Direct Stafford Loan
Description
The Direct Stafford Loan provides low interest loans to students to help pay for the cost of a student’s education after high school. There two types of Direct Stafford Loans that students can borrow: the Direct Subsidized Loan and the Direct Unsubsidized loan.
Students who qualify for a Direct Subsidized loan will not be charged interest while in school at least half-time, during the grace period, and during authorized deferment periods.
Interest accrues on the Direct Unsubsidized loan and is the borrower’s responsibility. Borrowers can choose to pay the interest quarterly or allow the interest to accrue and capitalize after their 6 month grace period expires.
Eligibility
Students must:
- Be enrolled at least half-time at an eligible college in an eligible program
- Be registered with the Selective Service (if required)
- Not be in default on a previous student loan
- Not owe a refund or overpayment of a student loan
- Not owe a refund or overpayment of a grant or scholarship
- Continue to make Satisfactory Academic Progress (SAP), as defined by the school
- Loan amounts may be prorated based on your program's length.
- Students who have previously received a federal student loan from a private lender under the FFEL Program will need to complete a new promissory note to receive loans under the Direct Loan Program. Please check with the financial aid office at your school for specific instructions.
- If you’re a student attending an institution located outside of the United States, your school is now able to participate in the Direct Loan Program. Please check with the financial aid representative at your school for specific instructions on how to obtain a Direct Loan for your next term.
How Much Can I Borrow?
The maximum amount you can borrow each year depends on your grade level and on whether you are a dependent or independent student.
Undergraduate Maximum Annual Limits
Dependent Undergraduates*
| Subsidized | ||
|---|---|---|
| First Year | $3,500 | $5,500 |
| Second Year | $4,500 | $6,500 |
| Third Year & Beyond | $5,500 | $7,500 |
All undergraduate annual loan limits are subject to proration for programs of less than a full academic year.
* Students whose parents are unable to borrow the PLUS loan should refer to the Independent loans limits.
** If the borrower does not have financial need for a Direct Subsidized Loan using expected family contribution (EFC), or has reached the aggregate limit in Subsidized Stafford Loans, the borrower may receive up to and including the entire amount in Direct Unsubsidized Loans assuming he or she has remaining eligibility for the loan.
Independent undergraduates***
| Subsidized | ||
|---|---|---|
| First Year | $3,500 | $9,500 |
| Second Year | $4,500 | $10,500 |
| Third Year & Beyond | $5,500 | $12,500 |
***These limits also apply to dependent students whose parents are unable to borrow a PLUS loan.
Aggregate Limits
Aggregate limits include amounts borrowed under the Direct Loan Programs and any amounts borrowed under the Federal Family Education Loan Program (FFELP).
| Subsidized | Unsubsidized | |
|---|---|---|
| Dependent Undergraduates | $23,000 | $31,000 |
| Independent Undergraduates | $23,000 | $57,500 |
Graduate Annual Loan Limits
| Graduate and Professional Students | $8,500 | $12,000 | $20,500 |
| Medical School Students | $8,500 | $32,000 | $40,500 |
Aggregate Loan Limits
| Graduate and Professional Students | $65,500 (including undergraduate Stafford loans) | $73,000 | $138,500 |
| Medical School Students (Effective 4/18/08 per DCL GEN-08-04) | $65,500 (including undergraduate Stafford loans) | $158,500 | $224,000 |
The aggregate loan limits include amounts borrowed as an undergraduate student
How Do I Apply?
- Complete the Free Application for Federal Student Aid (FAFSA). After you’ve completed your FAFSA, the information will be sent to your school and they will determine your eligibility for either the Direct Subsidized or Direct Unsubsidized Loan
- Accept your loan offer from the financial aid office
- Your school will notify you if you are to complete the application online through the school or if you are to go directly to the Direct Loan website. If you apply online, you will need your Personal Identification Number (PIN)
- Complete the Entrance Counseling
- Complete the Master Promissory Note
Interest Rates
Direct Subsidized Loans for Undergraduates:
- Loans disbursed after July 1, 2009-rate is fixed at 5.6%
- Loans disbursed after July 1, 2010-rate is fixed at 4.5%
- Loans disbursed after July 1, 2011-rate is fixed at 3.4%
Direct Unsubsidized Loans for Undergraduates and Direct Subsidized and Direct Unsubsidized Loans for Graduate / Professional Students:
- The interest is fixed at 6.8%
Repayment
Subsidized Stafford Loans:
A loan is money that must be repaid. If you have a subsidized Stafford loan, no payments are necessary while you are enrolled in school at least half-time and for six months after you leave school whether you graduate or not.
Repayment options are detailed on your Master Promissory Note, but as regulations change, your options may be expanded. If you encounter difficulties repaying your loan contact your lender to discuss all of your options.
Unsubsidized Stafford Loans:
If you borrowed an unsubsidized Stafford Loan, payment of principal does not begin until six months after you are no longer enrolled at least half-time.
The interest will be due while you are in school, but may be deferred until six months after you leave school.
If you choose to pay the interest on the loans while you are in school the total overall cost of borrowing will be lower.
Interest not paid while you are in school will accrue and be added to the principal balance, increasing your overall costs.
If you have difficulty repaying your loans, do not ignore the problem. Contact your lender for assistance with deferment or forbearance options.