How to Apply
THE FEDERAL DIRECT STAFFORD LOAN
Important Changes Beginning July 1, 2012
Elimination of subsidized interest on Graduate Stafford loans
All graduate Stafford loans disbursed on or after July 1, 2012 will be unsubsidized. This means the interest will begin accruing at disbursement for all graduate Stafford loans and will continue to accrue until the loan is repaid.
Elimination of the rebate on loan fees
The up-front rebate that all federal direct borrowers receive on loan fees has been eliminated. Beginning July 1, 2012 the full 1% fee on Stafford loans and the 4% fee on the PLUS/Graduate PLUS loans will be deducted from each loan disbursement.
The Federal Direct Stafford Loan is the most common student loan program for funding undergraduate and graduate education. There are two types of Stafford loans, Subsidized and Unsubsidized, and they differ in the following ways:
Need-based versus Non-need-based - The subsidized loan is considered a need based loan which means it is only awarded to those students who can demonstrate a financial need for the loan funds. The unsubsidized loan is available to anyone whose other financial aid doesn't meet the Cost of Attendance. Both loans require the borrower to complete the Free Application for Federal Student Aid (FAFSA).
In-School Interest Subsidy - Subsidized Stafford loans are interest-free as long as the borrower is enrolled at least half-time in a degree program at a university or college, and for the six month grace period that follows. Unsubsidized Stafford Loans begin accruing interest from the date of disbursement and interest continues to accrue while the borrower is in school.
Interest Rates for both loans are fixed rates. In some cases, the subsidized loans have a lower interest rate than the unsubsidized loans (see chart below).
Loan Limits differ depending on the borrower's grade level, dependency status, type of loan, and whether or not the borrower's parent's PLUS Loan has been denied.
- An undergraduate student's dependency status is determined by the financial aid office.
- If a student is deemed independent, or his/her parent is denied a PLUS Loan, the student is eligible for additional unsubsidized loans over the amount listed on the chart below. Freshmen and Sophomores may have up to $4,000, and Juniors and Seniors up to $5,000 in additional unsubsidized loan funds.
- The unsubsidized loan limits shown in the chart below are based on the borrower receiving the maximum amount of subsidized Stafford loan. If the borrower is not eligible for the maximum subsidized Stafford loan, then the borrower may be able to use additional unsubsidized loan funds to the combined limit, not to exceed the Cost of Attendance less other financial aid.
| Grade Level |
Loan Limits Subsidized Unsubsidized Combined |
Interest Rates Subsidized Unsubsidized |
| Annual Limits |
||
|
Undergraduate Freshman Sophomore Junior & Senior |
$3,500 $2,000 $5,500 $4,500 $2,000 $6,500 $5,500 $2,000 $7,500 |
3.40% (2012) 6.80% 6.80% (2013) |
|
Graduate & Professional All Grade Levels Medical Student 1st - 3rd Years 4th Year |
$8,500 $12,000 $20,500 $8,500 $38,666 $47,166 $8,500 $32,000 $40,500 |
6.80% 6.80% |
| Maximum Aggregate Limits |
||
|
Undergraduate Undergraduate (independent Graduate & Professional Medical Student |
$23,000 $8,000 $31,000 $23,000 $34,500 $57,500 $65,500* $73,000 $138,500 $65,500* $158,500 $224,000 |
|
* including undergraduate Stafford loans
Eligibility: To be eligible for a Stafford loan, you must be a U.S. citizen or permanent resident, not have previous defaults on a federal loan, be enrolled or plan to enroll at least half-time, and maintain satisfactory academic progress.
Loan Fees: Both the subsidized and the unsubsidized Undergraduate Stafford Loans have a 1% origination fee with an up-front rebate of .5%, resulting in a net origination fee of .5%. The fee is deducted from the loan proceeds at disbursement reducing the actual origination fee to .5%. The borrower is able to keep the rebate if, once he/she enters repayment, the first twelve monthly payments are made on time. If the borrower fails to meet the twelve on-time payments, the rebate fee is capitalized into the principal of the outstanding loan balance.
Grace Period: Stafford Loans have a six month grace period. Repayment and, in the case of subsidized loans, interest accrual does not begin until six months after the student graduates, withdraws, or is enrolled less than half-time.