Stafford Student Loans

Stafford student loans are low-interest loans that are provided by the U.S. Department of Education.  These loans are provided to help students cover the costs of higher education at a four-year college or university, community college, or trade school.

As with all federal student aid, in order to be eligible for Stafford student loans, you must complete the FAFSA form.

Stafford loans are generally included in the award letters that you will receive from the colleges or universities that you have been admitted to.

There are 2 types of Stafford Student Loans:

1. Direct Subsidized Loans – These loans are granted to students with financial need.  The amount that you are allowed to borrow is based on your FAFSA results and determined by the school you attend.  With this type of loan, you are not charged interest while you are in school as long as you are attending part-time.

2. Direct Unsubsidized Loans – Unlike direct subsidized loans, you are not required to demonstrate financial need to be considered eligible.  Similar to subsidized loans, your loan amount is determined by the school you attend.  With this type of loan, you are charged interest while you are in school.

When you receive and accept a Stafford Loan, you will have to complete a Master Promissory Note. What’s a Master Promissory Note (MPN)? This is a legal document that you must sign stating that you agree to repay your loan and any related expenses back to the Department of Education.  It will also give you additional details on the terms and conditions of your loan.  Your school will either provide you with a MPN or you will be directed to to complete one.

Do Stafford Student Loans have borrowing limits? Yes, there are limits to the maximum amount of loans that you are eligible for each year.  The actual loan limits are as follows:

Dependent Undergraduate Students:

  • 1st Year – $5,500 ($3,500 subsidized limit)
  • 2nd Year – $6,500 ($4,500 subsidized limit)
  • 3rd Year and beyond – $7,500 ($5,500 subsidized limit)
  • Maximum Debt – $31,000 ($23,000 subsidized limit)

Independent Undergraduate Students:

  • 1st Year – $9,500 ($3,500 subsidized limit)
  • 2nd Year – $10,500 ($4,500 subsidized limit)
  • 3rd Year and beyond – $12,500 ($5,500 subsidized limit)
  • Maximum Debt – $57,500 ($23,000 subsidized limit)

Graduate Students:

  • Each Year – $20,500 ($8,500 subsidized limit)
  • Maximum Debt – $138,500 ($65,000 subsidized limit); this amount also includes undergraduate loans

*Note: These amounts are subject to change.  Visit for the most current information

How do I get the loan money? The loan will be paid directly to your school’s financial aid department.  The money will first be used to pay for tuition and fees, room and board and other related school charges.  If there are any funds left over, you will receive a refund check.

What are the current interest rates on Stafford Student Loans?

Undergraduate Students:

Direct Subsidized Loans – Between 3.4% and 4.5%

Direct Unsubsidized Loans – 6.8%

Graduate Students:

Direct Subsidized Loans – 6.8%

Direct Unsubsidized Loans – 6.8%

How do I pay it back? When you receive your first Direct Loan, you will be contacted by the loan service provider.  This is who you will be paying the money back to.  If you are unsure who your loan service provider is, you can look it up on this website:

When do I have to pay it back? You will have a six month grace period after you graduate (or leave school, or drop below part-time enrollment) before you have to begin paying back your loans.  During this six month period, your service provider will notify you to let you know when your first payment is due.

Stafford student loans are the most widely used loans available and offer a great way to help you meet your college financial aid needs.

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Lauren Anderson is a certified school counselor who's passionate about helping students all over the world successfully transition from high school to college! After spending 6 years as a business professional, she obtained her Master’s degree in School Counseling and now spends her spare time helping students.

One Response to “Stafford Student Loans”

  • Carmen Bojanowski

    Carmen Bojanowski on January 7, 2013

    If I would have seen this when I began taking loans out, it would have saved me a lot of stress! As the first in my immediate family to attend college, I had to figure a lot of this stuff out on my own. This is very informative and it’s explained in a way much easier to understand than every other website that attempts to explain loans.

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