Notice: Undefined index: articledetail in /home/utils/securefiles/securecode/utl_article.cls.php on line 643
Stafford Loans |
College Loan Consolidation, Federal Loan Consolidation, Private Loan Consolidation, Student Loan Consolidation

America's Top Student Loan Provider

Stafford Loans
By Shaileja Mammen
Students depend on loans to bridge the gap between the amount students and families can reasonably afford to pay for education and the costs of attendance. Student loans have low interest rates, and repaying them is convenient with the variety of available deferment, forbearance, and cancellation options.

What are the eligibility conditions for Stafford loans?

Undergraduates, graduates, and professional degree students are eligible for Stafford loans only if they are enrolled as at least half-time students.

Who provides Stafford loans?

Stafford loans are available from two sources. The U.S. Department of Education provides Stafford loans directly to students through the William D. Ford Federal Direct Loan Program, and private lenders work with the Federal Family Education Loan (FFEL) Program.

Federal Direct Student Loan Program

The U.S. government provides loans directly to students. The loans are administered by the schools participating in the program. The loans are repaid to the U.S. government.

Federal Family Education Loan Program

Under this program, private lenders provide loans that are guaranteed against default by the federal government. The private lenders include banks, credit unions, and savings and loan associations.

Stafford loans are of two types, subsidized Stafford loans that are available to those who demonstrate financial need and unsubsidized Stafford loans, for which all students are eligible.

What is the maximum amount of Stafford loans that can be awarded?

The maximum you can borrow in a year depends on your dependency status and what year you are in school. Refer to Table 1 for a breakdown of how much you can borrow.

Table 1 Maximum Amounts of Allowed Borrowing

Year in School Dependent Undergraduate Student Independent Undergraduate Student Graduate and Professional Degree Student
First Year $3,500 $7,500—No more than $3,500 of this amount may be in subsidized loans. $20,500—No more than $8,500 of this amount may be in subsidized loans.
Second Year $4,500 $8,500—No more than $4,500 if this amount may be in subsidized loans.
Third and Beyond (Each Year) $5,500 $10,500—No more than $5,500 of this amount may be in subsidized loans.
Maximum total debt from Stafford loans when you graduate $23,000 $46,000—No more than $23,000 of this amount may be in subsidized loans. $138,500—No more than $65,500 of this amount may be in subsidized loans.  The graduated debt limit includes Stafford loans received for undergraduate study.

What other fees are charged on these loans?

An origination fee of up to three percent of the loan amount is deducted proportionately from each loan disbursement.

How is the loan disbursed?

The school will disburse the loan in at least two installments, and none of them will be greater than half the amount of the total loan amount.

What is the rate of interest charged on Stafford loans?

Below are the new interest rates effective July 1, 2007 to June 30, 2008 for Stafford and PLUS loans in the Direct Loan and Federal Family Education Loan (FFEL) Programs for loans disbursed between July 1, 1998 and June 30, 2006.

Table 2 Interest Rates

Loan Type Status Program
Direct Loans FFEL
Now After July 1 Now After July 1
Subsidized Stafford Loans Repayment or Forbearance 7.14 7.22 7.14 7.22
In-school, Grace, or Deferment 6.54 6.62 6.54 6.62
Unsubsidized Stafford Loans Repayment or Forbearance 7.14 7.22 7.14 7.22
In-school, Grace, or Deferment 6.54 6.62 6.54 6.62
PLUS Loans All 7.94 8.02 7.94 8.02

What are the differences in the repayment options available for subsidized and unsubsidized loans?

A comparison of the repayment options for subsidized and unsubsidized loans is shown in the table below.

Table 3 Comparison of Repayment Options

Type of Loan Grace Period Repayment to be made
Subsidized Stafford Loans (Direct & FFEL) No interest is charged during the 6-month grace period. No principal needs to be paid. U.S.Government through Direct Loan Servicing Center
Unsubsidized Stafford Loans (Direct & FFEL) Interest will be charged during the 6-month grace period which can be paid later.  It will be capitalized.   No principal needs to be paid. The private lender that made the loan

Is it possible to defer payments on Stafford loans?

