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What is a Federal Stafford Unsubsidized Loan?
- The Federal Stafford Unsubsidized 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.
- Many students combine subsidized loans with unsubsidized loans to borrow the maximum amount permitted each year.
- 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 Unsubsidized Loan?
Federal Stafford Unsubsidized Loan is awarded as a "final option" after consideration of financial need. This is not a need-based loan. Anyone, regardless of having a financial need or not, may be eligible for a Federal Stafford
Unsubsidized Loan. The amount of eligibility is determined in the analysis of the submitted FAFSA (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 Unsubsidized loan is fixed at 6.8 percent for loans first disbursed on or after July 1, 2006.
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You may be required to pay an origination fee. 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 (or accumulating) while you are in school. You will be given a choice of paying your interest while in school or deferring payment until you leave school. If you choose to make interest payments, you may reduce your payments and the overall cost of your loan.
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If you do not make interest payments, the interest on the loan accrues and will be added to your principal balance (called "capitalization") at the time you enter repayment.
- A TIP. When you fill out your Master Promissory Note, choose to defer interest payments whether you intend to pay or not. Then, you can make the payments if you want to but you would not have to make the interest payments.
- Repayment begins six months after you graduate, withdraw, or drop below half-time attendance.
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You may have between 10-25 years to repay depending on the amount owed, and payment plan selected.
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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 Unsubsidized 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 Unsubsidized 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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