Direct Stafford Loans have fixed interest rates on or after July 1, 2006. The Stafford Loans for 2012-2013 have the following interest rates:
Undergraduate Subsidized Stafford Loans are 3.4%
Graduate Unsubsidized and Undergraduate Unsubsidized Stafford Loans are 6.8%
You'll pay a fee of up to 2.5 percent of the loan, deducted proportionately from each loan disbursement. A portion of the fee is for insurance used to pay off loan defaults; the rest reduces the cost of the loan to the government. Because of this deduction, you'll receive slightly less than the amount you're borrowing.
For more in-depth information on Stafford Loans, go to http://www.finaid.org/loans/studentloan.phtml.
Below is an example of a beginning freshman's Stafford Loan disbursement:
|First year loan amount||$ 3,500|
|Amount available per quarter ($3,500 ÷ 3)||1,167|
|Less Lender Origination Fee (2.5%)||- 29|
|Net Amount received to pay fees||$ 1,138|