 Federal Stafford Loans
Subsidized StaffordFederal government pays the interest during in-school, grace, and deferment periods.
Unsubsidized StaffordBorrower pays all interest, which begins accruing upon first disbursement. Borrowers are encouraged to make interest payments while attending school. Otherwise, the interest will be capitalized according to the policy of the lender.
Interest Rates and FeesStafford loans disbursed after July 1, 2006 will have a fixed interest rate of 6.8%.
For loans disbursed prior to July 1, 2006 Stafford interest rate is variable, adjusted annually on July 1, with a cap of 8.25%. The rate during the in-school, grace, and deferment periods is 1.7% plus the 91 day Treasury Bill (6.62% effective July 1, 2007-June 30, 2008). During the repayment period and forbearance, the rate is 2.3 % plus the 91-day Treasury Bill (7.22% effective July 1, 2007-June 30, 2008).
Up to a 3% origination fee to the government and up to a 1% insurance fee to the loan guarantor may be charged. These fees are deducted from the loan amount prior to disbursement.
Loan Maximum$20,500 annually with a total aggregate limit (including any undergraduate borrowing) of $138,500. The maximum amount may be limited by the actual cost of attendance. The maximum amount for the subsidized portion of the loan, which is need-based as determined by the information provided on the FAFSA, is $8,500 annually. The amount you qualify for may be lower.
RepaymentSix months after student graduates, falls below half-time, or withdraws from school. Principle payments are deferred while enrolled at least half time. The minimum monthly payment is $50. However, because the maximum loan repayment term is 10 years, monthly payment may be higher. There is no pre-payment penalty for early repayment of Stafford loans. There are several repayment options available to Stafford borrowers, such as graduated repayment, income-sensitive repayment, and extended repayment. In addition, there are deferment and forbearance options. Borrowers should review all options carefully before they enter repayment.
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