All Stafford loans are either subsidized (the government pays the interest while you're in school and for the first six months after you stop attending at least half time) or unsubsidized (you pay all the interest, which you can allow to accrue (accumulate) and have it added to the principle balance of you loan while you are in school at least half time). To receive a subsidized Stafford Loan, you must be able to demonstrate financial need*.

Stafford loans have annual limits, based on a student's dependency status and grade level. The loan is limited to the following amounts for a dependent undergraduate student whose parents are able to obtain a federal PLUS loan†:

• First year - $3,500 combined subsidized and/or unsubsidized, plus $2,000 additional unsubsidized
• Second year - $4,500 combined subsidized and/or unsubsidized, plus $2,000 additional unsubsidized

A Stafford loan is limited to the following amounts for an independent undergraduate student or a dependent undergraduate student whose parents are unable to obtain PLUS loans due to adverse credit or other documented exceptional circumstances:

• First year - $3,500 combined subsidized and/or unsubsidized, plus $6,000 additional unsubsidized
• Second year - $4,500 combined subsidized and/or unsubsidized, plus $6,000 additional unsubsidized

Stafford loans have fixed interest rates (3.4 to 4.5 percent as of early 2010, depending on when you start school†). Repayment begins six months after graduation or leaving school, or six months after your academic schedule falls below half-time status.

*Financial aid is available to those who qualify

†Rates and amounts subject to change at any time