What is a Stafford loan?:Updated 2022
A Stafford Loan is a federal student loan made and guaranteed by the US Department of Education. Named for Vermont Senator Robert Stafford for his contribution to higher education, Stafford Loans are available for undergraduate, graduate, and professional students.
Stafford loans are currently only available. through the federal William D. Ford Direct Lending Program (direct loans) . Stafford loans are no longer available through the federal Family Education Loans program beginning July 1, 2010.
What types of Stafford loans are available?
There are two types of Stafford Loans, or Direct Stafford Loans.
1.Directly Subsidized Loans : These loans are only available tostudentswith financial need. The Ministry of Education pays interest while: (a) you are in school at least half-time; (b) you are in the grace period (the first 6 months after graduation); and you are deferred (you have chosen to postpone the repayment of your loan). For this reason, it is in your best interest to use the “subsidized” loans, if you are eligible for them, before taking out other loans.
2.Direct Unsubsidized Loans : These loans are available toundergraduate, graduate, and professionalstudents, and there is no need to demonstrate financial need. Unlike “subsidized” loans, you have to pay interest on unsubsidized loans even when you’re in school, on a grace period, or on a deferment. Because interest accrues, you must pay it if you can afford it during these times. If you cannot, accrued interest will be added to your principal and you will have a higher overall amount to repay.
Although the Ministry of Education is the lender, these loans are serviced by loan servicing organizations or companies responsible for helping the government manage billing and other services for your loan. You may have more than one servicer if you have multiple federal student loans.
Are you eligible for Stafford Loans?
To qualify for the “ Subsidized ” Loans, you must meet ALL of the following requirements:
First name , you must show financial need , which will be assessed based on the data you provided on your Free Application for Federal Student Aid (FAFSA) .
Second, you must be a US citizen or US national , OR fall under one of the following categories of eligible non-citizens who have :
- A green card;
- A Form I-94 , “Arrival-Departure Record”, indicating “Refugee”, “Granted Asylum”, “Cuban-Haitian Entrant”, “Conditional Entrant” (valid if issued before April 1, 1980), or “Parole”;
- Has battered immigrant status , or is the child of someone with battered immigrant status; Where
- A T-Visa (for victims of human trafficking).
Fourth , You must be registered with Selective Service , if you are a male between the ages of 18 and 25.
Fifth , You must be enrolled in an eligible program/degree m . Check with your school’s financial aid department to confirm your eligibility.
Sixth , You must be enrolled at least half-time .
Seventh , you must be making satisfactory academic progress (SAP ) by maintaining a cumulative grade point average (GPA), taking a minimum number of credit hours per semester, and staying on track to complete your degree within an acceptable time frame. SAP standards vary from school to school. Check with your school’s financial aid office to find out your expectations.
Eighth , You must certify on FAFSA that (1) you are not in default on a federal student loan and do not owe any money on a federal scholarship, and (2) you will use financial aid Federal for educational purposes only.
Ninth , You must have a high school diploma , GED, approved home schooling or qualifying career path program . Speak to your school’s financial aid office to find out if your school offers a qualifying career path program.
The requirements for “ unsubsidized ” loans are the same, except you don’t need to show “financial need”.
Once you have received a direct Stafford loan, be sure to maintain your eligibility for as long as you need the loan. If you lose your eligibility, you can take steps to regain it.
How do you apply for Stafford Direct Loans?
To apply for either of the two Stafford loans, you must complete the FAFSA form. The FAFSA, which is free to complete and submit, is used by current and prospective colleges to determine a student’s eligibility for various forms of financial aid.
Completing the FAFSA can be a long process that requires financial and other information, so be sure to start early and get it in as early as possible. The opening date is October 1 each year, so you have plenty of time to complete it before the federal deadline of June 30.
States and even schools also have their own deadlines for FAFSA submission. It is therefore best to check with your school administration to ensure that your form arrives on time.
You must complete the FAFSA annually . If you want to remain eligible for Stafford Direct Loans, be sure to keep up to date with any changes to the form and meet the deadlines.
What are the interest rates for Stafford direct loans?
The interest rate depends on the type of loan and the date the loan is first disbursed; it is generally lower for undergraduate student loans.
The interest rate depends on the type of loan and the date the loan is first disbursed; it is generally lower for undergraduate student loans.
For loans granted for the first time on or after July 1, 2022 and before July 1, 2023, the interest rate is as follows:
- 4.99% for Direct Subsidized Loans and Direct Unsubsidized Student Loans ; and
- 6.54% for direct unsubsidized loans for graduate or vocational students.
The interest rate is a fixed rate, which means the rate doesn’t change, so your monthly payments will always be the same amount. Knowing how much you need to pay each month will help you with your budget.
The interest rate is set each July 1 in accordance with federal law.
Note: The COVID-19 emergency assistance for student loans has been extended until December 31, 2022, so the following measures are available until that date: a suspension of loan repayments, a rate of 0% interest and stopping collections on defaulted loans.