What is a Stafford Loan?
A Stafford Loan is a loan for students attending colleges or, in some cases, trade and business schools. Student loans are one of the primary means by which most can pay for their education and additionally offset the financial burden of attending a school on a full-time basis. A Stafford Loan can be obtained by someone attending school at least part time, but will be offered at lower amounts than those for full-time students. There exist two basic types of Stafford Loan, subsidized and unsubsidized. Neither type requires a credit check. However, to apply for either type of Stafford Loan, one must fill out paperwork that states income. This information is computed with the price of attending a particular school, and an offer is made of the maximum amount one can obtain per academic year. A Stafford Loan may be reduced or increased depending on other sources of financial aid. For example, a student who receives grants or scholarships will have a reduced offer on loans. Since, in most ca
The U.S. Department of Education administers the Federal Family Education Loan (FFEL) Program of which the Stafford Loan program is part of. Funds for your FFEL program loans will come from a bank, credit union, or other lender that participates in the program. There are two types of Stafford Loans, subsidized or unsubsidized. A subsidized loan is awarded on the basis of financial need. If you’re eligible for a subsidized loan, the government will pay (subsidize) the interest on your loan while you’re in school, for the first six months after you leave school, and for any period you qualify to have your payments deferred. An unsubsidized loan is not based on financial need. Your school will subtract the total amount of your other financial aid from your cost of attendance to determine whether you’re eligible for an unsubsidized loan. Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it’s paid in full. You can choose to
Stafford Loans are federal student loans made directly available to college and university students and are used to supplement personal and family resources, scholarships, grants, and work-study. They may be subsidized by the U.S. Government or may be unsubsidized, depending on the student’s financial need. A subsidized federal loan is when the government pays the loan’s interest while you’re in school while an unsubsidized government student loan requires you to pay all the interest, although you can have the payments deferred until after graduation. To receive a subsidized Stafford Loan, you must be able to demonstrate financial need. About 2/3 of subsidized Stafford Loans are awarded to students with family adjusted gross income (AGI) of under $50,000, 1/4 to students with family AGI of $50,000 to $100,000, and a little less than 10% to students with family AGI over $100,000. The limit for the academic year beginning in 2009 is $3,500 per year for freshman undergraduate students, $4
Stafford loans are low-interest, federally guaranteed student loans available to both graduate and undergraduate students for tuition, program fees and other education-related expenses. Stafford loans can be either need-based or non–need-based. The standard repayment period for a Federal Stafford Loan is 10 years (although borrowers can extend their repayment term by consolidating their Stafford loans). Stafford borrowers can choose from different repayment plans—extended, graduated, income-sensitive—that can help make monthly payments more affordable once repayment begins. What’s the Difference Between a Subsidized and an Unsubsidized Stafford Loan? Subsidized Stafford loans are awarded on the basis of financial need. With a subsidized loan, any interest that accrues while the borrower is in school, in deferment, or in a grace period, is paid by the government. Unsubsidized Stafford loans are non–need-based, so eligible graduate students can qualify for unsubsidized Stafford aid regar
A Stafford loan can be either subsidized or unsubsidized. Recipients of a Stafford Loan can repay the loan in 10 to 30 years depending on the loan amount and the repayment plan selected. Since this is a federal loan, if there is a loan default, the recipient who fails to pay will not be able to receive future federal funding. The Stafford loan also has a wider variety of repayment plans and a longer repayment period.
