Federal Stafford Loan (Subsidized and Unsubsidized)

Terms

The most commonly used student loan at St. Olaf, the Stafford Loan is a low-cost and flexible loan that is available for all students who have a need for funds. The interest rate on the Subsidized Stafford Loan for the 2009-2010 school year is 5.6%; the Unsubsidized Stafford Loan interest rate is 6.8%. The federal government pays the interest on the subsidized loan while the student is in school. Repayment of principal and interest begins six months after the student leaves school. Depending on the lender chosen, there may be fees associated with borrowing this loan, ranging from 0-4 percent. The fees are deducted up front from the proceeds of the loan.

Repayment

Repayment begins six months after the student leaves school. Deferments are available for at least half-time enrollment in graduate school, and in certain cases, for economic hardship. The Stafford Loan has special features designed for new college graduates. For example, the lender is able to use some flexibility and can make various arrangements (that do not adversely affect credit rating) if a borrower is experiencing financial difficulties after entering repayment. Finally, there are some loan forgiveness provisions available through the federal loans for teaching, volunteering and community service in federally designated areas.

Eligibility

The Stafford Loan is federally guaranteed, and is available through private lenders. The amount of Subsidized versus Unsubsidized Loan that a student qualifies for is based on need.

How to apply

In order to be considered for the Stafford Loan, prospective students must complete the CSS/PROFILE and the Free Application for Federal Student Aid (FAFSA). Consideration for this program is automatic once those forms are received, and eligibility for the Stafford Loan will be presented on award letters. Award packets contain information about selecting a lender and completing the loan process.

Available funds

Annual loan limits for dependent students are as follows:

1st year - $5,500 (up to $3,500 Subsidized)
2nd year -$6,500 (up to $4,500 Subsidized)
3rd year - $7,500 (up to $5,500 Subsidized)
4th year - $7,500 (up to $5,500 Subsidized)

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