A Stafford Loan, also known as a Federal Direct Loan, is a low-cost loan provided by the U.S. Department of Education to students to help cover the costs of higher education. It is the largest and most popular student loan program in the United States [1].
Key Facts
- Maximum Loan Amount: The maximum loan amount for a Stafford loan can vary based on your grade level, dependency status, and whether you are an undergraduate or graduate student. The maximum annual loan amount can range from $5,500 to $20,500[3].
- Subsidized and Unsubsidized Loans: Stafford loans are divided into subsidized and unsubsidized loans. Subsidized loans are based on financial need, while unsubsidized loans are not. The amount you can receive in subsidized loans may be lower than the overall loan limits[3].
- Loan Limits by Year: The annual loan limits for subsidized and unsubsidized Stafford loans can vary depending on your grade level. For example, for dependent undergraduate students, the annual loan limits range from $5,500 to $7,500.
- Interest Rate: The interest rate on Stafford loans is variable and adjusted annually on July 1st. The current interest rate can be checked with the loan provider.
- Repayment Options: Repayment of Stafford loans typically begins six months after graduation or dropping below half-time enrollment. There are various repayment plans available, including standard repayment, extended repayment, income-driven repayment, and graduated repayment.
- Loan Fees: Stafford loans may have a loan fee of up to four percent, which is deducted proportionately from each loan disbursement.
Types of Stafford Loans
There are two types of Stafford Loans:
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Subsidized Stafford Loans
These loans are awarded based on financial need, as determined by the information provided on the Free Application for Federal Student Aid (FAFSA). The federal government pays the interest on subsidized loans while the student is enrolled in school at least half-time, during a grace period of up to six months after enrollment ends, and during certain deferment periods [2].
-
Unsubsidized Stafford Loans
These loans are not based on financial need, and students can qualify regardless of their income or assets. However, the federal government does not pay the interest on unsubsidized loans, and it accrues from the time the loan is disbursed until it is paid off [2].
Loan Limits
The maximum loan amount for a Stafford loan depends on the student’s grade level, dependency status, and whether they are an undergraduate or graduate student [3]. The annual loan limits for subsidized and unsubsidized Stafford loans can vary depending on the student’s grade level [3].
Interest Rates
The interest rate on Stafford loans is variable and adjusted annually on July 1st [3]. The current interest rate can be checked with the loan provider.
Repayment Options
Repayment of Stafford loans typically begins six months after graduation or dropping below half-time enrollment [3]. There are various repayment plans available, including standard repayment, extended repayment, income-driven repayment, and graduated repayment [3].
Loan Fees
Stafford loans may have a loan fee of up to four percent, which is deducted proportionately from each loan disbursement [3].
Sources
[1] https://www.savingforcollege.com/article/everything-you-need-to-know-about-the-federal-stafford-loan
[2] https://www.govloans.gov/loans/stafford-loans-for-students
[3] https://www.thebalancemoney.com/max-stafford-loan-795128
FAQs
How much can I borrow in Stafford loans?
The maximum loan amount for a Stafford loan depends on the student’s grade level, dependency status, and whether they are an undergraduate or graduate student. The annual loan limits range from $5,500 to $20,500 3.
What is the difference between subsidized and unsubsidized Stafford loans?
Subsidized Stafford loans are based on financial need, while unsubsidized Stafford loans are not. The federal government pays the interest on subsidized loans while the student is enrolled in school at least half-time, during a grace period of up to six months after enrollment ends, and during certain deferment periods. The federal government does not pay the interest on unsubsidized loans, and it accrues from the time the loan is disbursed until it is paid off 2.
What is the interest rate on Stafford loans?
The interest rate on Stafford loans is variable and adjusted annually on July 1st. The current interest rate can be checked with the loan provider 3.
What are the repayment options for Stafford loans?
There are various repayment plans available for Stafford loans, including standard repayment, extended repayment, income-driven repayment, and graduated repayment 3.
Is there a loan fee for Stafford loans?
Yes, Stafford loans may have a loan fee of up to four percent, which is deducted proportionately from each loan disbursement 3.
How long do I have to start repaying my Stafford loan?
Repayment of Stafford loans typically begins six months after graduation or dropping below half-time enrollment 3.
Can I consolidate my Stafford loans?
Yes, borrowers can consolidate their federal student loans into a Federal Direct Consolidation Loan. The interest rate on a Federal Direct Consolidation Loan is the weighted average of the interest rates on the loans included in the consolidation loan, rounded up to the nearest 1/8th of a percentage point 3.
Are there any forgiveness options for Stafford loans?
Yes, there are several options for forgiveness of Stafford loans, including Teacher Loan Forgiveness and Public Service Loan Forgiveness. There are also several options for cancellation of Stafford loans, such as a closed school discharge, death discharge, and total and permanent disability discharge 3.