Federal Stafford Loan
Stafford loans are awarded based on a student's dependency status, financial need, cost of attendance, and grade level. Both undergraduate and graduate students may borrow in this program. These loans will be subsidized when based on need and the federal government will pay the interest while the student remains enrolled at least half-time. Unsubsidized loans are also available based on the student's cost of attendance and other financial aid. These loans require the student to pay or accrue the interest while enrolled, although the principal amount of the loan is deferred. Borrowers begin repaying both subsidized and unsubsidized Stafford loans at the end of at least half-time enrollment.
Subsidized Stafford
The Subsidized Federal Stafford Loan is a need-based loan program. Subsidized means the interest is paid by the government while the student is in school. The Subsidized Federal Stafford can be deferred up to 6 months upon graduating, leaving the university, or dropping below half-time attendance. This loan is repaid to the Department of Education.
The interest rate on the Subsidized Federal Stafford Loan Programs is 5.6% fixed for the undergraduate level and 6.8% fixed for the graduate level.
Unsubsidized Stafford
The Unsubsidized Federal Stafford Loan is a non-need based loan program, in which the interest is charged to the student from the time the loan is disbursed until it is paid in full. If the student allows the interest to accumulate, it will be capitalized (the interest will be added to the principal amount of the loan and additional interest will be based upon the higher amount). The student has the option of paying the interest while in school on a monthly or quarterly basis, so it will not accumulate.
The interest rate on the Unsubsidized Federal Stafford Loan Programs is a fixed 6.8%.