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What is a Federal Stafford Subsidized Loan?
- The Federal Stafford Subsidized loan is a federally sponsored student loan available at schools participating in the FFELP. A bank, credit union, savings and loan association or in rare cases the school itself can make the loan. The
school's primary role is to certify your eligibility.
- A guarantor, a state agency or non-profit corporation, insures the loan, which means you can make the loan just on your signature. The guarantor may charge a fee for this insurance.
- This loan was created specifically for students after high school and has many benefits not ordinarily found in credit cards or other loan products.
- You choose the lender. Keep in mind that this is the beginning of a long-term relationship. It is a good idea to use the same lender throughout your college career. Multiple lenders can cause increased
monthly payments and complicate repayment.
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Do I qualify for a Federal Stafford Subsidized Loan?
A Federal Stafford Subsidized loan is awarded on the basis of financial need. Eligibility is determined in the analysis of the submitted FASFA (Free Application for Federal Student
Aid) data and by the school. The school will offer you the loan in an award letter if you qualify.
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How much can I borrow?
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What are the terms?
- The interest rate on a Federal Stafford Subsidized loan cannot exceed 8.25 percent.
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The interest rate varies annually and is adjusted each July 1. You'll be notified of interest rate changes throughout the life of the loan.
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You may be required to pay an origination fee of up to 3% of the principal balance. This will be deducted from the loan disbursement you receive which is then paid to the Department of Education.
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Interest is accruing while you are in school. However, the taxpayers are paying that interest. When you start repayment, you begin paying the interest.
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Repayment begins six months after you graduate, withdraw, or drop below half-time attendance.
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You may have up to ten years to repay.
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The minimum payment amount is $50 per loan.
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Many lenders offer up-front discounts or repayment incentives that affect the over-all cost of the loan. You should examine these options carefully when choosing a lender. You may get more money up-front, but actually pay more in
the long-term.
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How do I apply?
Complete the Free Application for Federal Student Aid (FAFSA), which will start the financial aid application process at your school. Your school may also have an institutional
application you must complete. If the school offers and you accept a Federal Stafford Subsidized loan, you will receive a Master Promissory Note that you must sign and return as instructed.
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How do I Receive my money?
Normally, loans are disbursed in two equal disbursements, at the beginning and middle of the academic period. Schools disburse Stafford Subsidized Loans in one of two ways:
- Electronic funds transfer (EFT), which allows your lender to transfer your money directly to a school's bank account and subsequently to your student account.
- Paper check made payable to you and your school and sent directly to the school for endorsement.
To find a Brazos Lender, click here.
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