Stafford Loan

What Is a Stafford Loan?

Stafford loan is a type of federal, fixed-rate student loan accessible to college and university undergraduate, graduate, and professional students going to college half-time. These loans are additionally called direct loans and are given out under the William D. Portage Federal Direct Loan Program. They are planned to supplement existing personal and family resources accessible for higher education costs, including scholarships, awards, and work-study. Federal direct loans can be utilized to pay for the costs of education, including tuition, room and board, books, and other education-related expenses.

Federal student loans were called Stafford loans under a previous program run by the Federal Family Education Loan Program. Effective July 1, 2010, all new federal student loans began coming directly from the U.S. Department of Education under the William D. Passage Federal Direct Loan Program (Federal Direct Loans). Both Stafford loans and direct loans allude to similar loans.

How a Stafford Loan Works

Federally guaranteed student loans can be either sponsored (financed Stafford loans or direct sponsored loans), and that means the federal government pays the interest during certain periods, or unsubsidized (unsubsidized Stafford loans or direct unsubsidized loans).

Direct sponsored loans are simply accessible to undergraduates with demonstrated financial need, though both undergraduate and graduate students can take out direct unsubsidized loans and financial need isn't a factor. Contingent upon their conditions, students might borrow bigger sums, yet the maximum sums that might be financed are $3,500 each year for rookies, $4,500 each year for sophomores, $5,500 each year for youngsters, and $5,500 each year for senior or fifth-year students. The student's dependency status additionally influences the amount they can borrow.

Stafford loans, presently called direct loans, give low-cost, federally guaranteed financing for students going to college in some measure half-time.

Students must initially be accepted into a college or university accredited to acknowledge federal loans and complete the Free Application for Federal Student Aid (FAFSA) prior to applying for the loan. To utilize any federal loan to pay for your education, you must be enrolled in a program offered by an accredited school. Search this site to see whether the school you are thinking about is accredited for federal loans.

Interest rates on Stafford loans are generally lower than those on private loans, there is no credit check for most federal student loans, and repayment doesn't start until after a student leaves college or dips under half-time.