A Subsidized Stafford loan is based
on the financial need of the student. This is a
federal loan which has a variable interest rate
that changes every year on July 1. The federal government
pays the interest on the loan while the student
is still in school and six months after the student
graduates or ceases to be enrolled at least half
time.
Eligibility
– Student must be a citizen
or permanent resident of the United States. Student
must be enrolled in a post-secondary institution
as either a full or part-time undergraduate or graduate
student.
Interest Rate – Interest
rates are based on 91-day T-bill + 1.7% during school
and increase .6% upon graduation. Rates are variable
and may change July 1, however, they are capped
at 8.25%.
Pluses
• Federal government pays the interest on
the loan while the student is in school and during
any grace period
• Up to 10 years to repay the loan
• Repayment does not begin until 6 months
after graduation
• Annual limits start at $2,625 freshman year
and increase to $3,500 sophomore year, and $5,500
junior and senior years
• Annual limits for graduate students are
$8,500/year
Minuses
• Amount based on the financial need of student
• 4% origination/insurance fee applies
• Most students must combine subsidized loans
with unsubsidized loans in order to borrow the maximum
amount allowed each year.
