Federal Stafford Loans
- Fixed interest rate - as low as 3.4%
- No payments while in school at least half-time
Students attending a four-year college or university, community college, or trade, career, or technical school are eligible to apply for Federal Stafford Loans to pay for the costs of higher education. These are federal loans with low interest rates and are the best, first choice for student loans. To apply, borrowers are required to fill out the Free Application for Federal Student Aid (FAFSA).
Stafford Loan Types
There are two different types of Stafford Loans — subsidized and unsubsidized.
Subsidized Stafford Loans are offered to students with financial need. Interest on these loans is paid by the government (subsidized) while a student is enrolled at least half-time at an eligible school. The interest rate for the 2012-2013 school year is 3.4%.
Unsubsidized Stafford Loans are available to students, regardless of their financial need. The interest accrues as soon as the loan is disbursed (unlike the subsidized loan). This can be paid off during school, grace, forbearance and deferment periods. Or, the borrower can defer payments while in school. The current interest rate for this loan is fixed at 6.8%.
Federal interests rates are a trending topic. Read on about the Federal Stafford loan interest rates history, current rates and what's in store for the future.
Stafford Loan Limits
|Dependent Students||Annual Loan Limits|
|First Year||$5,500 ($3,500 subsidized/$2,000 unsubsidized)|
|Second Year||$6,500 ($4,500 subsidized/$2,000 unsubsidized)|
|Third Year and Beyond||$7,500 ($5,500 subsidized/$2,000 unsubsidized)|
|Independent Students||Annual Loan Limits|
|First Year||$9,500 ($3,500 subsidized/$6,000 unsubsidized)|
|Second Year||$10,500 ($4,500 subsidized/$6,000 unsubsidized)|
|Third Year and Beyond||$12,500 ($5,500 subsidized/$7,000 unsubsidized)|
|Graduate or Professional||$20,500 ($8,500 subsidized/$12,000 unsubsidized)|
|Undergraduate Dependent||$31,000 (Up to $23,000 may be subsidized)|
|Graduate or Professional||
$138,500 (Up to $65,000 may be subsidized)
or $224,000 (for Health Professionals)
|For loans first disbursed on or after July 1, 2008.|
Borrowing limits are based on the student's grade level and status as a student. Independent students may be eligible to borrow more because they are paying for college without assistance from family.
Even if a student is financing their education, dependency status is still determined by the school based on the Department of Education's guidelines.
Students don't always qualify for the maximum Federal Stafford Loan amount and may be awarded less based on their financial situation. For additional loan funding, students can use an alternative student loan to cover the remaining costs of education.