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Federal Stafford Loan
The most commonly awarded student loan is the Federal Stafford Loan. The
Federal Stafford loan is awarded to students who can prove financial need.
This loan program has a fixed interest rate of 6.8%. There are two different
kinds of Federal Stafford loans - subsidized and unsubsidized. The subsidized version is a loan in which the Federal Government reimburses the lender for the interest while you are in school. Therefore, you do not need to begin making payments on these loans until after you graduate, fall below half-time student status, or drop out of school entirely. Repayment of the loan begins at the end of the six-month grace period and is set up for a maximum of ten years with a minimum payment of $50.00 per month. The actual amount you pay per month varies depending upon the total amount you borrow. There is no penalty for pre-paying your loan. The need analysis determines the amount you can borrow. However, there are loan maximums which also determine the total amount you can borrow. The Fact Sheet illustrates the different loan maximums.
The Federal Subsidized Stafford loan is issued in multiple increments,
paid once each semester or quarter. The loan funds will be sent directly
to the school by the lender.
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