Stafford Loan Frequently Asked Questions
Table of Contents
- Are there specific schools that accept Stafford loans?
- How can I receive a Stafford loan?
- I completed my MPN, what's next?
- How long does it take to get my funds?
- Can you tell me what my balance is on my Stafford loan?
- How much am I eligible for in Stafford Loans?
- Why does the loan need to be certified?
- What is the interest rate for Stafford Loans?
- What's the difference between unsubsidized and subsidized loans?
- What are the deadlines for Stafford Loans?
- How much can I borrow under a Stafford Loan?
- The loan is deferred until graduation; can we pay on the loan during the 4 years?
- Are there penalties for early payment, or if the loan is paid in full before scheduled (deferred) payments begin?
- What are the repayment options for a Stafford Loan?
- Do I have to reapply every year in order to get the Stafford Loan?
- How is my EFC Calculated?
- Why do some schools use an EFC that differs from what my Federal EFC (on my SAR) says?
- Can I get a Stafford Loan if I have poor credit?
- What are the Stafford Loan cancellation policies?
- How can I bridge the financial gap between my total cost of education and the amount of financial aid I was awarded?
- Which student loan programs are best?
- How to choose an alternative loan program?
Are there specific schools that accept Stafford loans?
Yes, Stafford Loans can be used at any eligible school which accepts them. Take a look at the School Loans page for information about which schools accept which loans. If you are unsure if your school participates in the Federal Loan Program, contact your financial aid officer.
How can I receive a Stafford loan?
I completed my MPN, what's next?
Once you have signed your Master Promissory Note (or MPN), return it for processing. If you have submitted an MPN for your school in the past, you may simply have to complete a "Loan Request Form for Returning Students". The school will then certify the loan for the dollar amount that you were awarded.
How long does it take to get my funds?
It all depends on what date your school sets the disbursement for. Check with your financial aid officer for more information.
Can you tell me what my balance is on my Stafford loan?
If you are wondering how much you owe in Federal Stafford Loans, please call the US Department of Education at 800-433-3243 or you may look up your student loans on the National Student Loan Database. Visit www.NSLDS.ed.gov.
How much am I eligible for in Stafford Loans?
To see the loan limits chart for both undergraduates and graduates, please visit: Stafford Loan Info or you can:
Why does the loan need to be certified?
Certification is necessary because Stafford loans are federally guaranteed loans. Your school must verify that you are enrolled in classes, and that you are maintaining satisfactory academic progress in order to continue to be eligible for Stafford loans through the federal government.
What is the interest rate for Stafford Loans?
For details, visit: Stafford Loan Interest Rates. Generally, the interest rate on subsidized Stafford Loans is fixed at 3.86%. The interest rate for Unsubsidized Stafford loans is a fixed rate of 3.86%. The unsubsidized Stafford loan for graduate students is at a fixed rate of 5.41%.
Note that these APRs are for loans originated after July 1, 2013.
What's the difference between unsubsidized and subsidized loans?
- Subsidized loans are awarded based on financial need. You will not be charged interest before you begin repayment or during periods of deferment. The federal government "subsidizes" (or pays) the interest during these times.
- Unsubsidized loans are not awarded based on financial needs. Any eligible student can take out Unsubsidized Stafford Loans. You will be charged interest from the time the loan is disbursed, to the time the loan is repaid in full.
What are the deadlines for Stafford Loans?
There is no single set deadline for Stafford Loan applications; you will need to contact your school's financial aid office to obtain deadlines for your specific institution.
How much can I borrow under a Stafford Loan?
The amount you can borrow is based on your grade level and your status as a student. Independent students may be eligible to borrow more because they are paying for college without assistance from their family. Please review the current Stafford loan limits chart for borrowing limits and to determine dependency status.
Based on your award letter, you may not always qualify for the maximum Stafford Loan amount. For additional loan funding, consider alternative student loans which allow you to borrow up to the total cost of education less other financial aid received.
The loan is deferred until graduation; can we pay on the loan during the 4 years?
Absolutely, there is no penalty for pre-payment of Stafford loans. To access your online account and make payments, visit the Direct Loan Center. You will need your SSN and FAFSA PIN to access your account.
Are there penalties for early payment, or if the loan is paid in full before scheduled (deferred) payments begin?
There are never early payment penalties for federal student loans.
What are the repayment options for a Stafford Loan?
You can choose one of the following plans:
- The Standard Repayment Plan requires you to pay a fixed amount each month based on your principle and interest but will be no less than $50 or the interest that has accrued.
