Federal Loans

Stafford Loans are the most common source of federally backed loan funds. There are two types of Stafford loans: direct subsidized and direct unsubsidized. Your FAFSA will establish your eligibility for both.

Direct Subsidized Stafford Loans are need-based loans. To qualify for a loan, students must meet all requirements to receive federal financial aid and have been determined for eligibility for a Pell Grant.

Full-time students may be eligible to borrow up to $3,500 for the first academic year, $4,500 for the second year, and $5,500 for each year after that.

The federal government pays interest on the loans while a student attends school and during a grace period that extends for six months after the student leaves school.  Students must begin to pay back the loans six months after they finish school or attend less than half time.

Direct subsidized loans disbursed between July 1, 2012 and June 30, 2013 have a fixed rate of 3.4%.

Direct Unsubsidized Stafford Loans are for all qualified students and are not based on financial need. It is open to students who are ineligible for have limited eligibility for the direct subsidized loan.

Dependent students may receive an unsubsidized loan of up to $2,000 per academic year. Independent students may borrow up to $6,000 per academic year.

Direct unsubsidized loans accrue interest from the time the loan is disbursed. Interest payments begin immediately, but can be deferred while a student attends school. Loan repayment begins six months after a student leaves school or reduces attendance below half time.

Direct unsubsidized loans disbursed between July 1, 2012 and June 30, 2013 have a fixed rate of 6.8%.

Total Stafford Borrowing Limits. Total undergraduate Stafford loans cannot exceed $23,000 for dependent students and $57,500 for independent students, who cannot receive more than $23,000 of which may be in subsidized Stafford loans).

Stafford loans must be repaid within 10 years unless the student qualifies for an alternative repayment plan.

Direct PLUS Loans let parents with good credit histories who have dependent undergraduate students borrow up to a maximum of the student’s unmet costs. These loans are fixed at 7.9%.

Dependent students must meet requirements to receive federal financial aid. Parents must meet some of these requirements as well.

The first payment on a PLUS loan is due 60 days after the final loan disbursement.