Stafford Loans

One of the most popular ways of financing your college education is the Stafford Loan.  There are two types of Stafford Loans- they can either be subsidized or unsubsidized.  In order to apply and obtain approval for the Federal Stafford Student Loan, you must fill out the FAFSA.  You cannot get a Stafford Loan without filling out the FAFSA, which is why the first step for getting financial aid is to fill out the free application for federal student aid.

Once you've submitted your FAFSA, you'll receive a Student Aid Report and award letter, approximately 3 weeks after filing.  This report is also sent to the college of your choice, and indicates how much financial aid you will be eligible to receive, what types of college loans you are approved for and how much financing you will receive towards the cost of your education. 

Applying for a Federal Stafford Student Loan

If your award letter indicates that you have been awarded a federal subsidized or unsubsidized Stafford Loan, then you can apply for free at staffordloan.com.  Filling out the application will result in you receiving a promissory note that you must fill out and sign indicating your promise to use the money for educational purposes only and that you will repay the funds as agreed.  You will also have to attend an enterance counseling program regarding your federal loans if it is your first Stafford loan.

Each year you are attending college you can apply for financial aid by resubmitting a new FAFSA.  This is how you obtain additional Stafford loans and other student loans for each year of study.

Stafford Loan Eligibility Requirements

• Filed a FAFSA
• Subsidized Stafford Loans require demonstration of financial need determined by college
• Must be a US citizen, eligible non-citizen or permanent resident of the US
• Must be enrolled in college at least half time
• Must not owe a refund on an education grant or be in default on any student loan

Subsidized Stafford Student Loans

A subsidized Stafford Loan is available to students who have demonstrated financial need, as determined by the college the student wants to attend.  While the student is attending college at least half-time, the interest that accrues on the student loan will be paid by the government on behalf of the student.  The student is not responsible for interest on subsidized loans as long as he or she is in school at least half-time.

Unsubsidized Stafford Student Loans

An unsubsidized Stafford Loan is not based on financial need.  All students, even those who have no financial needs, can qualify for this type of college loan.  As interest accrues on an unsubsidized loan, the student is responsible for paying it even while attending school- although he or she may elect to allow the interest to accrue while in school and then add it to the principal balance of the loan upon graduation.  Adding the interest to the principal balance of the loan is called "capitalization", and it allows the student to avoid making payments while still in school, but it does increase the total amount paid for the student loan.