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Stafford Loans (FFELS and Direct Loans)

Stafford Loans, offered to the students, has both the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan).

These either or both programs mostly are offered in all the universities. The principal differences between them are:

  • The plan of repayment.
  • Direct Loan funds come from the federal government.
  • FFEL funds come from the bank or any other lender.


The Process:


To get either of them, you must complete the FAFSA process. Then, your university will inspect your results letting you know if you are eligible.

The next step is the lender selection; generally, the university has a list of preferred lenders; you can choose from this list or rather another one.

The Amounts:


The mount of the payment will be according to your year in university and a subsidized or unsubsidized loan.

  • A subsidized loan is when the government will pay the interest during your time in university plus the next six months, and have qualified for deferred payments.
  • You will receive an unsubsidized loan, when you did not demonstrate financial need. Opposite to the subsidized loans, you will have to pay your interests.

You would receive both loans for the same enrollment while you do not exceed their annual limits. For a dependent undergraduate student, the annual loan would be up to:

  • $3,500: First-year student, and enrolled in a program fully academic.
  • $4,500: One completed year of study, and a reminder year fully academic.
  • $5,500: Two completed years of study and a reminder year fully academic.

For both, an independent undergraduate student and a dependent student who has not been eligible for the PLUS Loan; annually the loan would be up to:

  • $7,500: First-year student, and enrolled in a program fully academic. ($3,500 may be a subsidized loan).
  • $8,500: One completed year of study, and a reminder year fully academic. ($4,500 may be a subsidized loan)
  • $10,500: Two completed year of study, and a reminder year fully academic.($5,500 may be a subsidized loans)

For a graduate or professional degree student, the annual loan would be up to $20,500 ($8,500 could be in subsidized loans).

If your graduation is with a professional degree, the maximum total for this program is $138,500; and in subsidized loans will not exceed $65,500. However, for graduate and professional students registered in health professions is $224,000.


The Payments:



Mostly, the university will pay the student, for both the Direct Loan and the FFEL, in at least two periods of repayments, and the amount must not pass the half of the total.

Once you receive the money, the first thing to do is to pay the tuitions, fees, room, board, and school charges. If would be a remaining, you could choose to receive it by check or ask the school to hold it for you.

Generally, for a first-year undergraduate student and first-time borrowers, the university cannot pay until 30 days after the first day of the registration period..


The Interests:


The interest rate would vary according to the date of application, for both Direct Loans and FFEL programs.

The Repayments:



For both Direct Loan and FFEL, the grace period is 6 months, counting after the graduation, or dropping below half-time enrollment. Usually, the repayment is monthly and the lender must be punctual. During this period, for subsidized students there is no principal payment or interest; and for unsubsidized students there is no principal payment but the interest will be charged.

The place of payments will be according to the type of Loan, so if it is the FFEL program you will have to pay to a private lender or loan servicer, but if it is the Direct program you will have to pay to the U.S. Department of Education's Direct Loan Servicing Center.

Any charge will be added to you payment if the loan is a subsidized Direct or FEEL Loan, but in case of an unsubsidized loan, you are the only responsible during a deferment.

Back to: Federal Students Aid: FAFSA