Federal Stafford Loan Rates and Terms*

Stafford Loan interest rates are variable and are adjusted July 1 of each year, based on the last 91-Day T-Bill rate in May.

• Interest accrues at a rate based on that 91-day T-Bill + 2.3%. The rate until June 2007 is 6.8%.

Terms

The Stafford Loan has a 3% government origination fee and a 1% guarantee fee (normally waived). The money is taken out of the proceeds of the loan, so there is no initial cost to the student.

• Subsidized: The government will pay the interest loan while you are in school and during grace and deferment periods. Students must demonstrate financial need to be eligible for a subsidized Stafford Loan.
• Unsubsidized: Students are responsible for all interest, although payment is deferred until after graduation. All students, regardless of need, are eligible for the unsubsidized Stafford Loan.

Repayment

Repayment normally begins six months after the student leaves college, with a minimum monthly payment of $50 (actual payment depends on the amount borrowed). There is no prepayment penalty and the repayment periods are initially set at 10 years.

The student may choose alternate repayment options such as Deferment, Forbearance, and Income-sensitive repayment to reduce or postpone repayment. Some sort of hardship usually has to occur for such options to be granted.

All Stafford debt is forgiven in the event of death or permanent disability of the borrower.

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