Stafford Loans are the most common type of federal student loans for post-secondary education. There are several different types of Stafford Loans. There are subsidized Stafford Loans which are based on need and unsubsidized Stafford Loans which are not need based. There is the Direct Loan Program which is funded by the Federal Government and the Federal Family Education Loan (FFEL) program which is available from private lenders. Except for subsidized Stafford Loans, which require the student to show financial need, all of these loans have identical requirements and loan limits.

Eligibility Requirements

In order to be considered for any of the Stafford Loans, individuals must have a high school diploma, a GED or have completed a state approved home school high school education program. Also, those students who have passed an approved Ability to Benefit Test may be eligible for these loans. Individuals must be U.S. citizens or eligible non-citizens and possess a valid social security number. Students must be enrolled in or accepted for enrollment in an eligible program (some internet courses are ineligible) and working towards a degree or certificate. These loans must be used for education purposes and students are required to sign a promissory note. The Federal Student Aid Information Center (FSAIF) is the best source for information regarding federal student loan programs. The FSAIF can also provide loan applications and information about participating private lenders. They can be reached by phone at 1-800-433-3243.

Loan Limits and Interest

The interest on subsidized Stafford Loans is paid by the federal government while the student is in school and for a certain grace period following the completion of school. These loans are available to independent students who can show financial need and dependent students whose parents can not qualify for a Federal PLUS loan to finance the student’s education. The interest on an unsubsidized Stafford Loan begins to accumulate from the first day of the loan. Unsubsidized Stafford Loan recipients are completely responsible for this interest and, if it is not paid, it will be added to the principal and additional interest will be charged based on this new amount. It is therefore advisable, if at all possible, to pay at least the interest on an unsubsidized Stafford Loan on a monthly basis. The maximum amount that a student may borrow or the “loan limit” of a Stafford Loan depends on the student’s year in school. In other words the maximum amount available to a freshman is less than the maximum amount available to a senior. Students who qualify for subsidized loans may be able to obtain unsubsidized loans as well in order to get closer to the actual cost of attendance. Complete information on federal loans is available at http://studentaid.ed.gov and at school financial aid offices.