Stafford Loans

Federal Stafford Loans are made to students as part of two loan programs: the William D. Ford Federal Direct Loan Program (Direct Loan), and the Federal Family Education Loan (FFEL) Program. Stafford Loans are true student loans. Therefore, the money must be repaid with interest.

Eligibility Rules for Stafford Loans

To be eligible for a Stafford Loan, you must be a U.S. citizen, or an eligible non-citizen with a valid Social Security number.  You must also demonstrate that you are qualified for a post secondary education by obtaining a high school diploma or a General Education Development (GED) certificate.

As part of the loan process, you will need to sign a document indicating you will be using the loan for higher education purposes. If you're a male between the ages of 18 and 25, then you must also comply with the Selective Service registration process to be eligible for Stafford Loans.

Applying for a Stafford Loan

You apply for Stafford Loans by completing a Free Application for Federal Student Aid (FAFSA).  Hardcopies of the FAFSA should be available from a high school guidance counselor, a college or university financial aid office, your local public library, or by calling 1-800-4-FED-AID (1-800-433-3243).  Applications can also be completed online.

Roughly one to four weeks after you've completed the FAFSA, you should receive a Student Aid Report or SAR.  You need to check the SAR carefully to make sure the information contained in the report is accurate.  Once the report is confirmed to be accurate, the SAR contains your Expected Family Contribution, or EFC.  Your school will use the EFC to determine your eligibility for student aid and Stafford Loans.

Offers of aid from your school's financial aid office, including Stafford Loans, will come back to you in the form of an Award Letter.

Stafford Loan Eligibility and Loan Limits

As long as you are enrolled at least half time, you can receive a Direct Loan or FFEL Stafford Loan.  These loans have variable interest rates, and are targeted at undergraduate and graduate students.  There are two forms of Stafford Loans:

• Subsidized Stafford Loans - Awarded to students based on financial need; no interest is charged until loan repayment begins.  The government is subsidizing the interest payable between the time the money is paid to your school and you start making payments on the loan.
  Unsubsidized Stafford Loans - These loans are not based on demonstrated financial need, and interest accumulates while students are still in school.

The limits for Stafford Loans depend on your student status, and whether or not you are a dependent student:

Stafford Loan Limits

Interest Rates on Stafford Loans

For Stafford loans disbursed beginning July 1, 2011, the interest rate is fixed at 5.60%.   Loans disbursed before July 1, 2006 offered a variable rate of interest, which is adjusted annually on July 1, and capped at 8.25%.  The current rate of interest on these variable rate loans through June 30, 2012 is 3.4% during repayment; and 6.80% during in-school, grace, and deferment.

Stafford Loan Fees

For Stafford loans first disbursed between July 1, 2011 and June 30, 2012, the fees can be up to 4%.  This includes a 2% federal origination fee, plus a 2% federal default fee.  There are many lenders that work with Sallie Mae to pay all, or a portion, of these loan fees.

Stafford Loan Repayment

You start to repay Stafford Loans six months after you graduate, or fall below half time enrollment. FFEL Stafford Loans are repaid to a private lender or loan servicing agency.  Direct Stafford Loans are repaid to the Department of Education.

For more information on the repayment options you have with these loans, please read our publication on Student Loan Repayment.  You should also take a look at our publication on Student Loan Deferment, since Stafford Loans are eligible for deferment too.

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