What is a Stafford Loan?

Stafford Loan


The key to successfully managing student loan debt in the future, depends in part, on the choices we make in student loans, at the beginning. This article is part of a series, describing the different types of student loans, such as a Stafford, Perkins, and PLUS student loans and which one may be best for you.


One of the advantages of a Stafford loan to consider, is that it is later eligible to be incorporated into a direct consolidation loan. This allows for the combining of all student loan debts, into one loan that is easier to manage.

Stafford loans are federal student loans for college. Most college students are eligible for a Stafford loan regardless of past credit and if they meet all of the requirements. Stafford loans offer a low interest rate of 4.5 % for the borrowed money although there might be a 1% fee to get the loan. You also don't have to make payments on the loan while enrolled in school.

Stafford loans can be subsidized or unsubsidized. A subsidized Stafford loan means that if a student qualifies and can demonstrate financial need (according to that particular schools requirements), the Government will pay the interest on the loan, during the time the student is in school, and usually six months after graduating. An unsubsidized Stafford loan requires that the student be obligated to pay the interest on the loan that is accruing, while in school.

To be eligible for a Stafford loan, you must be enrolled at least half-time, the student must have submitted a FAFSA ( free application for student aid), the student must also be a citizen of the United States or an eligible non-citizen.

The amount of the loan can be upwards of 20,500 dollars for every year, under certain conditions, such as the type of degree you are going for and how long you have been attending.