Get a Stafford Loan
Interest Rate
Interest for subsidized loans is generally paid by the Department of Education while you are in school. You are responsible for interest on unsubsidized loans beginning when they are disbursed. Stafford Loans first disbursed between July 1, 2006, and June 30, 2008, have a fixed interest rate of 6.8 percent. Subsidized loans first disbursed to undergraduate students only between July 1, 2008, and June 30, 2009, have an interest rate of 6.0 percent. Subsidized loans first disbursed to undergraduate students only between July 1, 2009, and June 30, 2010, have an interest rate of 5.6 percent. Unsubsidized Stafford Loans and all Stafford Loans for graduate students remain fixed at 6.8 percent.
Fees Paid by the Borrower
For Direct subsidized loans and Direct unsubsidized loans first disbursed between July 1, 2009, and June 20, 2010, the loan origination fee is 1.5 percent.
Repayment
Six months after you leave school or drop below half-time status, you must begin repaying a subsidized Federal Stafford Loan. Repayment on an unsubsidized loan begins immediately upon disbursement but may be delayed until six months after you leave school or drop below half-time status; however, interest begins to accrue upon disbursement.
You have at least 5 years, but no more than 10 years, to repay your loans under the standard, graduated, or income-sensitive repayment options. If you have no loans disbursed before October 7, 1998, you may qualify for an extended repayment plan if you owe more than $30,000 in student loans. Under the extended repayment plan, the repayment term can extend up to 25 years depending on the amount of indebtedness.
Use the Loan Payment Calculator to get an idea of what your monthly loan payment will be when you enter repayment.
Applications and More Information
First complete the Free Application for Federal Student Aid (FAFSA), available from financial aid offices at participating schools, the U.S. Department of Education, or online. A Master Promissory Note should also be completed and mailed or taken to your school for processing. You may electronically sign your MPN with your FAFSA pin number at www.studentloans.gov.
Alternative/Private Loans
You've probably seen television commercials for student loans. Keep in mind that these are NOT federally guaranteed loans. They're private loans, sometimes called alternative loans. The interest rate is based on your credit rating, and the loan may require a co-signer, especially if you're a dependent student. The interest rate will almost certainly be higher than you will pay on Stafford and PLUS Loans. You will probably not have the same deferment options you have with federal loans, meaning you will have to start repaying the private loan while you are in school.
If your grant, scholarship, work-study and personal funds aren't enough to cover your college costs, you should first get a Stafford or PLUS Loan. If you still need more funds and a private loan is your best alternative, you should compare lenders to see which one offers you the best interest rate and the best repayment options, including letting you defer payment until after you finish college. Private loans should be your last resort when it comes to paying for college.