- The Graduated Repayment Plan allows you to make lower payments at the beginning of repayment then, over time, your payments begin to increase. Each of your payments must equal the interest accrued on the loan between scheduled payments and initial payments general cover interest only for the first few years.
- The Income-Sensitive Repayment Plan bases your monthly payment on your yearly income and your loan amount. Payments may change as your income rises or falls.
- The Extended Repayment Plan is for borrowers with loans totaling more than $30,000. This plan offers a choice of fixed or graduated payments over a period of up to 25 years.
Do I have to reapply every year in order to get the Stafford Loan?
A very common question. You have to apply every year because each year, the amount of aid you are eligible for is determined by your FAFSA. Federal student loans do not "renew" automatically. If you remain at the same school, you will complete the MPN once the first time you apply and then request additional funds each year through graduation.
How is my EFC Calculated?
The federal government maintains the official Expected Family Contribution (EFC) calculation algorithm. This calculation determines family resources available from a family's income (less allowances for taxes and living expenses) and assets (less allowances for retirement). A percentage of these available amounts are earmarked as EFC. To see what your EFC is likely to be, try out this EFC Calculator.
Why do some schools use an EFC that differs from what my Federal EFC (on my SAR) says?
Some schools use an Institutional EFC calculation to determine eligibility for non-Federal sources of financial aid. This calculation usually considers additional family resources, like home equity, that are not part of the Federal EFC calculation. Visit Costs Considerations to learn all about the financial aid award process.
Can I get a Stafford Loan if I have poor credit?
Yes. The Stafford Loan is not a credit-based loan - it is a need-based loan and your eligibility for it is governed by your FAFSA submission, not your credit report.
What are the Stafford Loan cancellation policies?
Your school must notify you in writing whenever your account is credited with your loan proceeds. This notification must be sent to you no earlier than 30 days before and no later than 30 days after the school credits your account. You may cancel all or a portion of your loan if you inform your school within 14 days after the date that your school sends you this notice or by the first day of the payment period, whichever is later. Your school can tell you the first day of your payment period.
Check out our financial aid forum to post questions and engage in conversation with peers and industry leading financial aid experts.
How can I bridge the financial gap between my total cost of education and the amount of financial aid I was awarded?
There are four main options available to students and families:
- Contributions from Savings. A family might consider using savings or investments to meet educational costs. Families with assets that can be liquidated for educational expenses generally have less reliance on financial aid and pay less in fees and interest expenses.
- Contributions from Income. Some families might be able to meet educational expenses by allocating funds from their current budget. This option requires a family to closely analyze their income and expenses and determine an amount that they can pay on an ongoing basis. Adjustments may have to be made to existing household expenses to afford an amount to allocate from income.
- Tuition Payment Plans. If the school participates in a tuition payment plan, a family can pay the remaining tuition balance in monthly installments which can range from a nine to twelve month period of time.
- Alternative (Private) Student Loans. Consider alternative loans as a means to meet educational costs not covered by federal aid. For more information, read our page on alternative student loans.
- Learn more about how students pay for college on the Filling the Gap Infographic.
Which student loan programs are best?
While there are no absolute ways to determine which loan programs are best, there are some general guidelines and areas that will help to help you choose the most affordable loan option.
- Interest Subsidy -- Subsidized loans (in which the government or other agency) are far better than unsubsidized loans (in which interest must be paid by the borrower from the loan's disbursement).
- Lowest Cost -- The loan's interest rates and fee structure determine the amount of a loan's finance charges. Some loans (like mortgages) allow you to pay up-front fees in exchange for a lower interest rate. You should consider this feature in relation to how long you plan to repay the loan. The loans with a longer repayment period are often less expensive with lower interest charges and a slightly higher up-front fee.
- Interest rate options -- Programs offer different student loan interest rate options. Some are fixed and stay the same over the life of the loan. Some are variable and tied to the Prime interest rate (or other index). When the interest rate changes also varies among programs. Some change annually, some quarterly and some as often as monthly.
- Flexibility -- Consider the repayment options offered. Are payments required during repayment? Can the principal be deferred? Are alternative repayment programs (graduate repayment or income sensitive, for example) offered?
How to choose an alternative loan program?
There are many ways to compare student loan programs. And oftentimes, a student's and family's unique circumstances will determine what loan program makes the most sense. Alternative loan programs differ in who the borrower is (the student, parent or other co-applicant). You should refer to the page on Alternative Loans for more information.