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Federal Stafford Loans
Your college or university will participate in one of two programs that provide Federal Stafford Loans. The main difference between the two programs is who funds the loan. Your school will inform you of the program it participates in and how to apply for a Federal Stafford Loan.
Your school may participate in either the:
- Federal Family Education Loan Program (FFELP) where banks, credit unions and savings banks fund the loans.
- William D. Ford Federal Direct Loan Program (Direct) where the U.S. Department of Education provides the money for the loan through the college or university.
Loan Types
There are two types of Federal Stafford Loans: Subsidized and Unsubsidized.
Subsidized Federal Stafford Loans
Subsidized Federal Stafford Loans are based on financial need. While attending school and during the six-month grace period after you graduate, drop to less than half time or leave school, the government will pay the interest on your Subsidized Federal Stafford Loan.
Unsubsidized Federal Stafford Loans
Unsubsidized Federal Stafford Loans are not based on financial need. You will be responsible for paying the interest that accrues while you are attending college. You will, however, have the option to either pay the interest while you are in school or to add it to the principal amount of your loan.
Loan Facts
A few Federal Stafford Loan facts:
- You must complete the FAFSA.
- The interest rate is fixed at 6.80%.*
- Repayment begins six months after you graduate, leave school or drop to less than half time.
*For undergraduate Subsidized Federal Stafford Loans with disbursements made on or after July 1, 2008, and before July 1, 2009, the interest rate will be fixed at 6.00% for the life of the loan.
Find a serviced lender.
Loan Limits
The Ensuring Continued Access to Student Loans Act of 2008, signed into law on May 7, 2008, increases Federal Stafford Loan annual and aggregate limits for loans disbursed on or after July 1, 2008, for undergraduate students.
Maximum Annual Loan Limits for Stafford Loans
Disbursed On or After July 1, 2008 |
| Year |
Dependent
Undergraduate |
Independent
Undergraduate** |
Graduate
Student |
| First Year |
$5,500
(maximum $3,500 in subsidized Stafford Loans) |
$9,500
(maximum $3,500 in subsidized Stafford Loans) |
$20,500
(maximum $8,500 in subsidized Stafford Loans) |
| Second Year |
$6,500
(maximum $4,500 in subsidized Stafford Loans) |
$10,500
(maximum $4,500 in subsidized Stafford Loans) |
| Third–Fifth Year |
$7,500
(maximum $5,500 in subsidized Stafford Loans) |
$12,500
(maximum $5,500 in subsidized Stafford Loans) |
Aggregate Stafford
Loan Limit |
$31,000
(maximum $23,000 in subsidized Stafford Loans) |
$57,500
(maximum $23,000 in subsidized Stafford Loans) |
$138,500
(maximum $65,500 in subsidized Stafford Loans) |
**If you’re a dependent student whose parents applied for, but were not approved for, a Federal PLUS Loan (parent loan), you can borrow at the independent undergraduate level.
You can receive both subsidized and unsubsidized loans, as long as the amount you borrow does not exceed the annual loan limits.
When you graduate with a graduate or professional degree, the maximum total debt allowed from Stafford Loans is $138,500. This maximum total graduate debt limit includes Stafford Loans received for undergraduate study.
Apply for Your Loan
You may complete the Federal Stafford Loan Application and Master Promissory Note online, if you're attending a FFELP college or university in Iowa.
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Borrower Benefits |
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Iowa Student Loan will provide its Serviced Lenders with an allowance equal to 0.25% of the loan balance, on behalf of students, for the lender to provide a benefit to the borrower. Most lenders will apply this amount toward the up-front origination fee (set at 1.00% beginning July 1, 2008), while a few lenders may utilize this amount to benefit borrowers during repayment.
Eligibility Requirements
To be eligible for the Federal Stafford Loan Borrower Benefits, the borrower must:
- Be the recipient of a Federal Stafford Loan guaranteed on or after June 1, 2008.
- Attend an educational institution in Iowa or be an Iowa resident attending an educational institution across the country.
- Borrow a Federal Stafford Loan from an Iowa Student Loan Serviced Lender.
U.S. Bank is one lender that will use this allowance toward a repayment benefit. U.S. Bank will provide a 0.25% interest rate reduction to borrowers who pay by Auto-Debit. Auto-Debit is a requirement to be qualified for the 0.25% interest rate reduction benefit. If the Auto-Debit feature is canceled or Iowa Student Loan receives three non-sufficient funds payments in a 12-month period, the rate reduction benefit is lost.
U.S. Bank will also provide a 1.00% credit of the original principal amount after the first 12 consecutive monthly on-time payments for loans first disbursed on or after June 1, 2008, and before Sept. 1, 2008. (Payment received no more than 10 days past the due date.) Note: If you are a first-time borrower or a first-year undergraduate, your loan may not have a first disbursement date before Sept. 1, 2008.
Important Notice: Borrower Benefits may be modified or discontinued at any time without notice and at the sole discretion of Iowa Student Loan or U.S. Bank. Subsequent changes, however, will not affect loans already qualified for Borrower Benefits.
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