What is a Stafford Loan?
The Federal Family Education Loan Program offers two types of student loans: Subsidized Stafford Loans and Unsubsidized Stafford Loans. These loans do not require a credit check or collateral.
The Subsidized Stafford Loan is a need based student loan. The federal government pays the interest on the loan while you are in school, during the six month grace period prior to repayment, and during periods of deferment.
The Unsubsidized Stafford Loan is available to students regardless of need. You are responsible for paying the interest while in school or you can defer the interest payments until repayment begins on the principal. This adds the outstanding accrued interest to the loan balance, increasing the size and cost of the loan.
What is a Stafford Loan Master Promissory Note (MPN)?
A master promissory note is a legally binding agreement the student signs to obtain a loan under the FFELP, in which the borrower promises to repay the loan, with interest, in periodic installments. The agreement also includes information about any grace period, deferment, or cancellation provisions and the student’s rights and responsibilities with respect to the loan. A student may receive multiple subsidized and unsubsidized Federal Stafford Loans over a maximum ten year period.
What are the eligibility requirements?
Each student seeking a Stafford Loan must meet the following requirements:
- Qualify for financial need on the Free Application for Federal Student Aid (FAFSA).
- Have a high school diploma or General Education Development (GED) certificate.
- Be a U.S. Citizen or eligible non-citizen.
- Attend a participating postsecondary school.
- Work towards a degree or certificate in an eligible program.
- Maintain satisfactory academic progress.
- Have a valid Social Security Number.
- Register with the Selective Service if required.
- Certify that you are not in default on any Federal education loan and do not owe money on a Federal student grant.
- Certify that you will use Federal student aid only for educational purposes.
What are the loan limits for Stafford Loans?
These amounts are effective for loans first disbursed on or after 7/1/08.
| Dependent | | |
| 1st year | $3,500 | $5,500 |
| 2nd year | $4,500 | $6,500 |
| 3rd year & beyond | $5,500 | $7,500 |
| Independent | | |
| 1st year | $3,500 | $9,500 |
| 2nd year | $4,500 | $10,500 |
| 3rd year & beyond | $5,500 | $12,500 |
| Advanced Degree | $8,500 | $20,500 |
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Is the interest rate fixed or variable?
The interest rate on all Stafford Loans first disbursed on or after July 1, 2006 is a fixed rate for the life of the loan. Loans disbursed on or after July 1, 1994 through June 30, 2006 have a variable rate. The Federal government establishes the interest rate every July 1st.
How do I apply?
You can complete and eSign a Stafford Loan Master Promissory Note online, download a paper version of the MPN, or request one be mailed to you.
What is eSignature?
eSignature means an electronic symbol or process attached to, or logically associated with, a record and used by a person with the intent to sign the record.
What will I need to eSign the MPN?
You will need certain hardware and software to complete the electronic signature process online. The requirements are as follows:
- One of the following browsers: Internet Explorer 5.0 or higher or Netscape version 5.0 or higher.
- Adobe Acrobat Reader version 5.0 or higher. (This is required to view or print your Stafford MPN. Download a free copy of Acrobat here.)
- JavaScript and Cookies must be enabled in your browser setting.
- You will have met the hardware requirements by being able to run the above software.
To complete the MPN, you will need:
- The name of the school you are attending or plan to attend.
- Name of your chosen lender.
- Reference information of two adults who do not share a common address. The first reference should be a parent (if living), legal guardian or a relative.
What fees will I be charged for my Stafford Loans?
The Federal Department of Education charges an origination fee. Also, the guarantor on your loan may charge a default fee. These fees are deducted from your disbursement amount. Some lenders pay these fees on behalf of their borrowers. As of July 1, 2009, the Origination fee is 0.5% and the Default fee is 1%.
What can I expect after I finish the eSign MPN?
MOHELA will obtain other information from the school and the lender to process your loan request. When your eligibility is determined you, the lender, and the school will be notified. The school will need to certify your loan and then loan money will be sent directly to the school.
How will the money be disbursed?
Stafford Loan proceeds are disbursed directly to the school on dates specified by the school. Typically, with standard term schools, the first disbursement is made fall semester and the second disbursement is made spring semester. Different academic schedules may require more than two disbursements.
What are the Repayment Terms of a Stafford Loan?
Repayment begins six months after you graduate or drop below half-time status. The standard repayment term is ten years. Flexible repayment plans are available.
When and how do I set up the auto debit of payments on my account?
You may submit your auto debit application as early as 60 days prior to your loan entering repayment. The auto debit application must be completed and mailed to MOHELA for processing. More information
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