Interest Rates and Fees
The interest rate on Federal Stafford Loans is set by the federal government, and is dependent upon the type of loan and when it was (or will be) first disbursed for the loan period.
Most federal student loan have loan fees that are a percentage of the total loan amount. The loan fee is proportionately deducted from each loan disbursement you receive. The money you receive will be less than the amount you actually borrow.
Federal Direct Stafford Loans
There are two types of Stafford Loans, Subsidized and Unsubsidized Stafford.
The Federal Subsidized Stafford Loan
The Federal Subsidized Stafford Loan is a need-based loan. Interest is not charged to the student during periods of enrollment. Payment on the principal amount of Federal Subsidized Stafford Loans does not start until the student graduates, or drops below half-time (6 credit hours) enrollment for more than 6 months.
The Federal Unsubsidized Stafford Loan
The Federal Unsubsidized Stafford Loan is not need-based, which means that eligible students who may not qualify for need-based grants or loans (including the Federal Subsidized Stafford Loan), can qualify for the Unsubsidized Stafford Loan. Interest on the Federal Unsubsidized Stafford Loan is charged to the student from the date of disbursement, but the payment on the principal amount does not start until the student graduates, or drops below half-time (6 credit hours) enrollment for more than 6 months.
The type of loan and amount of loan that a student qualifies is determined based on:
- the school's cost of attendance
- the expected family contribution (EFC) from the FAFSA
- the amount of other financial aid that the student is receiving (Bright Future's, Grants, Scholarships, and Waivers.
- student's class level (annual limits apply)
- total Stafford borrowing level to date (aggregate limits apply)