Financial Aid Contacts

Federal Stafford Loans

The Federal Stafford Loan program provides both subsidized (need-based) and unsubsidized (non-need-based) loans to qualifying students. Federal Stafford Loans disbursed before July 1, 2006 have a variable interest rate with an 8.25 percent cap. New Federal Stafford Loans disbursed on or after July 1, 2006 have a fixed 6.8 percent interest rate.

• Interest on subsidized Federal Stafford Loans is paid by the federal government until six months after the borrower graduates, leaves the institution, or reduces enrollment to less than half-time. These loans are based on financial need and are limited to no more than $8500 annually.
• Interest on unsubsidized Federal Stafford Loans accrues from the time of disbursement and may be paid on a regular basis or deferred during periods of enrollment of at least a half-time basis. Deferred interest is capitalized at the time repayment begins. These loans are not based on need and may range up to $20,500 minus any subsidized Stafford amount.

Repayment on both subsidized and unsubsidized Federal Stafford Loans begins six months after the borrower graduates, leaves the institution, or reduces enrollment to less than half-time. Borrowers have up to 10 years to repay their loans, excluding periods of deferment. Deferments may be requested in certain cases when a borrower returns to school, is unemployed, or meets one of several other conditions.

Many lenders offer repayment incentive programs for students who have scheduled payments on time. These range from partial principal reduction to interest rate reductions to a combination of these. These may be available for students repaying under the standard and/or consolidated (extended) repayment programs. It is wise to check with your lender to find out what repayment incentive plans are available to you. Bear in mind that these may change by the time you graduate, and you may not receive the same repayment incentive plan that was offered when you began school.

Federal Stafford Loans, at the option of the student, may be consolidated upon graduation with the student’s other federal student loans, such as Guaranteed Student Loans, National Direct Student or Federal Carl Perkins Loans, SLS/ALAS Loans, Stafford Student Loans, Health Professions Loans, HEAL Loans, etc., to provide lower monthly payments and to extend the repayment period beyond the 10-year limit.

Students who have more than $30,000 in federal loans after graduation may arrange to have their repayment period extended up to 25 years without consolidating their loans.

Each borrower should review all options upon graduation to determine the repayment arrangement best suited to his or her needs.