A Federal Direct Stafford Loan is a low-interest loan available to students who are enrolled at least half-time in a degree-granting program and must:
The Federal Direct Stafford Loan can be subsidized or unsubsidized but cannot exceed the annual limits provided below.
The subsidized Federal Direct Stafford Loan is awarded on the basis of financial need as determined through the Free Application for Federal Student Aid (FAFSA). The Federal government pays interest on the loan while the student is enrolled at least half-time, through the grace period, and authorized deferment periods.
An unsubsidized student loan does not qualify for a federal interest subsidy and therefore the interest will start to accrue on the loan immediately following disbursement.
Payment of principal is deferred while students are enrolled in school at least half-time. After you graduate, withdraw, or drop to less than half-time enrollment, you will have a six-month grace period - during which time no payment on principal will be due. Repayment on the principal amount begins at the conclusion of the grace period. At repayment, the minimum monthly payment is $50. The maximum monthly payment is that amount that will repay your loans in 10 years. There is no penalty for early repayment.
The interest rate for the subsidized and unsubsidized Stafford Loan, with a first disbursement on or after July 1, 2015 - June 30, 2016, is a fixed 4.29%, with an 8.25% cap. The interest rate for the 2016-2017 academic year will not be known until July 1, 2016. Loan funds are disbursed via EFT (electronic funds transfer) to Hampden-Sydney in two disbursements, one at the beginning of each semester, and are credited directly to the tuition account. A 1.073% federal fee is deducted from each disbursement.
For loans where the first disbursement is made on or after October 1, 2015, the federal loan fee is 1.068%.