Stafford Loans
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A Stafford Loan is a federally-backed, variable rate student loan that covers all or part of your undergraduate and graduate education. Stafford rates are currently set at 6.8%.
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Eligibility Requirements
Stafford loans are available to students who meet the following eligibility requirements:
- Enrollment at least half-time as determined by the school
- US Citizenship or eligible residential status
- Satisfactory academic progress as determined by the school
- Not in default on any federal education loans
There are two types of Stafford Loans available:
Subsidized Loans
These are need-based. The federal government pays the interest on the loan
while the student is in school, during the six-month grace period before
repayment begins, and during periods of approved deferment. The federal
government determines your eligibility for a subsidized loan based on the
information you provide on your Free Application for Federal Student Aid
(FAFSA).
Unsubsidized Loans
These are available to all eligible students regardless of need. Students pay
all of the interest that accrues during school and during approved deferments.
Interest Rates and Fees
Stafford Loans have variable interest rates that are adjusted by the Federal Government every July 1. The current rate for Stafford Loans in grace is 6.54% and 7.14% for active repayment. By federal mandate, rates for Stafford will never exceed 8.25%.
Loan Fees
Stafford Loans do require a total of 4% administrative and guarantee fees upon
origination. These fees are standard and set by industry standards as part of
this federally sponsored program.
Origination Fee
The 3% origination fee of the principal is deducted each time a disbursement is
made. For instance, if the school certifies $20,000 for a school year, an
additional $600 is added. If there are two disbursements during the school
year, $300 is taken out during each disbursement. This fee is distributed to
the Federal Government to offset student loan program costs.
Guaranty Fee
The 1% guaranty fee is due to the guarantor as insurance against default.
Tax Deduction
Section 221 of the Internal Revenue Code allows some student loan borrowers to
deduct a portion of their interest costs for a given year. As of 2001, you
could be eligible to deduct up to $2,500 in interest. However, this may be
contingent based on the loan's disbursement date and your income. Please
consult your tax advisor for more details.
Stafford Loan Amounts
Annual Borrowing Limits (subsidized & unsubsidized):
| Year 1 | $2,625 |
| Year 2 | $3,500 |
| Year 3/4 | $5,500 (per year) |
| Graduate Years | $8,500 (per year) |
Independent undergraduate students and graduate students may opt for additional unsubsidized funds:
| Year 1/2 | $4,000 (per year) |
| Year 3/4 | $5,000 (per year) |
| Graduate Years | $10,000 (per year) |
Students are not allowed to accrue more than the following amount of Stafford Loan debt:
- $23,000 as a dependent undergraduate student
- $46,000 as an independent undergraduate student
- $138,000 as a graduate or professional student (including Stafford Loans received for undergraduate work)