Stafford Loan

Your choice of a college or university may dictate which of two Stafford Loan programs will help fund your educational costs. Some schools participate in the William D. Ford Federal Direct Loan Program and others participate in the Federal Family Education Loan Program (FFELP). The government acts as the lender for Direct Loans and a lending institution, such as your family bank or credit union, acts as the lender for the FFELP Loans. Regardless of which loan program is offered, the Stafford Loan offers you money for school with competitive interest rates.

How Much Money Do Stafford Loans Offer?
If you re a dependent student, you can qualify for a Stafford Loan of up to $2,625 during your first year of school, $3,500 in your sophomore year, and $5,500 per year thereafter. If you are an independent student, you can qualify for a larger loan amount, ranging from $6,625 to $18,500 depending on your year of study.

Part-time students are eligible for Stafford Loans. If you enroll less than half time, however, you are not eligible. The interest rate with a Stafford Loan is fixed at a competitive market rate at the time your loan is disbursed, and will never exceed 8.25%. Some lenders in the FFELP program may offer you discounted interest rates if you consistently make payments on time or if you participate in electronic payment plans.

Subsidized vs. Unsubsidized
To help you cover the cost of education, the Federal government guarantees loans up to a cumulative total of $18,500. If you meet your school's guidelines for financial need, you may qualify for a subsidized Stafford Loan. The Federal government pays the interest on a subsidized loan while you are in school. Although you do not have to begin making loan repayments on an unsubsidized Stafford Loan until six months after you leave college, the loan will begin accruing interest as soon as it is disbursed. If you receive a Stafford Loan and your enrollment status drops below half time, you will have to begin repaying the loan after the stated grace period You'll have to continue repaying the loan even if you're still attending classes.

If you qualify, you can also combine a subsidized Stafford Loan with an unsubsidized Stafford Loan to cover your college expenses

Stafford Loan Eligibility
You can qualify for a Stafford Loan without a credit check if you are a U.S. citizen or an eligible non-citizen enrolled at least half time at an accredited college or university. To begin the loan application process, complete the FAFSA--the same application that your school uses to determine your eligibility for other sources of funding.