Stafford (Direct) Loan
To be eligible for a Stafford loan, you must meet the following criteria:
- You must be enrolled at least half-time.
- You must file the FAFSA (Free Application for Federal Student Aid) every year that you are enrolled in school. Most students who apply will qualify for a subsidized or unsubsidized Stafford loan.
- To receive a Stafford loan during the summer, you must file the FAFSA and submit a summer aid application.
How to apply
The Stafford loan application is a two-step process. If you do not complete both steps, the loan will not be processed.
Difference between subsidized and unsubsidized
The federal government pays the interest on a subsidized loan while you are in school at least half-time, so the student has no interest payable or accruing while in school. After the student drops below half-time or leaves school, interest will begin to accrue.
Interest does accrue on an unsubsidized loan while you are in school. You may choose to pay interest while in school in order to avoid "paying interest on interest" (capitalizing interest).
The Stafford loan interest rate is a fixed 3.4% for undergrad subsidized, and 6.8% for undergrad/graduate unsubsidized.
Stafford loans require a 1% origination fee. Students will pay that 1% at the time of disbursement, and so receive 99% of the gross loan amount.
Repayment and consolidation
When you near graduation (or drop below half-time), you will be given information on loan repayment and consolidation. This is referred to as exit counseling (or "the exit interview"). For more information, see our page on loan repayment.