What are the terms of a Federal Subsidized Stafford Loan and the Federal Unsubsidized Stafford Loan?
A. A new loan carries a variable rate with an 8.25% cap. During in-school deferments or grace periods, the interest rate for loans disbursed from July 1, 2004 through June 30, 2005 is 2.77% in school, grace and deferment. The government pays the interest on the Federal Subsidized Stafford Loan while you are in school and for a six-month grace period after you leave school (if you have not already taken advantage of your grace period). For a Federal Unsubsidized Stafford Loan, interest accrues from the time loan funds are disbursed until it is paid in full. You can defer payment on the interest and principal while in school and during the six-month grace period. Stafford Loans are charged origination and guarantee fees, which are taken out of the loan proceeds by the lender. For more information on loan terms, refer to the “Borrower’s Rights and Responsibilities” section of the Federal Stafford Loan Master Promissory Note.