Yes, it is possible to defer payments on Stafford loans under certain conditions like at least half-time study at a post-secondary school or study in an approved graduate fellowship program or approved rehabilitation-training program for the disabled. If the borrower is facing economic hardship, deferment up to 3 years is available.

Can payments be temporarily reduced or postponed?

Yes, payments on student loans can be temporarily reduced or postponed with consent from the lender or the loan-servicing agency. This forbearance can be granted for a period of 12 months at a time for a maximum of 3 years. A written agreement is necessary for forbearance.

Mandatory forbearance is granted when the borrower is in dental or medical residency or internship, the loan repayment is 20% or more of the borrower's monthly income, or repayments are being made by the Department of Defense. Interest that accrues during the period of forbearance must be paid.

Can Stafford loans be cancelled?

Stafford loans can be cancelled or forgiven in various situations. Default on repayment is not a precondition for cancellation or forgiveness of Stafford loans.

With the death or permanent disability of a student, loans are cancelled. The other situations in which loans are forgiven include when the borrower is a full-time teacher at a designated elementary or secondary school serving students from low-income families.


Article Title : Stafford Loans
Comment not found for this article.

Related articles
• Stafford Loans - An Overview
• Everything You Need to Know About Student Loans
• Federal Student Loan Consolidation - It Pays To Start Your Student Loan Repayments Fast!
• Consider Federal Student Loan Consolidation
• Are Some Student Loans Better Than Others

Share this story:
  • BlinkList
  • blogmarks
  • Digg
  • Facebook
  • Google
  • Sphinn
  • MySpace
  • NewsVine
  • Simpy
  • StumbleUpon
  • Technorati
  • E-mail this story to a friend!
  • Print this article!
  • Faves
  • Furl
  • Netvouz
  • Slashdot
  • Spurl
  • Yahoo! Buzz

EdFed introduces… Awareness… Learnal
At, EdFed, we proudly introduce 'articles on student loans' and 'Learnal - the journal to learn from', our free newsletter on student loan management, which is sure to keep you informed of the latest events and happenings in the student loan market. To receive your copy of the above just use the RSS feed below and add this to your "My Yahoo", blogs, newstickers, and other similar channels accepting distributable content.
Click here to sign up for our Weekly Newswire now!

How EdFed Helped others!
EdFed reduced my interest rate by a substantial amount. I can rest assured knowing that the rising of interest rates will not affect me. I am satisfied to say that they saved me $231 on my monthly payments and I would definitely recommend them to anyone looking to consolidate their loans.
- Clint W.  New Orleans, LA
* Your Name: * Your E-mail Address:

We respect your privacy.
* Your Friend's name: * Your Friend's E-mail address:
Include a Message:
+ Privacy Policy

Student Loan Consolidation Info - How to Choose the Right Loan Company

This column is sponsored by Granted, America's top job search engine. The Career Resources column is presented by Granted, America's leading job search engine dedicated to getting people jobs.

Education is one of the most basic right of any human, but with the increase in prices and the costs involved in education this has made these rights turn into a privilege which very few can enjoy. Any normal person today in the whole of United States has to take an education loan at one point of time to pay for their education fees.

read more
Schools Will No Longer Receive Paper FAFSA Forms
(September 20, 2007)

news desk
Stafford Loan Payment Calculator
PLUS Loan Payment Calculator
Loan Consolidation Payment Calculator
Glossary of Terms
Loan Comparison Chart
Scholarship Search
If you run into a period of financial difficulty, federal consolidation loans generally qualify for periods of deferment or forbearance until your financial situation improves.
US School Directory
Comprehensive List of Schools at which EdFed Assists Students.
EdFed is a FFELP lender with lender identification number 834241.
© Copyright 2020 EdFed. All Rights Reserved.

Home · About Us · Contact Us · News · Sitemap
Career Advice · Tell a Friend · Privacy Policy · Resume Service
Resume Distribution Service · Post Resume · Job Search Course
Sign up for the latest news on student loans.
Email Address:
+ Most Recent Newsletter
+ Newsletter Archives