| A Stafford loan is a loan product offered to | | | | Loans is that they're easy to qualify for in |
| students enrolled in American institutions of | | | | most cases. |
| higher education to help finance their | | | | |
| education. The loans are offered under Title | | | | Stafford Loan Eligibility |
| IV of the Higher Education Act of 1965 (with | | | | |
| subsequent amendments) and are therefore | | | | Stafford loans are available to students who |
| guaranteed by the U.S. Department of | | | | are any of the following: |
| Education either directly or through | | | | |
| guarantee agencies. | | | | Full-time |
| | | | |
| Because the loans are guaranteed by the full | | | | Part-time |
| faith of the US Government, they are offered | | | | |
| at a lower interest rate than the borrower | | | | Graduate |
| would otherwise be able to get for a private | | | | |
| loan. On the other hand, there are strict | | | | Undergraduate |
| eligibility requirements and limits on | | | | |
| Stafford loans, and they get special | | | | You must be a US citizen, national, permanent |
| treatment in personal bankruptcy cases. | | | | resident, or have other special status. In |
| Students applying for a Stafford loan must | | | | addition, you must be enrolled at least |
| first complete a FAFSA. | | | | half-time at an eligible institution. |
| | | | |
| Stafford loans are available to students | | | | Stafford Loan Highlights |
| either directly from the United States | | | | |
| Department of Education through the Federal | | | | Borrowers who use Stafford Loans may enjoy: |
| Direct Student Loan Program (FDSLP, also | | | | |
| known as Direct) or from a private lender | | | | No credit check needed |
| through the Federal Family Education Loan | | | | |
| Program (FFELP). | | | | Flexible repayment options (including |
| | | | consolidation) |
| No payments are expected on the loan while | | | | |
| the student is enrolled full time, and for | | | | No prepayment penalty |
| six months after the student has either | | | | |
| graduated or dropped out of a full-time | | | | Loan forgiveness for some teachers |
| program. | | | | |
| | | | Details on Stafford Loans |
| Stafford loans have a dual structure interest | | | | |
| rate: interest rates are lower when the | | | | If you’ll use a Stafford Loan, be |
| student is in-school and for the grace | | | | aware of the following: |
| period. Once they are in repayment, the | | | | |
| interest rate increases. | | | | You pay a fee (but it may be covered by your |
| | | | lender) |
| Stafford loans are available both as | | | | |
| subsidized and unsubsidized loans. Subsidized | | | | You must repay the loan |
| loans are offered to students based on | | | | |
| demonstrated financial need; with these | | | | Loans issued after July 2006 have a fixed |
| loans, interest is paid by the federal | | | | 6.8% APR |
| government while the student is enrolled and | | | | |
| during the grace period. | | | | Interest may be subsidized if you can |
| | | | demonstrate need |
| Interest on Stafford loans was previously | | | | |
| based on an adjustable formula, in which | | | | Interest may be capitalized (added to the |
| rates were set annually based on the | | | | back of the loan) if you decide not to pay |
| prevailing 91-day Treasury bill. As of July | | | | while in school |
| 1, 2006, however, all Stafford loans are | | | | |
| issued with a fixed interest rate. For direct | | | | How to Get a Stafford Loan |
| loans and most loan providers, the rate is | | | | |
| currently set at 6.80%. | | | | To get the ball rolling, you’ll need |
| | | | to: |
| As the new rate goes into effect, some loan | | | | |
| providers are foregoing portions of the | | | | Complete the FAFSA process |
| margin they are entitled to under the Federal | | | | |
| program, offering interest rates lower than | | | | Choose a lender – ask your Financial |
| the standard rate. Many are also offering | | | | Aid office for suggestions |
| price incentives related to payment history, | | | | |
| direct debit, etc. MyRichUncle was the first | | | | How Much Can I Borrow? |
| to announce reduced interest rates, expecting | | | | |
| others to follow with time. Collectively, | | | | The maximum loan depends on your status and |
| interest rate reductions, principal | | | | can range from $2625 to $18500. |
| reductions and origination fee discounts are | | | | |
| known as Borrower Benefits. | | | | Ask your Financial Aid office for details. In |
| | | | general “independent†(or |
| In addition, in repealing the Single Holder | | | | self-supporting) students and graduate |
| Rule, Congress also allows loan providers to | | | | students can borrow the most. |
| compete for College Consolidation Loans that | | | | |
| are available to students and former students | | | | For Additional Information |
| with multiple loans. Specialized | | | | |
| consolidation lenders and student loan | | | | Your Financial Aid office is really the best |
| providers compete on various incentives to | | | | place to go with questions. You can also |
| attract customers. | | | | visit: |
| | | | |
| Stafford Loans are available through US | | | | The Department of Education’s loan |
| Department of Education funding programs. | | | | page (where you can view the Student Guide) |
| This page covers the basics of Stafford | | | | |
| Loans. A unique characteristic of Stafford | | | | The Federal Student Aid Direct Loans site |