What Is A Direct Stafford Loan Estimate?

A direct stafford loan is a federally funded loan to pay for your college tuition.

Student loans have indebted The United States of $1.53 trillion, and this is because college education is so expensive. Middle class households simply cannot afford sending their kids off to IVY leagues and prestigious institutions, which is why they often resort to student loans.

Direct Stafford Loan Definition

A direct stafford loan is funded and presented to the eligible candidate through the federal government. The funds come directly from The US Department of Education and are to be paid in time to them only. The interest rate however is determined by the federal government, not The US Department of Education.

Let’s get into further details.

There are two types of direct stafford loans:

  • Subsidized Stafford Loan: A loan for which the government pays the interest while you are in school, during grace periods, and during any deferment periods.
  • Unsubsidized Stafford loan: A loan for which you are responsible for paying all the interest that accrues from the date of the first disbursement until the loan is paid in full.

Anyone is able to apply for a direct stafford loan, as long as they follow the minimum requirements for the eligibility criteria.

To qualify for a stafford loan, the borrower must:

  • Be a U.S. citizen, national, or eligible non-citizen
  • Be enrolled at least half-time in an eligible degree or certificate-granting program
  • Have received a high school diploma or equivalent (like the GED)
  • Not in default on any existing federal student loans
  • Meet general eligibility requirements for federal student aid

Direct Stafford Loan Maximum

First Year Undergraduate Loan Limit

  Dependent Students (except students whose parents are unable to obtain PLUS Loans) Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans)
Subsidized Loan Limit $3,500 $3,500
Unsubsidized Loan Limit $2,000 $6,000
Total Loan Limit $5,500 $9,500

Second-Year Undergraduate Annual Loan Limit

  Dependent Students (except students whose parents are unable to obtain PLUS Loans) Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans)
Subsidized Loan Limit $4,500 $4,500
Unsubsidized Loan Limit $2,000 $6,000
Total Loan Limit $6,500 $10,500

Third Year and Beyond Undergraduate Annual Loan Limit

  Dependent Students (except students whose parents are unable to obtain PLUS Loans) Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans)
Subsidized Loan Limit $5,500 $5,500
Unsubsidized Loan Limit $2,000 $7,000
Total Loan Limit $7,500 $12,500

Graduate or Professional Student Annual Loan Limit

  Dependent Students (except students whose parents are unable to obtain PLUS Loans) Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans)
Subsidized Loan Limit Not Applicable (all graduate and professional students are considered independent)
Unsubsidized Loan Limit $20,500
Total Loan Limit $20,500

Subsidized and Unsubsidized Aggregate Loan Limit

  Dependent Students (except students whose parents are unable to obtain PLUS Loans) Independent Undergraduate Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans) Independent Graduate or Professional Students
Subsidized Loan Limit $23,000 $23,000 $65,500
Unsubsidized Loan Limit $8,000 $34,500 $73,000
Total Loan Limit $31,000 $57,500 $138,500

Note: Sample rates have been extracted online, courtesy of FederalStudentAid

Apply For Direct Stafford Loan

During the digital times, applying for loans and various government related applications have been made very easy. Especially in the times of the pandemic.

You must complete a FAFSA to qualify for any type of Stafford Loan. Students are notified if they are approved for need-based subsidized Stafford Loan funds. You are free to apply for unsubsidized Stafford Loan funds over and above any subsidized funds for which you’ve been approved.

Once you choose a student loan lender you will complete the Master Promissory Note for the Stafford Loan. For more details, you can visit the Student Aid website.

Is a Direct Stafford Loan good?

Direct stafford loans are literally the government’s way of helping out students with their dreams of higher education. The loan is sponsored by the federal government, and if the student qualifies for the unsubsidized loan, they get further relief on the debt.

Just like every other loan, direct stafford loans are to be repaid within due time, after a set amount of interest is added to their monthly installments. Stafford loans are good because as soon as the student is about to start their degree, the lump-sum amount is paid upfront. The student then pays it back in due time.

In short, these loans and other student loans are an easy way of getting someone else to pay for the cost of tuition, boarding and other fees, however, when it comes to paying the money back, it is never an easy task. Many students don’t have excellent jobs to pay for their routine expenses as well as the debt.

Such loans should be your last priority, because after the interest is added to the principal amount, it becomes a lot to pay back. Look for complete sponsorship options, or a financial gift deed from a generous family member, moreover, if the student gets some percentage of the tuition off from scholarship, that would be even better.

Nabeel Ahmad

Nabeel Ahmad

Nabeel Ahmad is the founder and editor-in-chief of Insurance Noon. Apart from Insurance Noon, he is a serial entrepreneur, and has founded multiple successful companies in different industries.

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