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Stafford Loan Terms
There are two forms of Stafford Loans that you can apply for, unsubsidized and subsidized Stafford loans. The federal Stafford loan terms and conditions for these two forms of federal Stafford loans are as follows:
Unsubsidized Federal Stafford Loan
- Increased borrowing limits per year. Depending on how long you have been in school and your degree level, you can get up to and additional $12,000 is Stafford Loan (subsidized) per year.
- Eligibility is not based on financial need as determined by the FAFSA.
- No payments are required while you are in-school, however, you will be responsible for all interest that accrues on the loan during your in-school period.
- You may choose to make payments on this type of Stafford Loan while you are in school, during your 6-month grace period following graduation or as scheduled in special deferment situations.
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You must complete the Free Application for Federal Student Aid (FAFSA) to be considered for this loan.
- Go to www.fafsa.ed.gov to complete your FAFSA.
Subsidized Federal Stafford Loan
- The United States federal government pays the interest on this type of Stafford Loan while you are in school, during your six-month grace period after completing your program and during periods of approved federal student loan deferment.
- Eligibility is based on financial need as determined by the FAFSA.
- Go to www.fafsa.ed.gov to complete your FAFSA.
Disbursement
In most cases, your loan will be disbursed in 2 installments – i.e. 2 separate payments. Neither of the installments will be greater than half of the amount of the loan. Funds from a Stafford Loan must first be used for fees that are owed to your school such as tuition, fees, room and board. If funds remain after these costs have been paid, you will receive the remaining balance from your school. You can also request that the school hold any unused funds for a later time during your enrollment.
Some schools will disburse the funds after 30 days of enrollment for first-time borrowers or first-year students. This provides the student an opportunity to withdraw from classes before any remaining funds are disbursed to the school.
Canceling a Stafford Loan
You may cancel either a portion or all of a Federal Stafford Loan if you inform your school within 14 days of the date that the loan is scheduled to be deposited with your school. If you receive from your school any funds that you wish to cancel, you can refuse the funds by not signing and endorsing the check and returning it to your school.
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) |
| 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) |
| For loans first disbursed on or after July 1, 2008. | |
Example #1: A dependent freshman whose parent has access to PLUS borrowing (whether or not the parent is actually willing to borrow) could previously have borrowed $3,500 in a subsidized loan. If the student did not have need for the full $3,500, the student could have borrowed a subsidized loan for the amount of demonstrated need and the difference between that amount and the $3,500 base limit in an unsubsidized loan. Under the new law, that student will be able to borrow a total of $5,500, no more than $3,500 of which may be subsidized.
Example #2: A dependent freshman whose parents are unable to borrow PLUS could previously have borrowed a total of $7,500, no more than $3,500 of which could be subsidized. Under the new limits, that student can borrow a total of $9,500, no more than $3,500 of which can be subsidized (that is, the base limit of $3,500 plus the new additional unsubsidized limit of $6,000). The amount a student can actually borrow may not exceed cost of attendance minus other assistance (or, for subsidized loans, other assistance plus the EFC). The same limits apply to a freshman who is an independent student.
