Get a Stafford Loan
Interest Rate
Interest for subsidized loans is generally paid by the Department of Education while you are in school. The student is responsible for interest upon loan disbursement for unsubsidized loans. Federal Stafford Loans first disbursed on or after July 1, 2006 have a fixed interest rate of 6.8 percent. Subsidized loans first disbursed to undergraduate students only on or after July 1, 2008 through June 30, 2009 have an interest rate of 6.0 percent. Subsidized loans first disbursed to undergraduate students only on or after July 1, 2009 through June 30, 2010 have an interest rate of 5.6 percent. Unsubsidized Stafford Loans and all Staffords for graduate students remain fixed at 6.8 percent.
Fees Paid by the Borrower
A 1.0% origination fee may be charged to the borrower on a Federal Stafford Loan, and a 1% federal default fee will be charged. Any fees are deducted from the principal before your loan is disbursed. Some lenders may not charge the origination fee and may pay this default fee on your behalf.
The origination fee for Stafford Loans whose first disbursement of principal is made on or after July 1,2008 through June 30, 2009 is 1.0%. The origination fee for Stafford Loans whose first disbursement of principal is made on or after July 1, 2009 through June 30, 2010 is 0.5%. The origination fee will be eliminated as of July 1, 2010.
Lenders may also offer discounted interest rates. Check with your lender to determine applicable fees.
Repayment
Six months after the borrower leaves school or drops below half-time status, repayment begins on a subsidized Federal Stafford Loan. Repayment on an unsubsidized loan begins immediately upon disbursement but may be delayed until six months after the borrower leaves school or drops below half-time status; however, interest begins to accrue upon disbursement.
Borrowers have at least 5 years, but no more than 10 years, to repay their loans under the standard, graduated, or income-sensitive repayment options. For new borrowers on or after October 7, 1998 (borrowers who have no outstanding balance on loans made before this date), an extended repayment plan is available if student loan debt is in excess of $30,000. 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.
Insurance
KHEAA insures Federal Stafford Loans made by participating lenders against default, death, or total and permanent disability; false certification of the loan; and, under certain conditions, bankruptcy, school closure, or partial discharge for failure to make a refund. The holder of the loan files a claim with KHEAA and receives reimbursement for principal and interest pursuant to an executed Contract of Insurance. In case of default and bankruptcy, this insurance only repays the lender for its loss on the loan and does not relieve the borrower of his/her obligation to repay.
