Federal Direct Stafford Loan

The Federal Direct Stafford Loan is the basic student loan available to all students, regardless of financial need. It is the education loan most students borrow first, before all others. If the loan is subsidized, the government will pay the interest while the student is in school. If the loan is unsubsidized, the student has the option of capitalizing the interest or of paying the interest quarterly during the in-school period. Payment of the principle itself, on both the subsidized and unsubsidized loans, does not begin until six months after graduation, provided the student remains enrolled on at least a half-time (6 credits) basis. Repayment period is ten years. Please Note:  Effective on loans disbursed July 1, 2013 and after, the origination fee will be 1.072%.  Fees for 2014-15 will change for loans disbursed October 1, 2014 and after. Also, interest rates for Federal Direct Loans will be "variable-fixed", meaning students will receive a new rate with each loan, but then the rate would be fixed for the life of the loan (and capped  at 8.25% for undergraduate Stafford Loans, 9.5% for graduate Stafford Loans).  For 2013-14, effective July 1, 2013, the Undergraduate Stafford Loan interest rate (subsidized and unsubsidized) will be set at 3.86%.  The Graduate student Stafford Loan rate will be set at 5.41%.  The U.S. Department of Education and its servicers will adjust rates for all affected borrowers, including those who had already received their first subsidized loan disbursement, without any further action on the part of the borrower or the school.

As an example, 1.072% of the total amount borrowed is deducted from loan proceeds: 

Example:  Student borrows $5,500 in Federal Direct Stafford Loans for the year, to be split over the fall and spring semesters.  In this case, after the origination fee is deducted, $2,720 will disburse one semester, $2,721 will disburse the next semester. 

Incarcerated individuals are not eligible for federal Direct Stafford Loans and may only be considered for federal Pell and/or SEOG Grants.  For more information about Federal Student Aid, visit the U.S. Department of Education's http://studentaid.ed.gov.   


Maximum annual loan limits based on grade level for dependent undergraduate students are as follows: 

  • $3,500 Subsidized* + $2,000 Unsubsidized: Freshmen (0-26 credits earned)  
  • $4,500 Subsidized* + $2,000 Unsubsidized: Sophomore (27-56 credits earned)
  • $5,500 Subsidized* + $2,000 Unsubsidized: Junior/Senior (57 + credits earned) 


  • Maximum annual loan limits per grade level for independent undergraduate students or for dependent undergraduate students whose parents are denied on the federal PLUS Loan are as follows: 

    • Freshman: $3,500 Subsidized* Stafford + $6,000 Unsubsidized Stafford
    • Sophomore: $4,500 Subsidized* Stafford + $6,000 Unsubsidized Stafford
    • Junior & Senior: $5,500 Subsidized* Stafford + $7,000 Unsubsidized Stafford
  • $31,000 is the lifetime aggregate borrowing limit for a dependent undergraduate student; $57,500 for independent undergraduates and dependent undergraduates whose parents are denied on Parent PLUS Loans each year.
  • A legislative change, effective July 1, 2013, mandated that students who are otherwise eligible may only receive federal subsidized loans for 150 percent of the published time frame for their program of study.  For example, full-time students in a 4-year bachelor's degree program, cannot receive federal subsidized Stafford loans beyond 6 years.

    *Whether loan is Subsidized is based on financial need as determined by the FAFSA. If student as no financial need, total annual Unsubsidized Stafford Loan eligibility would be: $5,500 as a freshman, $6,500 as a sophomore, $7,500 as a junior or senior.

    To Apply for a Federal Direct Stafford Loan for summer 2014/fall 2014 and/or spring 2015: 

    1. Complete a 2014-2015 Federal Direct Stafford Loan Acceptance Form.

    2. Complete the Federal Direct Stafford Loan MPN* at www.StudentLoans.gov. Federal PIN required.

    3. Complete a Federal Direct Stafford Loan Entrance Counseling session* at www.StudentLoans.gov.

    *Required only for first-time Federal Direct Stafford Loan borrowers.

    See Arcadia's Title IV Code of Conduct for more information.

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