may be capitalized no more frequently than quarterly, and again at the end of forbearance.
Total origination or insurance fees:
4% (3% to the federal government and 1% to the state or regional
guaranty agency, to cover administrative costs).
Repayment term:
Up to 10 years.
Minimum payment:
$600 per year ($50 per month per FFELP loan account). Borrowers
who take out Stafford loans from more than one lender may be required
to make more than one minimum payment.
Interest subsidy:
Not applicable.
Repayment begins:
Following a six-month grace period after leaving school.
