Subsidized Stafford Loan

Subsidized Stafford

Subsidized loans are need-based. The federal government pays the interest on these loans while the student is in school and at least half-time during the grace period before repayment begins.

The terms and conditions of the program are explained below.

Eligibility:
You must be a U.S. citizen or permanent resident; full- or half-time undergraduate or graduate student. A credit check is not required.

Loan limits:

Interest rate: Annual limits are variable and may change on July 1. 

• 2007-08 rate:  6.8%
• 2008-09 rate:  6.0%  
• During in-school, grace or deferment, rate based on 91 day T-bill rate + 1.70%.
• During repayment periods, based on 91 day T-bill + 2.30%.
• Capped at 8.25%.
• Based upon current rates.

Total origination or insurance fees:
3% to the federal government to cover administrative costs.
0.5% to the guarantee agency to cover the insurance fee.

Repayment term:
Up to 10 years.

Minimum payment:
$600 per year ($50 per month per FFELP loan account). If you take out Stafford loans from more than one lender you may be required to make more than one minimum payment.

Interest subsidy:
The federal government pays interest on the loan (Subsidized Stafford Loans only) while you are in school at least half-time or during any grace period.

Repayment begins:
Following a 6-month grace period once you stop attending at least half-time.