Federal Stafford Loans
Available through the William D. Ford Federal Direct Loan Program, Stafford Loans are low-interest loans that help cover the cost of education at a four-year college or university; community college; or trade, career or technical school. There are two types of loans under the program: subsidized and unsubsidized. Subsidized loans are for students with financial need, determined by the results of the FAFSA, and interest on these loans are deferred while you’re in school. Unsubsidized loans do not require proof of financial need and interest accrues from the time it’s first paid out.
Stafford Loan Eligibility
Since Stafford Loans are offered through the federal government, there are certain eligibility requirements needed to qualify. Students must be either a U.S. citizen or an eligible non-resident with a valid social security number. You must also have a high school diploma or have earned a GED. In addition, you cannot owe any refunds on federal grants or have defaulted on any student loans.
Applying for a Federal Stafford Loan
As with all federal student aid, you must complete the FAFSA to be eligible for a Stafford Loan. Most students apply for the FAFSA online, but hard copy applications can be mailed in, as well. Pick up an application at your high school counselor’s office or any college or university financial aid office. In addition, loans are disbursed per academic year, so you will need to apply for the FAFSA every year you plan to be enrolled. Another tip: Apply as early as possible. Late applications will not be processed.
Covering College Costs
The federal government determines how much you’ll receive from your Stafford Loan based on your FAFSA. Once you’ve submitted your application, your Expected Family Contribution (EFC) and Cost of Attendance (COA) will determine what loans and/or grants you qualify for. COA includes tuition, living expenses, miscellaneous fees, books, meals and board. This amount minus the EFC equals a student’s financial need, which can be covered by federal grants, state grants, academic or talent scholarships, institutional grants, federal work-study and various loans.
Low-Interest Stafford Loans
There are several benefits to being awarded a Stafford Loan. Because the federal government guarantees these loans, credit checks are not required. In addition, the fixed rate associated with the loan is usually much lower than the going rates on the market. When it comes to repayment, the terms are very flexible. You may be able to set the payment plan that suits you best or you can consolidate all your loans into one more affordable one.
Keep in mind, however, that sometimes loan limits do not cover all college costs and expenses. In order to supplement these costs, you may have to apply for a private student loan or find other sources of funding.