Stafford student loans are low fixed-rate loans provided by the federal government, regardless of the student’s financial situation, for undergraduate, graduate, trade, career or technical school students attending school at least half-time.  Stafford loans are the most common type of federal student loans and one of the lowest-cost ways to pay for college.

There are 2 types of Stafford loans; subsidized and unsubsidized.  

• Subsidized loans interest is paid by the government for students with financial needs.  Your school will review your FAFSA (Application for Federal Student Aid) to determine the amount you can borrow.  You will not be charged interest while you are in school (at least half-time) and during the grace periods and deferment periods.
• Unsubsidized loans interest is paid by the students.  You are not required to show financial need to receive this loan.  Your school will determine the amount you can borrow.  Interest accrues when the loan is issued.  You can pay the interest while you are in school and during grace periods and deferment or forbearance periods.  If you decide not to pay until you graduate the interest will accrue which will increase your loan balance when you graduate.

The Stafford loan borrowing limits are as based on whether a student is a dependent of his/her parents and his/her year in school.  The Stafford loan borrowing limits are as follows:

• Dependent Students       
• Freshman: $5,500 ($3,500 subsidized / $2,000 unsubsidized)
• Sophomore: $6,500 ($4,500 subsidized / $2,000 unsubsidized)
• Junior & Beyond: $7,500 ($5,500 subsidized / $2,000 unsubsidized)
• Independent Students    
• Freshman: $9,500 ($3,500 subsidized / $6,000 unsubsidized)
• Sophomore: $10,500 ($4,500 subsidized / $6,000 unsubsidized)
• Junior & Beyond: $12,500 ($5,500 subsidized / $7,000 unsubsidized)
• Graduate / Professional: $20,500 ($8,500 subsidized / $12,000 unsubsidized)
• Lifetime Limits
• Undergraduate Dependent: $31,000 (Up to $23,000 may be subsidized)
• Undergraduate Independent: $57,500
• Graduate or Professional: 138,500 (Up to $65,000 may be subsidized)or $224,000 (for Health Professionals)

Dependent students who are not able to secure a PLUS loan may secure a Stafford loan up to the independent student loan amount.

Repayment of Stafford loans begins 6 months after the student completes on of the following:

• Graduates
• Drops-out
• Drops below half-time status

During the 6 months grace period, interest does not accrue onto subsidized loans; however, interest does accrue onto unsubsidized loans.

There are several repayment plans for Stafford loans which include:

• Even payments over 10 years
• Increasing payments over 10 years
• Even or increasing payments over 25 years (loans over $30,000)
• Income-sensitive payments

The benefits of Stafford loan include:

• Low fixed interest rate as low as 4.5%.
• No payments required as long as you are enrolled in college.
• No financial requirement or credit history to qualify.
• You may borrow up to $20,500 per year depending on degree status and years in school

To apply for a Stafford Loan you must complete the FAFSA (Free Application for Federal Student Aid) at http://www.fafsa.ed.gov/.  Stafford loans are generally a part of your total award package, which may contain other types of financial aid.

When you receive your Stafford Loan you must complete a Master Promissory Note (MPN) which is a legal document stating that you promise to repay the loan with any accrued interest and fees.  The MPN also states the terms and conditions of your loan.