Stafford Loan Program

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What is a Stafford Loan?

Stafford Loans are among the most popular and available of federal student loan programs. If you're a graduate or undergraduate student enrolled in an eligible program of study on at least a half time basis, you are essentially eligible to apply for a Stafford Loan. There are two types of Stafford Loans available, subsidized and unsubsidized.

Subsidized Stafford Loan

With a subsidized Stafford Loan, the federal government pays the interest on the loan:

(a)   While you're in school

(b)   For six months after graduation, and

(c)   During any approved deferment periods.

To qualify for a subsidized Stafford Loan, you must demonstrate financial need. Consequently, not everyone is eligible. Your financial need is based on the income and asset information you provide on the financial aid application, known as the FAFSA.

Unsubsidized Stafford Loan

With an unsubsidized Stafford Loan, you are responsible for paying the interest that accrues during the school year, in the six-month period after graduation, and during any deferment periods. Unsubsidized Stafford Loans are not based on financial need; therefore students at all income levels can obtain them.

The terms and conditions of both loans are similar, and each has specific annual borrowing limits. If you're interested in applying for a Stafford Loan, you should first talk to a financial aid counselor.

One final note: Your lender for a Stafford Loan (subsidized or unsubsidized) can be either the federal government (through the Direct Loan Program) or a private lender (through the Federal Family Education Loan Program). In most cases, you don't choose your lender. Instead, the college will tell you which lender it prefers.

Stafford Loans Facts

Schools Generally Participate in one of These Two Stafford Loan Programs:

(a)   The William D. Ford Federal Direct Loan (FFDL) Program

(b)   The Federal Family Education Loan (FFEL) Program

Under the Direct Loan Program, the funds come directly from the federal government. Funds for the FFEL will come from the bank, credit union, or other lender that participates in the program.

The terms and conditions of both lending programs are similar. The amounts you may borrow are the same whether you get a Direct Stafford Loan or a FFEL Stafford. The primary differences between the two programs are the source of the funds and the repayment provisions. For either type of Stafford Loan, you must fill out a Federal Student Aid Application (FAFSA). After your FAFSA is processed, your school will review the results and will inform you about your Stafford Loan eligibility. You will also have to sign a promissory note. In part 2, we'll cover the qualifications you must meet to apply for a Stafford Loan.

Stafford Loan Information: Part 1 | Part 2 

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