Need Help Getting Federal Stafford Loans?

Stafford Loans are loans provided to students with some form of financial need to cover all or the remainder of their education.

Offered to any students enrolled in an American university, these low interest educational loans are provided by a the broader loan program known as the Federal Direct Student Loan Program, or by private lenders through the Federal Family Education Loan Program.

No payment is expected on these loans while the student is enrolled in college. These loans also do not require any payment to be made until six months after your last day as an enrolled full or half time student. After the 6 months, known as the “grace period,” these loans need to start being paid off. Deferment can continue for those in financial hardship, but proof of hardship must be obtained in order to continue delaying payment.

There are two types of Stafford College loans, Subsidized and Unsubsidized.

Subsidized Loans

Subsidized loans are only provided to students who are found to be in financial need after filling out their FAFSA. The interest on subsidized loans is paid by the federal government while the student is in school and during the grace period, as well as during any authorized deferment. After the grace period is over, the borrower is responsible for any interest that accrues during the ten year payment period.

The amount of Stafford loans you can subsidize is limited depending on your year of college.

Freshman: $2,625

Sophomore: $3,500

Junior and Senior: $5,500

Graduate Student: $8,500

Any Stafford loan amounts beyond those listed above are automatically considered unsubsidized loans. Students that are considered independents may take out more money in loans than students that are dependents, though these are still subject to being unsubsidized loans.

Subsidized loans also may have lower interest over time as the federal government goes through a rate reduction.

Unsubsidized Loans

Unsubsidized loans are given to those in financial need and made available to students who are not considered to be in as much financial need. Students have the option of accepting or rejecting any amount of the unsubsidized loans.

Unsubsidized Stafford loans garner interest while the student is enrolled in college as well as during the grace period. This interest may be deferred until after the grace period, but it accrues nonetheless. Many students and parents choose to pay off this interest while the student is in school so that after the grace period the payments remain lower, though it is not necessary.

Unsubsidized loans are not subject to the same rate reduction as subsidized loans, and continue to be charged at a 6.8% interest rate.

Consolidation and Discounts

Stafford loans can be consolidated after graduation, making them generally more affordable and keeping interest low. Consolidating these public student loans is useful, even when the interest rate is low, because these rates are subject to a spike in interest depending on the economy. Also, in the case of unsubsidized loans, the consolidated rate may be lower than the fixed 6.8% interest rate.

Stafford loans are also subject to discharge (also known as “forgiveness”) if the student meets some very specific criteria. However, this forgiveness is no guarantee, and most students will still need to repay their student loans over time.