There are two types of federal Stafford loans available

Subsidized		If you demonstrate financial need, you can apply for a subsidized Stafford loan. Interest is not charged on these loans until you enter repayment and during deferment, if the loan meets certain eligibility requirements.
Unsubsidized		If you do not demonstrate financial need, you can apply for an unsubsidized Stafford loan. With this type of loan, the borrower is responsible for paying interest that accrues during school, grace, and deferment periods. Interest is added to the loan principal (capitalized) at the end of the grace period, at the start of repayment, or at the end of deferment unless you are able to make interest payments. Your grace period ends six months after you graduate, leave school, or drop below at least half-time status.

Things to remember about federal Stafford loans

• For loans disbursed 7/1/08–6/30/09, the interest rate on any Stafford loan for graduate students and on unsubsidized Stafford loans for undergraduates is fixed at 6.8% and on subsidized Stafford loans for undergraduates at 6.0%.
• The federal government charges a 1% loan origination fee and a 1% loan default fee on Stafford loans, which is deducted from the original amount you borrow each year.
• When you graduate or leave school, you'll have a six-month grace period before you begin repayment on your loans.
• You can take up to 10 years to repay your loan(s); you can also choose from a variety of repayment plans. You can request to change your repayment plan once every 12 months as long as you continue in loan repayment!
• You may apply for deferment if you experience economic hardship or re-enroll in school. You may also request deferment from your lender if you need to postpone payments in some situations. Contact your lender for assistance with this option.

See a full comparison of federal subsidized and unsubsidized Stafford loans.

Learn more about money-saving borrower benefits available to Southwest federal Stafford loan borrowers.

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