Student loans, unlike grants and work-study, are borrowed money that must be repaid, with interest, just like car loans and mortgages.  You cannot have these loans canceled because you did not like the education you received, did not get a job in your field of study, or because you are having financial difficulty.  Loans are legal obligations, so before you take out a student loan, think about the amount you will have to repay over the years.

  Stafford Loans are for undergraduate, graduate, and professional degree students.  You must be enrolled as at least a half-time student to be eligible for a Stafford Loan.

  There are two types of Stafford Loans:  subsidized and unsubsidized.  You must have financial need to receive a subsidized Stafford Loan.  Financial need is not a requirement to obtain an unsubsidized Stafford Loan.  The US Department of Education will pay (subsidize)  the interest that accrues on subsidized Stafford Loans during certain periods. 

  PLUS Loans are loans parents can obtain to help pay the cost of education for their dependent undergraduate children.  In addition, graduate and professional degree students may obtain PLUS loans to help pay for their own education. 

  Consolidation Loans allow student or parent borrowers to combine multiple federal education loans into one loan with one monthly payment.

Maximum Annual Loan Limits Chart – Subsidized and Unsubsidized Direct and FFEL Stafford Loans

Years

Dependent Undergraduate Student

Independent Undergraduate Student

Graduate and Professional Degree Student

First Year

$3,500

$7,500 – No more than $3,500 of this amount may be in subsidized loans

$20,500 – No more than $8,500 of this amount may be in subsidized loans.

Second Year

$4,500

$8,500 – No more than $4,500 of this amount may be in subsidized loans

$20,500 – No more than $8,500 of this amount may be in subsidized loans.

Third and beyond

(each year)

$5,500

$10,500 – No more than $5,500 of  this amount may be in subsidized loans.

$20,500 – No more than $8,500 of this amount may be in subsidized loans.

Maximum Total Debt from Stafford Loans

$23,000

$46,000 – No more than $23,000 of this amount may be in subsidized loans.

$138,500 – No more than $65,500 of this amount may be in subsidized loans.  The graduate debt limit includes Stafford Loans received for undergraduate study.

NOTE:  The amount show in the chart above are the maximum amounts that you may borrow for an academic year.  You might receive less than the maximum if you receive other financial aid that’s used to cover a portion of your cost of attendance.  The maximum amount you may borrow will also be less in certain situations, such as if you are an undergraduate student enrolled in a program of study that is shorter than an academic year.

  Subsidized Stafford Loan:

  • Available to students who demonstrate financial need.
  • Eligible students can borrow a subsidized Stafford Loan to cover some or all of their need.
  • For a subsidized loan, the US Department of Education pays the interest:

While you’re in school at least half-time.

For the first six months after you leave school (referred to as a “grace period”).

During a period of deferment (a postponement of loan payments).

The amount of your subsidized loan cannot exceed your financial need.

  Unsubsidized Stafford Loan:

  • Does not require students to demonstrate financial need.
  • The US Department of Education does not pay interest on unsubsidized loans.

  To determine the amount of your unsubsidized loan, we use this equation:

Cost of Attendance

-        Federal Pell Grant (if eligible)

-        Subsidized Stafford Loan amount (if eligible)

-        Any other financial aid, scholarships, or assistance you receive

=   Amount of unsubsidized loan you receive (up to the annual maximum loan amount)

 

  Depending on your financial need, you may receive both subsidized and unsubsidized loans for the same enrollment period, but the total amount of these loans may not exceed the annual loan limit.

  For an unsubsidized loan:

-        You’re responsible for paying the interest that accrues on the loan from the time the loan is disbursed until it’s paid in full.

-        You can pay the interest while you’re in school or during a period of deferment or forbearance.

Or, you can allow the interest to accrue (accumulate and have the interest added to the principal amount of your loan.  This is called capitalization.  If you choose not to pay the interest as it accrues and allow it to be capitalized, this will increase the total amount that you have to repay. 		 
 
 

 

  
 

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