Federal Stafford Loans
The Federal Stafford Loan is a long-term, low-interest loan made to students by lending institutions, like Univest National Bank & Trust Co. The Stafford Loan is designed for students that have completed the Free Application for Federal Student Aid (FAFSA), and are enrolled, either on a part-time basis or full-time, in a degree or qualified certificate program at an eligible school.
There are two types of Stafford Loans
- Subsidized Federal Staffford Loan: On a Subsidized Federal Stafford Loan the federal government pays the interest on the loan while the student is in school, during the grace period and during any deferments after payments have begun. However, to be eligible for interest subsidy benefits you must have a “financial need.”
- Unsubsidized Federal Stafford Loan: An Unsubsidized Stafford Loan holds the student responsible for paying the interest on the loan from the date the loan is disbursed. The student has the option of paying the interest while attending school or may elect to have the interest capitalized. There is no requirement to demonstrate a financial need to obtain an Unsubsidized Stafford Loan, however, this type of loan is limited to the cost of education minus other financial aid, including any Subsidized Stafford Loan.
Loan Amounts
An undergraduate may borrow up to $2,625 for preparatory coursework (for enrollment in a undergraduate program), $3,500 for the 1st full academic year, $4,500 for the 2nd full academic year, and up to $5,500 for the 3rd, 4th and 5th full academic years. Independent students may borrow an additional unsubsidized $4,000 for their 1st and 2nd full academic year, and $5,000 per year for the remaining years.
Interest Rate
The interest rate is set annually by the federal government on July 1st. The interest rate is based on the 91-day Treasury Bill, plus 1.7% for the in-school period and 2.3 % for the repayment period. The rate cannot exceed the maximum cap of 8.25%. (The current interest rate for loans disbursed on or after July 1, 2007 is 6.80% fixed.)
Fees
Origination Fee: 1.5% (Fee forwarded to the Federal Government.)
Guarantee Fee: 1% (PHEAA waives this fee.)
Repayment Schedule
After the student has graduated, withdraws, or leaves school, the student will be granted a six-month grace period. Repayment of the Federal Stafford Loan begins at the end of the six-month grace period.
For more information, call or visit any one of our convenient Financial Service Centers located throughout Bucks and Montgomery Counties.