If a loan is needed to fund your education, consider a Stafford loan. There are two types of Stafford loans: subsidized and unsubsidized.
- Subsidized loans, the federal government pays the interest while you are in school at least half time and during grace or any other authorized deferment period. You become responsible for the interest at repayment.
- Unsubsidized loans, you are responsible for interest as soon as the loan is taken out. You may either pay the interest as it accrues or defer it until after graduation. Deferred interest on a Direct Stafford loan is capitalized, or added to the original balance of the loan directly before you enter repayment. Except for the in-school interest provisions, both subsidized and unsubsidized Stafford loans have similar terms.
Stafford loan terms
Eligibility: You must be a U.S. citizen or permanent resident, and must be a full- or half-time undergraduate or graduate student.
Interest rates:
Rates are fixed at 6.8 percent for the life of the loan, except for subsidized loans to undergraduates, which carry a fixed rate of 4.5 percent on loans first disbursed beginning July 1, 2010 through June 30, 2011.
Loan limits
Loan limits vary depending on whether you are dependent or independent. Independent students often may borrow more than dependent students. Your grade level also figures in. Specifically, the Stafford annual loan limits are:
| Annual Loan Limits |
Dependent |
Independent
|
| Freshman |
$5,500 ($3,500 between subsidized and unsubsidized, plus an additional $2,000 unsubsidized.) |
$9,500 ($3,500 between subsidized and unsubsidized, plus an additional $6,000 in unsubsidized.) |
| Sophomore |
$6,500 ($4,500 between subsidized and unsubsidized, plus an additional $2,000 unsubsidized.) |
$10,500 ($4,500 between subsidized and unsubsidized, plus an additional $6,000 unsubsidized.) |
| Junior or Senior |
$7,500 ($5,500 between subsidized and unsubsidized, plus an additional $2,000 unsubsidized.) |
$12,500 ($8,500 between subsidized and unsubsidized, plus an additional $4,000 unsubsidized.) |
| Graduate or Professional |
N/A |
$20,500 ($8,500 between subsidized and unsubsidized, plus an additional $12,000 unsubsidized.) |
| Lifetime Limits |
|
| Undergraduate dependent |
$31,000 (up to $23,000 may be subsidized) |
| Undergraduate independent |
$57,500 (between subsidized and unsubsidized) |
| Graduate and Professional |
$138,500 (up to $65,000 may be subsidized) or $224,000 (for health professions) |
*For dependent or independent students. Can be subsidized or unsubsidized loans or a combination of both.
** For independent students or for dependent students denied for a PLUS loan.
Repayment
You receive a six-month grace period before having to begin repayment on Stafford loans after dropping below half-time study, graduating from college, or leaving school for other reasons.
- A variety of repayment terms are available, including graduated payment, extended, income-based, and income-contingent or income-sensitive options.
- You may be eligible to postpone payments through deferment or forbearance.
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