Federal Direct Stafford Loan
The Federal Direct Stafford Loan is the basic student loan available to all students, regardless of financial need. It is the education loan most students borrow first, before all others. If the loan is subsidized, the government will pay the interest while the student is in school. If the loan is unsubsidized, the student has the option of capitalizing the interest or of paying the interest quarterly during the in-school period. Payment of the principle itself, on both the subsidized and unsubsidized loans, does not begin until six months after graduation, provided the student remains enrolled on at least a half-time (6 credits) basis. Repayment period is ten years. The interest rate is fixed at 6.8% on Federal Direct Unsubsidized Stafford Loans for both undergraduates and graduate students. For the 2012-13 academic year, the interest rate on Federal Direct Subsidized Stafford Loans for undergraduates is fixed at 3.4%. This was a result of recently enacted legislation, which rolled back the originally scheduled increase to 6.8% that was to go into effect on 7/1/12. There is currently a 1% origination fee charged by the government on Federal Direct Subsidized and Unsubsidized Stafford Loans for both undergraduate and graduate students. Effective on loans disbursed July 1, 2013 and after, the origination fee will be 1.051%.
As an example, 1.051% of the total amount borrowed is deducted from loan proceeds:
Example: Student borrows $5,500 in Federal Direct Stafford Loans for the year, to be split over the fall and spring semesters. In this case, after the origination fee is deducted, $2,721 will disburse one semester, $2,721 will disburse the next semester.
Incarcerated individuals are not eligible for federal Direct Stafford Loans and may only be considered for federal Pell and/or SEOG Grants. For more information about Federal Student Aid, visit the U.S. Department of Education's http://studentaid.ed.gov.
Maximum annual loan limits based on grade level for dependent undergraduate students are as follows:
Maximum annual loan limits per grade level for
independent undergraduate students or for dependent undergraduate students whose parents are denied on the federal PLUS Loan are as follows:
- Freshman: $3,500 Subsidized* Stafford + $6,000 Unsubsidized Stafford
- Sophomore: $4,500 Subsidized* Stafford + $6,000 Unsubsidized Stafford
- Junior & Senior: $5,500 Subsidized* Stafford + $7,000 Unsubsidized Stafford
$31,000 is the lifetime aggregate borrowing limit for a dependent undergraduate student; $57,500 for independent undergraduates and dependent undergraduates whose parents are denied on Parent PLUS Loans each year.
*Whether loan is Subsidized is based on financial need as determined by the FAFSA. If student as no financial need, total annual Unsubsidized Stafford Loan eligibility would be: $5,500 as a freshman, $6,500 as a sophomore, $7,500 as a junior or senior.
To Apply for a Federal Direct Stafford Loan for summer 2012/fall 2012 and/or spring 2013:
1. Complete a 2012-2013 Federal Direct Stafford Loan Acceptance Form for Undergraduates.
2. Complete the Federal Direct Stafford Loan MPN* at www.StudentLoans.gov. Federal PIN required.
3. Complete a Federal Direct Stafford Loan Entrance Counseling session* at www.StudentLoans.gov.
*Required only for first-time Federal Direct Stafford Loan borrowers.
See Arcadia's Title IV Code of Conduct for more information.
