Federal Stafford Loans

Stafford Loans are low interest rate loans borrowed in the student’s own name. There is no credit report review. Co-signers are not required. The funds for Stafford Loans are provided by private lenders and are subsidized and guaranteed by the Federal government.

Eligiblity is determined through using the Free Application for Federal Student Aid (FAFSA), the student’s financial situation, and the cost of attendance at the chosen school. The FAFSA can be filled out online at www.fafsa.ed.gov.

Applications are generally made using the Federal Stafford Loan Master Promissory Note (Stafford MPN). After the school certifies eligibility and the guarantee is received, funds are distributed through the school’s financial aid office.

Assuming continued attendance at the same school and using the same lender, the same Stafford MPN can be used for additional disbursements in subsequent years, for up to 10 years.

Loan amounts are capped based on the student’s status, dependency, and aggregate loan limits. A first year dependent student can borrower up to $2,625 while a graduate student can borrow as much as $18,500 per year.

Stafford Loan Terms

Rates and origination fees are capped by the Federal government. Origination fees can vary by lender.

1) Subsidized Federal Stafford Loan:

• Available to eligible students attending participating schools.
• Students who demonstrate financial need are eligible to have the federal government pay the interest on the loan until repayment begins and during any deferment periods.
• A six month grace period is allowed after leaving school or dropping below half-time enrollment before repayment begins.
• Loan repayment is scheduled over a period of ten years or up to 25 years for borrowers eligible for extended repayments

2) Unsubsidized Federal Stafford Loan:

• Available to eligible students attending participating schools.
• Students not meeting financial qualifications for Subsidized loans, are typically eligible for Unsubsidized Stafford loans.
• Unsubsidized Stafford loans can supplement subsidized loans.
• An Unsubsidized Stafford loan accrues interest while in the borrower is in school or deferment and the borrower is responsible for paying all accrued interest from the time the loan is disbursed until it is paid in full.
• Other than the interest accrual, the terms of the Unsubsidized and Subsidized Stafford loans are similar.