The Unsubsidized Stafford Loan Explained

A Stafford loan is a federal government sponsored loan. The loan is designed to be a low cost form of finance specifically to assist students with the significant costs incurred during their time at college. While there are two options with a Stafford Loan, the Unsubsidized Stafford Loan option is one that only a few prospective students consider.

So how will applying for an Unsubsidized Stafford Loan be of benefit to you?

Well the first step to getting an ubsubsidized loan is the same as the Subsidized Stafford Loan. You will need to complete and submit an FAFSA form. FAFSA is the shortened form of Federal Application for Federal Student Aid.  (See other pages on this site about completing the FAFSA form).

Once you have filled this form out you will need to submit the form on time. After the form has been reviewed you should get a financial aid award letter. This letter will show that you have the eligibility to apply for an Unsubsidized Stafford Loan.

The next step to getting your loan is to complete a Master Promissory Note – also called an MPN.  You will also need to have a contract drawn up between you and your lender. This contract should state that you agree to the terms of the contract and that you will repay the loan.

You can use the College Board to choose a suitable lender or you can get recommendations from your school’s financial office.

Once the details of your application have been approved, you can choose to use the Unsubsidized Stafford Loan. The details of this loan are very simple. To apply for this loan you must pass the eligibility test. In the test you will need to be a US citizen or an eligible non-citizen. The amount that you will receive for the first year in college or university is just over two thousand six hundred dollars.

For the next year you will receive about $3,500. This amount is for the entire year. During the time period of the third to the fifth year in college or university you will receive about $5,500. The total amount of money that you can expect to receive from the Unsubsidized Stafford Loan is about $18,500. This amount is the combined amounts that are found in the subsidized and Unsubsidized Stafford Loan.

There are additional amounts which are provided to independent students. The first year these students will also receive about $4,000. During the third to fifth year they will receive about $5,000. The interest rate for the Unsubsidized Stafford Loan is a fixed rate of 6.8%.

Once you graduate you will have ten years to repay you Unsubsidized Stafford Loan. This length of time should enable you to earn the money required to repay your loan. As you can see, an unsubsidized Stafford Loan comes with very generous terms.