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  • 3m.
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    Subsidized Stafford Loans: Before You Borrow

    The government awards subsidized Stafford loans to undergraduate students with financial need, and it pays their interest at certain times, like when you enroll in school at least half time.
    Updated: July 1, 2016

    What You'll Learn

    • What it takes to qualify for subsidized Stafford loans.
    • The current interest rates on these loans.
    • Why it's smart to start repaying them while you're in school.

    A woman reading a book in the library

    The Highlights

    Who can borrow these loans?

    Undergraduate students with financial need

    How much can I borrow each year?

    Annual limits vary (see details below)

    How much can I borrow in total?

    $23,000

    What's the current interest rate?

    3.76%

    Am I responsible for paying the interest?

    Yes, after you leave school or are no longer enrolled at least half time

    Dig Into The Details

    Who Can Borrow These Loans?

    Undergraduate students with financial need can borrow subsidized Stafford loans to help finance their education costs.

    To borrow a subsidized Stafford loan, you need to demonstrate financial need when you apply with the Free Application for Federal Student Aid (FAFSA). You must also be:

    • A U.S. citizen or eligible non-citizen.
    • Enrolled at least half time at an eligible institution.

    How Much Can I Borrow?

    Undergraduate independent or dependent students can borrow a maximum of $23,000. This includes:

    • Up to $3,500 in your first year.
    • Up to $4,500 in your second year.
    • Up to $5,500 in your third year and beyond.

    As of July 1, 2012, graduate students are no longer eligible for subsidized Stafford loans.

    What's The Current Interest Rate?

    For undergraduates, subsidized Stafford loans disbursed from July 1, 2016, to June 30, 2017, have an interest rate of 3.76%. Here are the interest rates for subsidized Stafford loans disbursed before July 1, 2016:

    Date Disbursed

    Interest Rate

    July 1, 2006, to June 30, 2008

    6.8%

    July 1, 2008, to June 30, 2009

    6%

    July 1, 2009, to June 30, 2010

    5.6%

    July 1, 2010, to June 30, 2011

    4.5%

    July 1, 2011, to June 30, 2013

    3.4%

    July 1, 2013, to June 30, 2014

    3.66%

    July 1, 2014, to June 30, 2015

    4.66%

    July 1, 2015, to June 30, 2016

    4.29%

    Graduate subsidized Stafford loans made before July 1, 2012, have a fixed interest rate of 6.8%.

    If you have a subsidized Stafford loan that was disbursed prior to July 1, 2006, contact your loan holder for interest rate information. Many loans made before this time have a variable interest rate that changes annually.

    You may also be interested in weighing the pros and cons of consolidating these older loans so you can lock in a fixed interest rate.

    Am I Responsible For Paying The Interest?

    Yes—but only during certain periods. Interest does not accrue while you are in school at least half time, in an approved deferment, or in your grace period.

    However, if you have subsidized Stafford loans that were disbursed between July 1, 2012, and July 1, 2014, you will be responsible for interest that accrues during your grace period. See special rules for subsidized loans when you take too long to complete your academic program.

    Be Money Smart

    Making even small monthly payments on your subsidized Stafford loans while you're still in school could help you out significantly down the road.

    Let's say you decide to borrow $9,000 in subsidized Stafford loans over the course of your undergraduate studies (we'll pretend the 3.76% interest rate won't change during the time you're in school). If you pay just $30 toward this loan every month for the 4 years you're in school, you'll owe about $7,590 instead of $9,000 when the loan goes into repayment. By entering repayment with that lower balance, you'll save almost $300 in interest over the life of your loan. And every little bit counts!

    Want to learn more about repaying subsidized Stafford loans? Check out this article. If you decide to apply, you'll need to fill out the FAFSA.

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