Federal Stafford Loan
About the Federal Stafford Loan
The Federal Stafford Loan is a long-term, low-interest loan available to all students.
How to apply for the Stafford loan
- Complete the Free Application for Federal Student Aid (FAFSA).
- Complete the Master Promissory Note (MPN). If you have borrowed previously at USD you do not need a new MPN unless you are changing your lender.
- Complete the on-line Stafford Entrance Counseling Session (All first-time borrowers at USD must complete this session before funds will be available).
Subsidized vs. Unsubsidized Stafford Loans
Your Stafford Loan award may be subsidized, unsubsidized or the combination of the two.
- Subsidized Stafford
- The Subsidized Stafford Loan is awarded for the academic year based on your financial need and academic grade level.
- Financial need is determined by your cost of attendance minus your Estimated Family Contribution (EFC) from the FAFSA and any other aid you will receive.
- The federal government subsidizes or pays the interest on the loan while you are enrolled at least half-time, in your six-month grace period or in an eligible period of deferment.
- Interest will be charged once you enter repayment.
- Unsubsidized Stafford
- The Unsubsidized Stafford Loan is awarded based on your cost of attendance minus any other aid you will receive and your academic grade level.
- You are responsible for the interest on this loan from the time the loan is disbursed until is it paid in full. The federal government DOES NOT subsidize the interest on this loan.
- You may choose to defer the interest during enrollment and deferment periods, but it will be capitalized (added to the principal amount).
- The Stafford Loan interest rate for undergraduate subsidized is a fixed 4.5% for 2010-11 and a fixed 3.4% for 2011-12.
- For undergraduate/unsubsidized and graduate subsidized/unsubsidized the interest rate is 6.8%.
- Stafford Loans borrowed before July 1, 2006 have a variable interest rate with a cap of 8.25%.
Effective July 1, 2010, a loan fee of 1% of the principal amount of each loan a student receives will apply. The fees are deducted from your loan by your lender prior to disbursement. However, students will receive a repayment incentive equal to .5% of the principal amount of each loan received. The borrower retains one .5% incentive by making the first 12 monthly payments on time.