What is a Stafford Loan?

Stafford Loans

Federal Stafford Subsidized loans carry a low-interest fixed rate of 6.0% effective July 1, 2008 for undergraduate students and 6.8% for graduate students. The interest rate is based on current Federal guidelines. Loan fees up to 3% may be deducted from your loans by the lender and/or guarantor at disbursement. All loan funds are disbursed in two equal amounts.

Subsidized Loans are need-based and determined by the cost of attendance minus your expected family contribution (EFC). The government pays the interest that accrues while you are enrolled at least half-time (6 credit hours), in an authorized period of deferment or during your six-month grace period that starts when you graduate or drop below-half-time enrollment status.

Unsubsidized Loans are not need based and the interest rate is fixed at 6.8%. The student is responsible for the interest that accrues from the time the loan is disbursed until it is paid in full. The student can choose to pay the interest as it accrues or let it capitalize. If you let the interest capitalize it will be added to the loan amount. At repayment, interest will be calculated on the amount of the loan plus the accrued interest.

Annual Stafford Loan Maximums as of July 1, 2008
Year	Dependent		Independent
Year	Subsidized or Unsubsidized	Additional Unsubsidized	Subsidized or Unsubsidized	Additional Unsubsidized
Year 1	$3,500	$2,000	$3,500	$6,000
Year 2	$4,500	$2,000	$4,500	$6,000
Year 3, 4, 5	$5,500	$2,000	$5,500	$7,000
Aggregate Limit	$31,000		$57,500
Graduate/ Professional	N/A	N/A	$8,500	$12,000
Aggregate Limit	$138,500

Loan Interest Rates

Loans First Disbursed on or After July 1, 2006

Loan Type	Grade Level	Program
		Direct Loans		FFEL
		7/1/2006 to 6/30/2008	7/1/2008 to 6/30/2009	7/1/2006 to 6/30/2008	7/1/2008 to 6/30/2009
Subsidized Loans	Undergraduate	6.80	6.00	6.80	6.00
Subsidized Loans	Graduate	6.80	6.80	6.80	6.80
Unsubsidized Loans	Undergraduate	6.80	6.80	6.80	6.80
Unsubsidized Loans	Graduate	6.80	6.80	6.80	6.80
PLUS Loans	All	7.90	7.90	8.50	8.50

Variable Rates for Loans First Disbursed Between July 1, 1998 and June 30, 2006

These rates were calculated based upon statutory formulas and equal the bond equivalent rate of the 91-day Treasury bills auctioned on May 27, 2008, plus certain statutory percentage add-ons. The 91-day Treasury bills were auctioned at 1.905 percent, rounded to 1.91 percent.

Loan Type	Status	Program
		Direct Loans		FFEL
		7/1/2007 to 6/30/2008	7/1/2008 to 6/30/2009	7/1/2007 to 6/30/2008	7/1/2008 to 6/30/2009
Subsidized Loans	Repayment or Forbearance	7.22	4.21	7.22	4.21
Subsidized Loans	In-school, Grace, or Deferment	6.62	3.61	6.62	3.61
Unsubsidized Loans	Repayment or Forbearance	7.22	4.21	7.22	4.21
Unsubsidized Loans	In-school, Grace, or Deferment	6.62	3.61	6.62	3.61
PLUS Loans	All	8.02	5.01	8.02	5.01

Interest rates on Stafford and PLUS loans disbursed before July 1, 1998, are calculated using different statutory formulas, percentage add-ons, or both.
Generally, interest rates on Consolidation Loans are fixed rates calculated based on the weighted average of the loans being consolidated rounded up to the next higher 1/8 percent, not to exceed 8.25%.