Stafford Loans

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Stafford Loans are one loan option available to most college students. Here we try to cover what you need to know to apply for, borrow with, and repay your Subsidized and Unsubsidized Stafford Loan.

What is a Stafford Loan?

A Stafford Loan is a federally-funded student loan used for higher education. These loans are available to students through the Federal Direct Student Loan Program. There are two types of Stafford Loans - Subsidized and Unsubsidized.

  • Subsidized Stafford Loan: This type is based on financial need of the student. The interest for this loan is subsidized by the government while the student is in school and during deferment periods.
  • Unsubsidized Stafford Loan: This type can be taken out by any eligible student as they are not based on financial need. The interest for this loan accrues from disbursal to full repayment - the student is responsible for all interest accrued.

Am I Eligible for a Stafford Loan?

here are certain criteria that need to be met in order to be considered eligible for either type of Stafford Loan. If you are considering applying for a Stafford Loan, consider if you meet ALL of the following criteria:

  • Submit the Free FAFSA Application
  • Be in some type of financial need. (Subsidized Stafford Loans only)
  • Be a U.S. citizen or national, a U.S. permanent resident, or eligible non-citizen.
  • Be currently enrolled in or have immediate plans to enroll at least half-time in school at least half-time.
  • Be accepted for enrollment or be already attending a Title-IV-eligible school.
  • Not currently in default on any education loan or owe a refund on any education grant you received in the past.

How Do I Apply for a Stafford Loan?

Step 1: Complete the FAFSA Application

Step 2: Your school will review your FAFSA Application.

Step 3: You will receive notification of your eligibility by receiving an award letter.

Step 4: Once you receive this award letter, you should then apply for the Stafford Loan (as well as other federal and private student loans)

Step 5: If granted a Stafford Loan, you must sign a Master Promissory Note (MPN) which proves you agree to all of the terms of your Stafford Loan.

Is There a Deadline to Apply for a Stafford Loan?

There is no specific deadline to request a Stafford Loan. There are, however, FAFSA deadlines. These deadlines vary by each school and state so you should check online to find your specific deadline for your state and school.

How Much Can I Borrow with a Stafford Loan?

The amount of money you can borrow with a Stafford Loan is based on your grade level and dependency status. While your grade level is obvious to you, your dependency status will have to be determined by the school you are attending. Regardless of your ability to live on your own and financially support yourself, your school may still deem you as a dependent. This decision varies by student.

According to, in the 2013-2014 academic year, the cumulative loan limits for dependent and independent students were:

  • Dependent Undergraduate Student: $31,000 (No more than $23,000 of this can be subsidized)
  • Independent Undergraduate Student: $57,500 (No more than $23,000 of this can be subsidized)

The cumulative loan limits for Graduate, Professional and Medical schools in the 2013-2014 academic year were:

  • Graduate and Professional: $138,500
  • Medical School: $224,000

In order to continue receiving your Stafford Loan, you must re-apply for federal financial before each academic year. To re-apply, you must:

  • File your FAFSA
  • Receive your Stafford Loan award letter
  • Accept your Stafford Loans and any other federal aid you may receive

When Will My Stafford Loan Funds Be Disbursed?

The funds you receive will be sent directly to your school in two separate installments - typically your fall and winter semesters. You will not be able to choose where your money goes until the tuition and fees are paid first. Afterwards, any remaining funds will be refunded to you.

What is the Interest on a Stafford Loan?

The interest rates for the Stafford Loan, much like any other loan, are subject to change from year to year. According to, the current interest rates for the 2013-2014 academic year are:

  • 3.86% for undergraduate subsidized loans
  • 3.86% for undergraduate unsubsidized loans
  • 5.41% for graduate Stafford loans

Your interest rate is fixed and will not change during the course of your education. With an Unsubsidized Stafford Loan, you have the option to pay the interest every month while you're in school or defer the interest and have it added to your loan balance to be paid after you finish school.

When Am I Required to Pay Back My Stafford Loan?

Your loans do not need to be paid back until 6 months after one of the following events occurs:

  • Graduation
  • Withdrawal from school for any reason
  • Dropping below half-time enrollment

During the 6 month grace period, your loan servicer will be contacting you with information regarding your loan repayment. Your loan servicer will also notify you when your first payment comes due.

What Are My Stafford Loan Repayment Options?

The Stafford Loan has four Student Loan Debt Repayment Plans available to you. You may choose any of the four that you see fit.

Standard Repayment Plan - Allows you to pay off your student loan debt in 10 years or less with a minimum monthly payment of $50. Your monthly payment will be a fixed amount based on your principle and interest.

Graduated Repayment Plan - Allows you to pay off your student loan debt in 10-30 years depending on the amount you owe. You will have a minimum monthly payment of $25 that will increase over time until your loan is paid completely. Your monthly payment will be determined by your debt amount.

Income-Based Repayment Plan - You must have partial financial hardship to select this repayment plan. If you qualify, this plan allows you to pay off your student loan debt in 25 years or less. Your monthly payment is capped at 15% of your discretionary income. These monthly payments may change due to income changes.

  • Discretionary income = Adjusted Gross Income - 150% of the poverty line

Extended Repayment Plan - You must have at least $30,000 in federal student loan debt with a single lender to qualify for this repayment plan. If you qualify, this plan allows you to pay off your student loan debt in 25 years or less with a minimum monthly payment of $50. You have a choice of a fixed or graduated payment in this plan. You may also choose this option with consolidation and your payment period would change to 10-30 years.

Who Do I Send My Stafford Loan Repayment To?

When it comes time to start making your monthly payments - after graduation, withdrawal, or decrease in attendance below half-time - you must complete an exit counseling session. This counseling is a crucial part of the borrowing process as it will provide you with information on your rights and responsibilities, as well as any deferment and repayment options you may have. Once you have completed your exit counseling, you are ready to begin making your monthly payments to your individual loan servicer.