Stafford Unsubsidized Loan Overview
What Is a Stafford Unsubsidized Loan?
The Stafford Unsubsidized Loan Program provides low-interest loans to help students
pay for college. A Stafford Unsubsidized Loan has a low, fixed interest rate of
6.8%, and you aren't required to make loan payments while you attend college. Maximum
loan amounts vary based on dependency status and grade level.
Having a "fixed" interest rates means it won't change over time. Other loans have
variable rates that change depending on different factors, which would change how
much you repay.
The biggest difference between the two types of Stafford Loans is that the federal
government pays the interest on the subsidized version while you're in college,
whereas you pay the interest on the unsubsidized version while you're in college.
Yet the Stafford Unsubsidized Loan is still a much better aid alternative than a
private loan or a credit card.
Like the
Stafford Subsidized Loan,
the Stafford Unsubsidized Loan falls into two categories: Direct and Federal Family
Education Loan (FFEL) Program. Here are the differences:
- With the Direct Stafford Unsubsidized Loan, you get your loan directly from the
U.S. Department of Education.
- With the FFEL Program Stafford Unsubsidized Loan, you get your loan from a participating
lender. You can choose from banks, credit unions, and other lending institutions.
Some colleges provide a "preferred lenders" list, but this is just a starting point.
You can choose any lender.
Stafford Unsubsidized Loan Eligibility and Requirements
To be eligible for a Stafford Unsubsidized Loan, you must:
- Be enrolled at least half-time; and
- Not be in default on any of your student loans
How Do I Apply for a Stafford Unsubsidized Loan?
The first step is completing a
federal student aid application (FAFSA).
Aid award letters from colleges will state if you're eligible for a Stafford Unsubsidized
Loan. Loan amounts offered depend on your grade, enrollment status, and the amount
of aid you receive from other student aid sources.
Once your eligibility and award amount are determined, you will have to complete
a Master Promissory Note (MPN), which binds you to the loan's payback terms. You
can get an MPN from your college's financial aid office or download one on your
college's website.
Selecting the best loan can be a challenge. Of the federal, state, and private student
loans, which type is best for you? Check out the
loan comparison worksheet
from StudentAid.com. You can use this tool to help you learn about the different
types of loans and how to select the best loan for you.