What is a Direct Stafford Loan Estimate?

A Direct Stafford Loan Estimate is a form that provides an estimate of the total amount of Stafford Loans that a student may be eligible to receive.

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What is a Stafford Loan?

A Stafford Loan is a student loan offered to eligible students enrolled in accredited colleges or universities to help finance their education. The loan is either subsidized or unsubsidized.

Subsidized Stafford Loans are need-based loans. That means the U.S. Department of Education pays the interest on the loan while the student is still in school, during their six-month grace period after they leave school, and during any periods of deferment (postponement of loan payments).

Unsubsidized Stafford Loans are not need-based loans. Interest accrues on an unsubsidized loan from the time the loan is first disbursed until it is paid in full. The student may choose to pay the interest while in school and during grace periods and deferment or forbearance periods, or allow it to accrue and be capitalized (added to the principal amount of the loan).

How to Apply for a Stafford Loan

Stafford loans are available to both undergraduate and graduate students and are one of the most popular types of student loans. Stafford loans are federally backed loans, which means they come with certain protections and benefits that other types of loans may not offer.

To apply for a Stafford loan, you will first need to fill out a FAFSA form. The FAFSA form is used to determine your eligibility for federal student aid. Once you have completed the FAFSA form, you will then need to submit a Direct Stafford Loan Request to your school’s financial aid office.

Your school’s financial aid office will then review your request and determine how much money you are eligible to receive. If you are approved for a Stafford loan, you will be given a Direct Stafford Loan Estimate. This estimate will list the amount of money you are eligible to receive, as well as the interest rate and repayment terms.

You should carefully review your Direct Stafford Loan Estimate before accepting the loan. Once you accept the loan, you will be responsible for repaying it, even if you do not finish your degree or drop out of school. Make sure you understand the terms of the loan before accepting it.

What is the Interest Rate for a Stafford Loan?

The Stafford Loan annual interest rate is a variable rate, meaning it can change every year. Your interest rate is determined by the date your loan is first disbursed, and will never be more than 8.25%. To see what the current Stafford Loan interest rates are, visit studentaid.gov/interest-rates.

For subsidized Stafford Loans first disbursed on or after July 1, 2019, and before July 1, 2020, the interest rate is 4.53%. For unsubsidized Stafford Loans first disbursed on or after July 1, 2019, and before July 1, 2020, the interest rate is 6.08%.

What are the Loan Fees for a Stafford Loan?

Loan fees are a percentage of the overall loan amount and are deducted proportionately each time a disbursement is made. For example, if you have a $10,000 loan with a 1.053% loan fee, you will owe a $105.30 loan fee. This amount will be deducted from each disbursement of your loan. If your first disbursement is for $5,000, then $52.65 will be deducted from that payment and sent to the U.S. Department of Education to cover the loan fee. The remaining $2,500 will be paid to you or your school.

How Much Can I Borrow with a Stafford Loan?

The amount you can borrow with a Stafford Loan depends on your financial need, the cost of attendance at your school, your status as a full-time or part-time student, and whether you’re an undergraduate or graduate student.

For the 2019-2020 academic year, the maximum amount you can borrow as an undergraduate student is $5,500 for the first year, $6,500 for the second year, and $7,500 for each subsequent year. If you’re a dependent student whose parents are unable to obtain a PLUS Loan, you may be eligible to receive additional unsubsidized Stafford Loan funds. The maximum amount you can borrow as a graduate or professional student is $20,500 per year.

If you have questions about Stafford Loans or any other financial aid options, please contact the financial aid office at your school.

When Do I Repay a Stafford Loan?

Stafford loans have a fixed interest rate, so your monthly payments will stay the same for the life of the loan. You’ll have a six-month grace period after you graduate or leave school before you have to begin repaying your Stafford loan.

What is a Direct Stafford Loan Estimate?

The Direct Stafford Loan Estimate is a breakdown of the expected costs of your Stafford Loan, as well as the estimated interest rate and monthly payments. This estimate is provided to you by your lender before you formally agree to the terms of the loan.

The Direct Stafford Loan Estimate will include an estimate of the total amount you will need to repay over the life of the loan, as well as the interest rate and monthly payment amount. This estimate is based on the current interest rate and projected future interest rates. Your actual loan terms may be different from what is shown on the Direct Stafford Loan Estimate.

The Direct Stafford Loan Estimate is not a binding contract, but it can give you a good idea of what to expect from your loan. Be sure to review it carefully and ask any questions you have before you sign any documents.

How to Use a Direct Stafford Loan Estimate

The first step in applying for a Direct Stafford Loan is completing a Free Application for Federal Student Aid (FAFSA®). This form is used to determine your eligibility for all types of federal student aid, including grants, work-study, and loans.

After you have submitted your FAFSA form, the school’s financial aid office will put together a financial aid package based on the information you provided. This package will include a Direct Stafford Loan Estimate, which is an estimate of the maximum amount you’re eligible to borrow in Direct Stafford Loans.

The amount listed on your Stafford Loan Estimate may be more or less than the amount you actually end up borrowing. Your final loan amount will be determined by the school after they have reviewed your FAFSA form and other financial aid documents.

If you have any questions about your Direct Stafford Loan Estimate, or any other part of the financial aid process, be sure to contact your school’s financial aid office.