Stafford Loans

The most common type of Student Loans is known as a Stafford Loan.

A Stafford Loan is available to all students who have financial need and who does not have financial need. To be considered for a Strafford Loan, student must fill out the FAFSA.

General Information

A Stafford Loan are for undergraduate or graduate and professional students made through one of the two U.S. Department of Education Programs.

  1. The Direct Stafford Loans or "Direct Loans," essentially the Department of Education becomes your lender.
  2. FFEL Stafford Loans or "Federal Stafford Loans," where a private institution becomes your lender usually a major bank.

The schools determine which program they wish to participate in.

If the student who is receiving the Stafford Loan is determined to have "financial need" then the Federal Government will subsidize the interest. What this means is that the Federal Government will pay the interest accrued while the student is in college and for an additional six months. Once a student leaves college for more than six months the student will be responsible for interest accrued from that period forward.

If the student who is receiving the Stafford Loan is, determine not to have "financial need" then the Strafford Loan will be unsubsidized. This means the student will be responsible for the interest from the start date of the loan. The interest will be accrued and capitalized to the loan amount. What this means is any interest accrued while the student is in college it will be added to the principle amount.

Amounts Available

The amounts for Stafford Loans depends on how many years the student have been attending college.

A first year student will receive a Stafford Loan for: $2,625.00
A second year student will receive a Stafford Loan for: $ 3,500.00
A third year student will receive a Stafford Loan for: $ 5,500.00
A fourth year student will receive a Stafford Loan for: $ 5,500.00

If you are an independent student then the amount of the Stafford Loans is different.

A first year student: Max Amount $6,625, with no more than $2,625 of this amount being subsidized. A second year student: Amount $7,500, with no more than $3,500 of this amount being subsidized.

A third and fourth year student: Amount $10,500, with no more than $5,500 of this amount being subsidized.

Disbursement and Interest

Your school will disburse your loan in at least two installments; no installment will be greater than half the amount of your loan. If you're a first-year undergraduate student and a first-time borrower, your first disbursement can't be made until 30 days after the first day of your enrollment period.

The interest rates charged on these loans are drastically below normal loan rates. The rates usually average between 3 - 5 percent.

In addition, a loan fee will be applied to the Stafford loan up to 4 percent. This fee will be deducted from the total loan amount and the net amount will be disbursed to the educational institution.

Repayment of Stafford Loans begins six months after the student stops attending college.

Logo