Stafford Loan
(Federal Direct Subsidized and Unsubsidized)
How to apply for Stafford loan
- File the Free Application for Federal Student Aid (FAFSA). Most students who apply will qualify for a subsidized or unsubsidized Stafford.
- Summer semester Stafford requires the FAFSA AND an MSU summer aid application.
Actions YOU must take to receive your Stafford Loan funds
- Your enrollment level must be at least half-time.
- You must accept your loans in StuInfo/eFinaid.
- You must complete a Stafford Direct Loan Master Promissory Note (MPN). The Stafford MPN is good for ten years provided at least one Stafford Loan is disbursed to you within the first 12 months after signing.
Difference between subsidized and unsubsidized Stafford
- SUBSIDIZED
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, there is a one-time grace period of six months. - UNSUBSIDIZED
Interest does accrue on an unsubsidized Stafford while you are in school. You may choose to pay interest while in school in order to avoid "paying interest on interest" (capitalizing interest).
Interest rates
- The Direct Stafford Loan interest rate is a fixed 5.6% for undergrad subsidized, and 6.8% for undergrad unsubsidized and graduate sub and unsub. (For 2008-2009 the undergrad subsidized rate was 6%.)
- Loans borrowed prior to July 1, 2006 have variable interest rates with a cap of 8.25%.
Loan fees
Stafford Loans require a 1% origination fee and a 1% guarantee fee. There's an up-front rebate of 1.5%, so the net disbursement is 99.5% of the gross loan amount. The borrower must make the first 12 payments on time to keep the rebate.
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 Exit Counseling or Exit Interview. More information on loan repayment…
