Federal Stafford Loans
Federal Stafford Loans (Subsidized and Unsubsidized) are fixed-rate student loans for Graduate students. These are the most common student loans, and one of the lowest-cost ways to pay for school.
In order to be eligible for Federal Stafford Loans, a graduate student must:
- File a Free Application for Federal Student Aid (FAFSA)
- Be enrolled at least half time (at least 3 credits per semester) in a master’s or doctoral program
- Be a U.S. Citizen or eligible non-citizen
- Be achieving Satisfactory Academic Progress as established by the University
- Cannot be in default on a student loan or owe a repayment on any grant funds
- Submit all documents required by the Financial Aid Office pertaining to Verification
Students pursuing only a Teaching Credential are considered fifth-year undergraduate students and follow the loan limits and credit requirements for third-year and beyond undergraduates. For more information, please visit Undergraduate Loans.
Stafford Loans may be subsidized by the U.S. Government or unsubsidized depending on the student's financial need. Please see below for more information.
Budget Control Act of 2011
After months of intense deficit reduction negotiations, both chambers of Congress passed and President Obama signed into law the Budget Control Act of 2011 just hours before the U.S. defaulted on its debt. The package contains two provisions related to graduate student aid:
- Elimination of the in-school loan interest subsidy for graduate and professional students
Interest Subsidy for Graduate Students: The Budget Control Act eliminates the in-school interest subsidy for graduate and professional students beginning July 1, 2012, a provision that would save $18.1 billion from FY 2012-21, $8.2 billion of which is from FY 2012-16, according to the Congressional Budget Office (CBO). The legislative language clarifies that the subsidy elimination does not apply to students taking preparatory coursework and those in programs leading to teacher certification where the credential is awarded by the state instead of the institution.
- Elimination of Direct Loan repayment incentives
Repayment incentives were also eliminated in the final package. The incentive for using automatic debit repayment provided borrowers with a 0.25 interest rate reduction and the up-front interest rebate incentive was equal to 0.5 percent of the loan amount and applied toward the 1 percent loan origination fee. For PLUS loans, the up-front interest rebate was 1.5 percent applied toward the 4 percent origination fee. Borrowers were able to keep the rebate if they made their first 12 payments on time. The language prohibits the Department of Education from authorizing or providing repayment incentives on new loans disbursed on or after July 1, 2012, except that an interest rate reduction may be provided to a borrower who agrees to automatically debited electronic payments. The CBO projects the elimination of the origination fee rebates would yield $3.6 billion from FY 2012-21.
Federal Stafford Subsidized Loan
Subsidized loans are available to students who demonstrate financial need as defined by the FAFSA. This loan is called "subsidized" because the government pays the interest on the loan while the student is enrolled in school and during the grace period. The loan goes into repayment six months after the student graduates or is no longer enrolled half time.
Federal Stafford Unsubsidized Loan
Unsubsidized loans are available to students who do not qualify for the Federal Stafford Subsidized Loan. These loans are "unsubsidized" because the interest accrues while the student is in school. Students can choose to pay the interest while in school, or add it to the balance of the loan when they enter repayment.
Interest Rates and Fees for Federal Direct Loans
| Program of Study | Fixed Interest Rate | Loan Fees |
|---|---|---|
| Federal Direct Subsidized Loan | 6.8% | 0.5% * |
| Federal Direct Unsubsidized Loan | 6.8% | 0.5% * |
*Federal Direct Subsidized and Unsubsidized Loan Fee Rebate: These loans have a 1.0% Origination Fee and offer a 0.5% Rebate on the Origination Fee. This results in a net Loan Fee of 0.5%, which will be deducted from the gross amount of the loan. If you fail to make 12 on-time monthly loan payments, you will be charged for the initial Rebate and it will be added back to the outstanding balance of the loan. If your first 12 monthly loan payments are made on time, the Rebate will become permanent.
Annual Loan Limits
Graduate and doctoral students are eligible to take out up to $20,500 per year in Federal Stafford Loans. Of this amount, up to $8,500 may be Subsidized.
Aggregate Loan Limits
Students who borrow Federal Stafford Loans have aggregate lifetime loan limits. This means that there is a maximum a student may take out in Federal Stafford Loans for his or her educational career. For Graduate and Doctoral students, the lifetime loan limit is $138,500. Of this amount, up to $65,000 may be subsidized. Students can check the amount of loans they have taken out during their academic careers through the National Student Loan Data System (NSLDS) at www.nslds.ed.gov.
Click here to read more about IMPORTANT UPDATES to the Direct Loan Program effective July 1, 2012
