Federal Direct Stafford Loans are federal loans available to degree-seeking graduate students enrolled at least half-time. Half-time is defined as 4.5 credit hours for graduate students. Stafford Loans are can be subsidized and/or unsubsidized. These loans are not credit-based and carry a current origination fee of one percent. The origination fee is deducted from the loan amount prior to its disbursal to the university. The Stafford Loan is borrowed directly from the U.S. Department of Education as part of the William D. Ford Direct Loan Program. Other schools may require students to select a private lender for the Stafford Loan, but that is not the case here at SU.
What are the types of Stafford Loans?
There are two types of Stafford Loans, subsidized and unsubsidized.
A Subsidized Stafford Loan is awarded on the basis of financial need
as determined by the FAFSA and SU. No interest will accumulate for the student
prior to repayment of the loan or during authorized periods of deferment. The
federal government will pay the interest during these periods.
An Unsubsidized Stafford Loan is not awarded on the basis of financial need. Unlike a subsidized loan, interest will begin to accrue immediately from the time the loan is disbursed until it is paid in full. Students are permitted the option of paying the interest each quarter or deferring interest payments until they enter repayment. If the student allows the interest to accrue while they are in school or during other periods of nonpayment, it will be capitalized – that is, the interest will be added to the principal amount of the loan, and additional interest will be based on that higher amount.
Depending on a student’s financial need, their Stafford Loan could be a combination of both subsidized and unsubsidized.
What is the federal maximum amount a graduate student can borrow
each year?
The federal maximum graduate students can borrow each academic
year is $20,500; of which up to $8,500 of this amount may be in subsidized Stafford
Loans, with the remaining $12,000 being unsubsidized. However, the total loan
amount students can borrow could be limited by the costs of their program.
Pharmacology students may borrow each academic year up $32,500; of which up to $8,500 of this amount may be in subsidized Stafford Loans, with the remaining $24,000 being unsubsidized. However, the total loan amount students can borrow could be limited by the costs of their program.
What is the interest rate for this loan?
Effective July 1, 2006, the interest rate on all Stafford Loans for graduate
students will be fixed at 6.8 percent.
When do students pay back these loans?
After students graduate, leave school, or drop below half-time
enrollment, they will have six months before they must begin repayment of their
loans. This period of time is called a grace period. Students are granted one
grace period. Students may have longer than six months if they are on active
duty in the military.
During the grace period on a subsidized loan, students will not be charged
interest. During the grace period on an unsubsidized loan, interest will accrue.
The interest can either be paid or be capitalized.