Federal Direct Stafford Loan

The Federal Direct Stafford Loan Program provides educational loans to assist students in paying for educational expenses. The Department of Education acts as the lender, providing funds for Stafford Loans. 

Students may receive a Direct Subsidized Loan, a Direct Unsubsidized Loan, or both for the same academic year.  Qualification for a Direct Subsidized Loan is based on financial need, as determined under federal regulations.  A student’s need is not a factor in determining eligibility for a Direct Unsubsidized Loan.  Students may qualify for a Direct Unsubsidized Loan regardless of their financial need. 

The Budget Control Act of 2011 made two important changes to the Direct Loan Program:

1. Effective for loans made for periods of enrollment (loan periods) beginning on or after July 1, 2012, graduate and professional students are no longer eligible to receive Direct Subsidized Loans. Direct Subsidized Loans received by any student for loan periods beginning before July 1, 2012 are not affected by this change. (NOTE: It is the beginning date of the loan period that determines whether a graduate student can receive a subsidized loan, not the first disbursement date.)

2. Effective for loans first disbursed on or after July 1, 2012, the law eliminates any repayment incentives to Direct Loan borrowers to encourage on-time repayment of loans, including any reduction in the interest rate or origination fees. As a result, the up-front interest rebate that has been provided to Direct Loan borrowers at the time of loan disbursement will not be offered on any Direct Loan with a first disbursement date that is on or after July 1, 2012. The law continues to authorize the Department to offer interest rate reductions to Direct Loan borrowers who agree to have payments automatically electronically debited.

 Loan Amounts

Student Level & Dependency Status
Max Stafford (Subsidized and Unsubsidized combined)
Max Subsidized
Dependent Freshman* $5,500
$3,500
Dependent Sophomore* $6,500
$4,500
Dependent Junior or Senior* $7,500
$5,500
Independent Freshman $9,500
$3,500
Independent Sophomore $10,500 $4,500
Independent Junior or Senior $12,500 $5,500
Graduate/Professional** $20,500 $0
Medical** $40,500 $0

* Dependent students may be eligible for additional Unsubsidized eligibility if parent is denied Federal PLUS Loan.

** See additional information above regarding Budget Control Act of 2011

Interest Rates

The interest rate is determined based on when the loan was borrowed and is listed in the information that is sent by the servicer.

Direct Subsidized Loan: The interest on a Direct Subsidized Loan is paid by the federal government while the student is enrolled in school at least half time, during the grace period, and deferment periods. (NOTE: The Consolidated Appropriations Act of 2012 temporarily eliminates the subsidy during the 6 month grace period on Direct Subsidized Stafford Loans first disbursed on or after July 1, 2012 and prior to July 1, 2014. The interest will continue to be subsidized while the student is enrolled in school at least half time.)

Direct Unsubsidized Loan: The interest on a Direct Unsubsidized Loan continues to accrue beginning at disbursement even while the student is in school and during grace and deferment periods.  Students are responsible for paying the interest that accumulates, either while in school, or having the interest capitalized until entering repayment.

The Bipartisan Student Loan Certainty Act of 2013 amends the Higher Education Act to provide new formulas for the determination of interest rates for all Direct Loan types. 

Interest rates will now be established each year for Direct Subsidized, Unsubsidized and PLUS Loans.  The rate will be the sum of an index (high yield of the 10-year Treasury Note) plus an "add on". The amount of the "add on" varies based on the type of federal loan and the student's status.  The interest rate, once established, will apply for the life of the loan.

Undergraduate Subsidized or Unsubsidized Stafford Loans
10-year Treasury Note rate + 2.05 capped at 8.25%

Graduate/Professional Unsubsidized Stafford Loans
10-year Treasury Note rate + 3.6% capped at 9.5%

PLUS Loans
10-year Treasury Note rate  + 4.6% capped at 10.5%

2014-2015:

Undergraduate Students: Fixed at 4.66% for  Federal Direct Subsidized Stafford and Unsubsidized Stafford Loans first disbursed on or after July 1, 2014.

Graduate/Professional Students: Fixed at 6.21% for Federal Direct Unsubsidized Stafford Loans disbursed on or after July 1, 2014.

Interest Accrual

The interest on the Subsidized Stafford Loan is paid by the federal government while the student is in school and during the 6 month grace period. (NOTE: The Consolidated Appropriations Act of 2012 temporarily eliminates the subsidy during the 6 month grace period on Direct Subsidized Stafford Loans first disbursed on or after July 1, 2012 and prior to July 1, 2014. The interest will continue to be subsidized while the student is enrolled in school at least half time.)

The interest on the Unsubsidized Stafford Loan accrues during school, grace, and repayment and is the responsibility of the borrower. Borrowers will receive a quarterly interest statement and may choose to make quarterly interest payments, or may choose to defer the interest. Unpaid interest will be capitalized and due at the end of the deferment period. When unpaid interest is capitalized, it increases the total cost of the loan.

Origination Fees

For all Stafford Loans disbursed 7/1/2014 through 09/30/2014, there is a 1.072% origination fee. For all Stafford Loans disbursed on or after 10/1/2014, the origination fee is 1.073%.

The loan fee/origination fee is subtracted proportionately from each loan disbursement.

Grace Period

6 months - Payments are not required during the grace period. There is no penalty if a borrower chooses to make payments during the grace period.

Loan Repayment

Federal Direct Stafford Loans are repaid to your federal loan servicer. Learn more at Repay Your Loans.