What is a Stafford Loan?
Stafford Loans are simple interest loans (capped at 8.25%) in which the student borrows money in his or her own name. These loans are available to both undergraduate and graduate students. Under the Academic Lending Services program, funds for Stafford Loans are provided by private lenders, such as banks, and are guaranteed by the federal government. All Stafford Loans are either subsidized (the government pays the interest while the student is in school) or unsubsidized (the student pays all the interest, although payments can be deferred until after graduation).To receive a subsidized Stafford Loan, the student must be able to demonstrate financial need.

What must students do before applying for a Stafford Loan?
Students must first complete the Free Application for Federal Student Aid (FAFSA). The FAFSA determines their eligibility for federal financial aid, including Stafford Loans. The school determines and certifies the student's eligibility for the loan.

Is there a waiting period for this loan?
Generally, a 30-day waiting period applies to first-time borrowers to ensure that enrollment has been consistent before the loan amount is disbursed. Funds cannot be disbursed earlier than 30 days prior to the date on which the student is scheduled to enroll.

What are the eligibility requirements?
The eligibility requirements that you need to meet in order to get a Stafford Loan are detailed on the Eligibility page for this product.

Are there any fees or credit requirements to apply?
ALS does not charge Stafford borrowers an origination fee. Some guarantee agencies charge up to a 1.0% guarantee fee on Stafford Loans, for which the borrower is responsible. Fees will be deducted from your total loan amount. There are no credit requirements for the Stafford loan.

How much can I borrow?
Your loan amount will be determined by the Federal government and your school’s financial aid office, based on information provided in the FAFSA. Maximum loan amounts are indicated in the chart below.

What is my interest rate?
The interest rate for the Stafford Loan is variable and is subject to change each July 1st, not to exceed 8.25%. The rate is equal to the bond equivalent rate of the 91-day Treasury Bills plus (+) 1.7% during in-school, grace and deferment periods, and Treasury Bill plus (+) 2.3% during repayment. The current rate as of July 1, 2005 is 4.70% during in-school, grace and deferment periods, and 5.30% in repayment.

What are the terms of repayment for this loan?
Borrowers must repay at least $50 a month. Repayment begins 6 months after the student graduates, leaves school or drops below half-time status. Generally, the repayment period is 10 years.

Can borrowers of unsubsidized Stafford Loans defer payments until after graduation?
Yes, payments can be postponed until after graduation by capitalizing the interest. However, this adds the interest payments to the loan balance, increasing the size and cost of the loan.

Can I choose my payment due date or change it?
Once the payment due date is established, it cannot be changed. However, you have the option to make a payment at any time before the due date.

Can I make more than the minimum loan payment each month?
You may prepay all or any portion of your loan at any time without penalty. Prepayment is encouraged as it can significantly reduce the total amount of interest paid over the life of the loan.

Are there any fees or penalties associated with early repayment?
No. You can repay your Stafford Loan early without a penalty or fee.

Is my loan guaranteed in any way?
Yes. Your Stafford Loan is federally guaranteed. The federal guarantee keeps your interest rates low, and entitles you to certain benefits.

Are there any tax benefits?
The tax code may offer you favorable tax advantages when you help finance your education with a Stafford Loan1, and you do not have to itemize your deductions to take advantage of student loan interest deductability. The maximum deduction is $2,500 per year.

To determine your eligibility and learn how these benefits apply to your specific situation, we encourage you to consult with your tax advisor and review IRS Publication 970, or call the IRS information line at 1.800.829.1040 for details.

How can I apply?
For now you can download a Stafford Loan application here. (Adobe Acrobat Reader is required).