Stafford Loans


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Stafford Loans, FFEL and Direct Loans!

Stafford Loans are student loans administered by the U.S. Department of Education. There were two versions of the Stafford Loan. As a result of recent legislation, no further loans will be made under the FFEL Program beginning July 1, 2010. All new Stafford, PLUS, and Consolidation Loans will come directly from the Department under the Direct Loan Program. These are known as Direct Subsidized Loans and Direct Unsubsidized Loans.

You must fill out a FAFSA form to be considered. Once the FAFSA has been processed, the school will inform you of your eligibility for the Stafford Loan. If you are to receive a loan, you will have to sign a promissory note that will spell out the terms and conditions of the loan.

Maximum Loan Amounts

The maximum loan amount depends on your year of study and whether you are a dependent student. For dependent students:

  • If you are a first year student in a program that is at least a full year of study, you can borrow up to $5,500. ($3,500 is the maximum subsidized loan)
  • If you are a second year student, the maximum is $6,500. ($4,500 is the maximum subsidized loan)
  • Junior and senior years, you can receive up to $7,500. ($5,500 is the maximum subsidized loan)

For independent students or dependent students whose parents applied for, but were not able to get a PLUS loan:

  • If you are a first year student in a program that is at least a full year of study, you can borrow up to $9,500. ($3,500 is the maximum subsidized loan)
  • If you are a second year student, the maximum is $10,500. ($4,500 is the maximum subsidized loan)
  • Junior and senior years, you can receive up to $12,500. ($5,500 is the maximum subsidized loan)

What is the interest rate?

For Direct Subsidized and Unsubsidized Loans to undergraduates disbursed after 7/1/2016 and before 7/1/2017, the interest rate will be 3.76%. Direct Unsubsidized Loans to Graduate or Professional students disbursed after 7/1/2016 and before 7/1/2017, will carry a 5.31% interest rate.
Unsubsidized Stafford loans first disbursed on or after July 1, 2006, have an interest rate fixed at 3.76 percent. The interest rate for subsidized Stafford loans first disbursed on or after July 1, 2009 is fixed at 5.6 percent. If the first disbursement of your subsidized loan is between July 1, 2010 and June 30, 2011, the interest rate on your loan is fixed at 4.5%. The interest rate on subsidized loans first disbursed to undergraduate students between July 1, 2011 and June 30, 2012 will be fixed at 3.4%. Loans issued prior to July 1, 2006, had a variable interest rate and these loans are not affected by the new fixed rate terms.

If you have the financial need, some or all of your Stafford Loans may be subsidized. This means that the federal government will pay the interest on the loans while you are attending school and for up to six months after you leave school. You may also be eligible to get some funds up to the yearly maximum as an unsubsidized loan.
As an example, if you are a first year student and you are eligible for a $1500 subsidized Stafford Loan, you may also borrow $5500 - $1500 = $4000 as an unsubsidized Stafford Loan.

Why didn't I get the whole amount?

For loans disbursed between October 1, 2015 and October 1, 2016, the fee is 1.068%. For loans first disbursed after October 1, 2016 and before October 1, 2017, the loan fee is 1.069%. The loan fee will be deducted proportionately from each loan disbursement.

When do I have to pay it back?

When you graduate, leave school or drop under a half-time enrollment, you will begin a six month grace period. Once this is finished, you will start repayment.

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