Repayment and Interest
Stafford Loans must be repaid.
A "Subsidized" Stafford Loan means that the federal government will pay all the interest on your loan until you begin repayment. Repayment will start six months after you graduate or cease to be enrolled at least half-time.
With an "Unsubsidized" Stafford Loan, you are responsible for all the interest from the day the loan is disbursed. While the loan is in an in school, grace, deferment or forbearance status, you may pay the interest quarterly or add the accrued interest to the principal when repayment begins (capitalization).
Repayment of your Stafford Loan is initially set up as using a standard plan; you pay the same amount each month. National Education offers other payment plans to help fit your budget. A change in payment plan can reduce your initial payments by up to 40%.
Alternative payment plans, deferments and forbearance are available to help you manage the repayment of your Stafford Loan.
Tips to remember:
- The student is the borrower and is responsible for paying back the loan.
- Loans are expected to be repaid within ten years.
- No penalty for early repayment; you can pay more than the monthly amount if you wish.
- There is a 6 month grace period after graduation or when you are enrolled less than half time.
- Payments are not required while you are enrolled in school at least half time and during the grace period.
- Repayment begins after the 6 month grace period ends.
- The interest rate for Stafford Loans made on or after July 1, 2009, is:
- fixed at 5.6% for subsidized Stafford Loans made to undergraduates
- fixed at 6.8% for subsidized Stafford Loans made to graduates
- fixed at 6.8% for unsubsidized Stafford Loans made to undergraduates and graduates
(see current interest rates)
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