Stafford Loans

Stafford Loans are for undergraduate, graduate and professional degree students. Stafford Loans deliver low-interest loans guaranteed by the government. They are awarded through the Direct Loan Program or the Federal Family Education Loan Program (FFELP).

You must be enrolled as at least a half-time (at least six semester hours or quarter hours per term for an undergraduate program) student to be eligible for a Stafford Loan.

There are two types of Stafford Loans: subsidized and unsubsidized.

With a subsidized loan, you must have financial need to receive a subsidized Stafford Loan. Students do not begin repayment until the student completes his education. For all students maintaining at least a half time course schedule the government will pay all interest that accumulates on the loan. The interest payments do not become the responsibility of the student until after he completes his education.

The U.S. Department of Education will pay (subsidize) the interest that accrues on subsidized Stafford Loans during certain periods. In other words, the government will pay the interest on your loan while you go to school, during the six month grace period after graduation, and anytime you may have a loan deferment or forbearance situation. All you need to do is attend school at least half time in an undergraduate or graduate degree-granting program.

For students that cannot qualify for a subsidized loan an unsubsidized loan is an option. The Stafford loan that is unsubsidized means that you are still able to defer payments until six months after completely your education. However, during all of that time interest will accumulate and compound on the principal of the loan.

Financial need is not a requirement to obtain an unsubsidized Stafford Loan. The government does not pay the interest on the loan. Interest accrues from the day the loan is paid out to your school. Traditionally your repayment also begins once the loan is fully disbursed, but many student borrowers opt to defer both interest and principal until after graduation.

How to Apply

The federal government determines if you are eligible for subsidized or unsubsidized Stafford Loans. But in order to be considered for this or any other federal loans you must fill out and file the Free Application for Federal Student Aid (FAFSA). Forms are available online and in Spanish versions. This form is a must for almost all types of financial aid, including many scholarships and grants from colleges and universities.