Stafford Loans, commonly referred to as the Guaranteed Student Loan can be either Subsidized or Unsubsidized. The type of Stafford Loan which has been awarded to you is based on Federal Need. The following is information which gives the difference between them.
- The Federal Stafford Subsidized Loan* is need-based and the federal government pays the interest on the loan while you are enrolled in school for at least half time (6 units undergraduate, 5 units graduate) and during any grace period before repayment begins.
- The Federal Stafford Unsubsidized Loan* is non-need based and you are responsible for the interest on the loan as soon as it is disbursed. You may choose to make interest payments or allow the interest to accumulate while you are enrolled in school. Any unpaid interest will be capitalized.
Both types of Federal Stafford Loans have a fixed interest rate of 6.8% for those loans disbursed on or after July 1, 2006. You are not required to accept any loan, and may borrow less than the amount offered by the school. Repayment begins six months after you graduate or your enrollment drops to a less than half time status.
- You must have submitted a FAFSA.
- For subsidized Stafford loans, you must have financial need as determined by your school.
- You must be a U.S. citizen or national, a U.S. permanent resident, or eligible non-citizen.
- You must be enrolled or plan to enroll at least half time.
- You must be accepted for enrollment or attend a school that participates in the Federal Family Education Loan Program.
- You must not be in default on any education loan or owe a refund on an education grant.
Annual loan limit
$5,500 (3,500 Subsidized + $2,000 Unsubsidized)
$6,500 ($4,500 Subsidized + $2,000 Unsubsidized)
Junior or senior
$7,500 ($5,500 Subsidized + $2,000 Unsubsidized)
Annual loan limit
$9,500 ($3,000 Subsidized + $6,000 Unsubsidized)
$10,500 ($4,500 Subsidized + 6,000 Unsubsidized)
Junior or senior
$12,500 ($5,500 Subsidized + $7,000 Unsubsidized)
Graduate or professional
Undergraduate dependent lifetime limit
Undergraduate independent lifetime limit
Graduate or professional lifetime limit*
*Exceptions may apply to certain graduate students (HEAL).
How much can I borrow?
It depends on your year in school and whether you have a subsidized or unsubsidized Direct or FFEL Stafford Loan. A subsidized loan is awarded on the basis of financial need. If you're eligible for a subsidized loan, the government will pay (subsidize) the interest on your loan while you're in school, for the first six months after you leave school, and if you qualify to have your payments deferred. Depending on your financial need, you may borrow subsidized money for an amount up to the annual loan borrowing limit for your level of study. (See below.)
You might be able to borrow loan funds beyond your subsidized loan amount or even if you don't have demonstrated financial need. In that case, you'd receive an unsubsidized loan. Your school will subtract the total amount of your other financial aid from your cost of attendance to determine whether you’re eligible for an unsubsidized loan. Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it is paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will increase the amount you have to repay.
You can receive a subsidized loan and an unsubsidized loan for the same enrollment period as long as you don't exceed the annual loan limits.
If you're a dependent undergraduate student, each year you can borrow up to
- $5,500 if you're a first-year student enrolled in a program of study that is at least a full academic year.
- $6,500 if you've completed your first year of study and the remainder of your program is at least a full academic year.
- $7,500 if you've completed two years of study and the remainder of your program is at least a full academic year.
If you're an independent undergraduate student or a dependent student whose parents have applied for but were unable to get a PLUS Loan (a parent loan), each year you can borrow up to
- $9,500 if you're a first-year student enrolled in a program of study that is at least a full academic year (no more than $3,500 of this amount may be in subsidized loans)
- $10,500 if you've completed your first year of study and the remainder of your program is at least a full academic year (no more than $4,500 of this amount may be in subsidized loans)
- $12,500 if you've completed two years of study and the remainder of your program is at least a full academic year (no more than $5,500 of this amount may be in subsidized loans)
These amounts are the maximum yearly amounts you can borrow in both subsidized and unsubsidized FFELs or Direct Loans, individually or in combination. Because you can't borrow more than your cost of attendance minus the amount of any Federal Pell Grant you're eligible for and minus any other financial aid you'll get, you may receive less than the annual maximum amounts.
For Stafford loans first disbursed beginning July 1, 2006, the interest rate is fixed at 6.8%.
For Stafford loans first disbursed beginning July 1, 2009, the interest rate is fixed at 6.0%.
Loans first disbursed before July 1, 2006 have a variable rate, adjusted annually on July 1, capped at 8.25%.
When do I pay back my Stafford Loans?
After you graduate, leave school, or drop below half-time enrollment, you will have a six-month "grace period" before you begin repayment. During this period, you'll receive repayment information, and you'll be notified of your first payment due date. You're responsible for beginning repayment on time, even if you don't receive this information. Payments are usually due monthly.
During the grace period on a subsidized loan, you don’t have to pay any principal, and you won’t be charged interest. During the grace period on an unsubsidized loan, you don’t have to pay any principal, but you will be charged interest. You can either pay the interest or it will be capitalized (added to your principal loan balance, thus increasing the amount you’ll repay).
How do I pay back my loans?
You’ll repay your Direct Loan to the U.S. Department of Education’s Direct Loan Servicing Center. Both the Direct Loan and FFEL programs offer four repayment plans you can choose from, but the terms differ slightly. You will receive more detailed information on your repayment options during entrance and exit counseling sessions your school will provide. To read more now about repayment plans under both programs, go to the Repaying section of this Web site.
What if I have trouble repaying the loan?
Under certain circumstances, you can receive a deferment or forbearance on your loan, as long as it’s not in default. During a deferment, no payments are required. You won’t be charged interest for a subsidized FFEL or Direct Stafford loan. If you have an unsubsidized Stafford Loan, you are responsible for the interest during deferment.
If you’re temporarily unable to meet your repayment schedule (for example due to poor health or other unforeseen personal problems), but you’re not eligible for a deferment, your lender might grant you forbearance for a limited and specified period. For more information, go to the Repaying section of this Web site.
Can my Stafford Loan ever be discharged (canceled)?
Yes, but only under a few circumstances. Your loan can’t be canceled because you didn’t complete the program of study at the school (unless you couldn’t complete the program for a valid reason—the school closed, for example), or because you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.
For more information about discharge, go to the Repaying section of this Web site.
You are responsible for all of the interest that accrues on your unsubsidized Stafford loan while you are in school, but you do not have to pay the interest during this time. Unpaid interest that is deferred until after graduation is capitalized (added to the loan principal) and you will therefore pay interest on a higher loan amount. The federal government pays the interest on subsidized Stafford loans while you are in school, during grace, and during authorized deferment.