Federal Direct Stafford Loans are federal loans available to degree-seeking undergraduate students enrolled at least half-time. Half-time at is SU defined as six credit hours for undergraduates. Stafford Loans are can be subsidized and/or unsubsidized. These loans are not credit-based and carry a current origination fee of one half 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 a dependent, undergraduate student
may borrow each academic year?
Freshman: $3,500
Sophomore: $4,500
Junior: $5,500
Senior: $5,500
Also, if a parent is denied a Parent PLUS Loan (see Parent Federal Loans) for credit reasons or if the student is considered to be independent by the FAFSA, freshmen and sophomores can borrow up to $4,000 in an additional unsubsidized loan; juniors and seniors can borrow up to an additional $5,000 in an unsubsidized loan.
What are the interest rates for Stafford Loans?*
Subsidized Stafford Loan Unsubsidized Stafford Loan
YEARS |
Subsidized Stafford Loan |
Unsubsidized Stafford Loan |
| 2007-2008 | 6.80% | 6.80% |
| 2008-2009 | 6.00% | 6.80% |
| 2009-2010 | 5.60% | 6.80% |
| 2010-2011 | 4.50% | 6.80% |
| 2011-2012 | 3.40% | 6.80% |
| 2012-Beyond | 6.80% | 6.80% |
*All Stafford Loan interest rates are fixed for the life of the loan.
When do students pay back Stafford 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.