For unsubsidized loans, you will be charged interest from the time the loan is disbursed until it is paid off in full.
However, you can choose to defer payment of interest while you are in school and during any grace or deferment period. However, if you allow interest to accrue accumulate during these periods, it will be capitalized. This means that interest will be added to the principal amount of your loan, and additional interest will be based on that higher amount.
To qualify for this program, you must be enrolled in a postsecondary educational program leading to a postsecondary degree or certificate. There are other requirements. TTY users for the hearing impaired can call By using a Renewal FAFSA, you will only have to update any information that has changed and fill in a few new answers. Interest Rate: The interest rate is variable adjusted annually on July 1st but does not exceed 8. You'll be notified any time the variable rate changes. For the current Stafford Loan interest rate, click here.
Maximum Loan Length: 30 years, depending on amount borrowed and repayment plan chosen. There are a number of repayment plans offered through the Direct programs. Those schools will then determine how much aid you can receive that year.
If a school offers you Direct Loans in its financial aid package, you can accept all, some or none of that offer. Remember that you should borrow only the amount you really need in the form of loans. The federal government distributes your loan money to your school, to pay the balance of what you owe for tuition and fees. You can then use that money to pay for education-related expenses , including books, housing or public transportation.
Or, you can return it, typically within days, to reduce your loan debt. Schools are required to disburse loans at least twice per year. Typically, schools have to make loan disbursements at least 10 days before classes start. For first-year undergrads taking out their first Stafford Loans, schools may disburse loans up to 30 days after the start of the term for which the loan was awarded. You will be assessed a loan fee , a percentage of the loan amount that is proportionately deducted from each loan disbursement.
For loans first disbursed between October 1, , and , the fee is 1. Before those dates, loans have different fees. You have a six-month grace period when you graduate, leave school or drop below half-time enrollment before you must start paying off your federal direct Stafford loan.
Some of the interest may be tax deductible. Other repayment plans provide lower monthly payments but often cost you more overall, because payments are stretched over a longer time. If you need to lower your monthly payments, your loan servicer can put you on another plan. In some cases, those plans set your payments as a specific percent of your income.
Stafford Loans are also eligible for the Direct Consolidation Program. This will consolidate all your eligible federal loan debt into a single loan with a monthly repayment based on the weighted-average repayments of the consolidated loans, with a new servicer and loan term.
In these circumstances, you are making one payment instead of multiple payments, but the loan repayment amount remains the same. The U. These loans are generally your best bet if you need to borrow money so you can pursue the education that will help you achieve your goals. Students who want to borrow more than the federal loan limits may want to consider a private student loan.
To be eligible for federal education loans, the student must be enrolled at least half-time. The student must also satisfy other general loan eligibility requirements for federal student aid, including citizenship status, enrollment in an eligible degree or certificate program, maintaining satisfactory academic progress , and not being in default on a federal student loan or grant overpayment.
The funds from a Federal Stafford Loan are sent directly from the federal government to the college. The college financial aid office applies the loan funds to tuition and fees, plus room and board if the student is living in college housing. However, federal regulations require a day delay for first-time, first-year borrowers at some colleges.
The college may also be required to split the student loan money into two disbursements. Colleges with low cohort default rates may receive a waiver of the day delay and two-disbursement requirements. Repayment of Federal Stafford Loans begins six months after the student graduates or drops below half-time enrollment.
The six month period is called a grace period. The standard repayment term is 10 years, but you can choose an alternate repayment plan, such as extended repayment, income-driven repayment, and graduated repayment. With income-driven repayment plans , your monthly payment is based on your income and family size, which can reduce what you pay each month.
After a certain amount of payments are made generally 20 to 25 years of payments, depending on the specific plan , the remaining balance is forgiven. Borrowers can consolidate their federal student loans into a Federal Direct Consolidation Loan. There are several options for forgiveness of Federal Stafford Loans.
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