Federal Stafford Loans

The Federal Stafford loan is an education loan designed to help you pay for college. Stafford loans are made through the William D. Ford Federal Direct Student Loan Program (Direct Loans) - this is a loan directly from the Federal Government. (Prior to July 1, 2010, Federal student loans were also available from banks other lenders through the FFEL program.) Federal student loans can be either subsidized or unsubsidized. The government sets the interest rate and limits the amount students can borrow. To be eligible for a Stafford loan, independent students or dependent students and their parents must submit a FAFSA. Families or students can complete the FAFSA as early as January 1st of the year the student will attend college. Payment on Stafford loans begins six months after graduating or dropping to less than half-time enrollment.

Loan Terms

  • Be enrolled at least half time
  • Be a U.S. citizen or eligible non-citizen 
  • Complete your Free Application for Federal Student Aid (FAFSA)

Loan Limits

Dependent student loan limits

  • Freshman – up to $3,500 subsidized, plus $2,000 unsubsidized
  • Sophomore – up to $4,500 subsidized, plus $2,000 unsubsidized 
  • Junior or senior – up to $5,500 subsidized, plus $2,000 unsubsidized  
  • Undergraduate dependent maximum aggregate limit – $31,000, No more than $23,000 of this amount may be in subsidized loans.
  • NOTE – Dependent students whose parents do not qualify for a PLUS loan may be eligible to borrow more in unsubsidized Stafford loans
  • After July 1, 2013, eligibility for subsidized loans is limited to 150% of program length (3 years for 2-year program/6 years for 4-year program). 
Independent undergraduate student  loan limits
  • Freshman – up to $3,500 subsidized, plus $6,000 unsubsidized
  • Sophomore – up to $4,500 subsidized, plus $6,000 unsubsidized
  • Junior or senior – up to $5,500 subsidized, plus $7,000 unsubsidized
  • Undergraduate independent maximum aggregate limit – $57,500, no more than $23,000 of this amount may be in subsidized loans.
Graduate or professional student loan limits
  • Up to $20,500 unsubsidized
  • Graduate or professional maximum aggregate limit – $138,500, no more than $65,500 of this amount may be in subsidized loans (subsidized loans are not available to graduate students after 7/1/2012).

Interest Rates
The interest rate for Stafford loans is set by the federal government and may be tax deductible. Interest rates below are based on disbursement dates.

  • Disbursed before July 1, 2006 (on or after 7/1/1998) – all loans have a variable interest rate, which is adjusted annually on July 1, and capped at 8.25%.
    • From July 1, 2011 through June 30, 2012, the rate during repayment was 2.36% and the rate while in school, grace or deferment was 1.76%.
    • From July 1, 2012 through June 30, 2013, the rate during repayment is 2.39% and the rate while in school, grace or deferment is 1.79%.
  • Disbursed July 1, 2006 through June 30, 2008 – the interest rate for all Stafford loans was fixed at 6.8%.
  • Disbursed on or after July 1, 2008:
    • All loans used for graduate school – are fixed at 6.8%. 
    • Undergraduate unsubsidized loans – are fixed at 6.8%. 
    • Undergraduate subsidized loans – are based on the disbursement date as follows:
      • 7-1-08 through 6-30-09 – 6.00% 
      • 7-1-09 through 6-30-10 – 5.60%
      • 7-1-10 through 6-30-11 – 4.50%
      • 7-1-11 through 6-30-12 – 3.40%
      • 7-1-12 through 6-30-13 – 3.40%

Fees

Origination Fee – Loans originated between July 1, 2008 through June 30, 2009 carry a 1% origination fee. Loans disbursed on or after July 1, 2009 carry a 0.5% origination fee. Loans originated on or after July 1, 2010 carry a 1% origination fee.

Repayment Options

Repayment begins six months after the student graduates or attends school less than half time. However, students are welcome to pay at any time and some financially savvy students pay their interest while they're in school. If you have any difficulty making your student loan payments get in touch with your lender right away. There are several repayment options that can help you keep on track. You may even qualify for deferment or forbearance – but remember that in most cases your loan will continue to accrue interest while you're taking a break from making payments.

Standard repayment – Make both principal and interest payments each month for up to a 10-year repayment term. This option offers the lowest-total-interest cost. To calculate your estimated loan payments using a standard repayment plan, go to the Department of Education's Standard Repayment plan calculator.

Graduated repayment – Payments begin at a lower amount and then increase over the life of the loan, still a 10- year repayment term. This option offers a higher total interest cost than standard repayment, but may match better with what borrowers can afford to pay. To calculate your estimated loan payments using a graduated repayment plan, go to the Department of Education's Graduated Repayment plan calculator.

Income-sensitive repayment (FFEL loans only) – Payments are calculated based on your income. You must reapply each year and payments are adjusted annually based on income changes. This option offers a higher-total-interest cost than standard repayment. This repayment option is only available for FFEL loans (not for loans from the Direct Loan Program).

Income Contingent Repayment (Direct loans only) – This plan gives you the flexibility to meet your Direct Loans obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or 20% of your monthly discretionary income. The maximum repayment period is 25 years. To calculate your estimated loan payments using an Income Contingent Repayment plan, go to the Department of Education's ICR plan calculator.

Extended repayment – If your loan balance is higher than $30,000, you may be eligible for a longer loan term of up to 25 years and a choice of standard or graduated payments. This plan offers a higher-total-interest cost than standard repayment. To calculate your estimated loan payments using an extended repayment plan, go to the the Department of Education's Extended Repayment plan calculator.

Income-based repayment (IBR) – This repayment option establishes a monthly payment that takes your unique situation into account by considering your income, family size, and federal student loan debt. Loans paid under the IBR plan have a maximum 25-year repayment term.  IBR is only available for federal student loans, such as the Stafford, Grad PLUS and certain Consolidation loans. It is not available for Parent PLUS loans or for Consolidation loans that include Parent PLUS loans.  For more important information from the Department of Education about IBR go to IBR Plan Information. Or, to download an IBR Fact Sheet in PDF format, click here. To find out if you qualify and calculate your estimated loan payment amount under IBR, go to the Department of Education's IBR calculator.
 
Stafford Loan Monthly Payment Examples
 Amount Borrowed     Monthly Payment *
 $3,500      $50.00
 $4,500  $51.79
 $5,500      $63.29
 $10,000  $115.08
 $15,000   $172.62


*The monthly payment amounts represent unsubsidized Stafford loans that carry the 6.8% interest rate repaid on a standard 10-year repayment term with a minimum monthly payment of $50. All calculations are estimates.

 

Close

Please sign in

In order to save a page/activity in either your toolbox or favorites you must first be logged in.