Stafford loans are the way that most students pay for their college education funds. In fact, this is one of the most commonly taken out loans. When it comes to the Stafford Loans, there are both subsidized and unsubsidized types and each can be used by both undergraduates and graduates. These Stafford Loans are offered to students through the U.S. Department of Education, like Perkins Loans, Parent PLUS Loans, and Grad PLUS Loans.
What are Stafford Loans?
Subsidized Stafford loans are available to all undergraduate students that have some type of financial need for the loan. The amount that you are eligible to borrow depends on how much your school determines you can, but the amount will never exceed what your financial need is. One of the best things about the subsidized loans is that the interest on the loan is paid for while you are enrolled either half-time or more in school. You also do not have to start paying back this loan until six months after you graduate or leave school.
An unsubsidized loan is different than a subsidized loan in a couple of different ways. First and foremost, unsubsidized loans are available to both undergraduate and graduate students who are enrolled in college. Another main difference is that unsubsidized loans do not require any type of financial need to obtain them. Just like the subsidized loan, your school will determine the amount of aid that you are eligible to borrow, but it will never exceed your cost of attendance. You ARE responsible for paying interest on an unsubsidized loan and interest will accrue while you are in school.
What are the Requirements?
There are some requirements that must be met before you can receive a Stafford loan. First, you must fill out the FAFSA to be considered for the loan. In addition, you must be enrolled in college at least half-time, which is typically six credit hours.
You must also be enrolled in a degree seeking program or a program that gains college credits. For instance, you cannot just be taking a single class that does not count for any credit. If you want to obtain a subsidized loan, you must have a financial need for it. If you do not, you will only qualify to receive an unsubsidized loan.
How Much Can I Borrow?
When it comes down to the amount that you can borrow, it varies from student to student and school to school. Your college is responsible for determining how much you are able to borrow based on the cost of attendance.
The amount you receive depends on the year you are in college and whether you are considered an independent or dependent student. Below, we will go over the loan amounts you are eligible to receive.
- First year undergraduate dependent students can receive $5,500 per year. Financially independent first year undergraduate students can receive up to $9,500 per year.
- Second year undergraduate dependent students can receive up to $6,500 per year. Financially independent undergraduate students can receive up to $10,500 per year.
- Third year and beyond undergraduate dependent students can receive up to $7,500 per year. Financially independent students can receive up to $12,500 per year.
Graduate students will receive more based on their cost of attendance and the amount can vary from $20,500 to $57,500.
What are the Interest Rates?
When it comes to the interest rate on your student loans, it may vary depending on when you take out your student loan.
For undergraduates, if your loan was taken out on or after July 1st, 2015, but before July 1st, 2016, your interest rate for both subsidized and unsubsidized loans is 4.29 percent. If you took our your loan between July 2016 and June 2017, the interest rate is 3.76 percent. The most recent interest rate for the 2017-2018 school year was a fixed 4.45 percent.
Undergraduate Stafford loan rates for the upcoming school year of 2018-2019 are 5.05 percent.
Graduates, who can only get unsubsidized Stafford loans, have different fixed interest rates. For the 2015-2016 school year, the rate was 5.84 percent. For 2016-2017, it was 5.31 percent, and for 2017-2018, it was bumped up to 6 percent.
Graduate Stafford loan rates for the upcoming school year of 2018-2019 are 6.6 percent.
What Else Should I Know About Stafford Loans?
Stafford loans are a great way to pay for college, if you need the financial help. You will need to pay back the loan, but usually have a six-month grace period once you graduate or leave school. Also, there are many federal benefits that these come with that other types of loans, such as those from private lenders and banks, do not.
In addition, you will need to apply for the loan by filling out the FAFSA. If you do not, you will not receive the loan for your schooling. All students will qualify for the unsubsidized loan and you do not have to meet any financial requirements to receive it.
If you are interested in applying for and using Stafford loans for your schooling, speak with your financial aid counselor today.