Stafford Loans

One of the better known primary sources of federal financial aid for students is the Stafford loan. Guaranteed by the government, Stafford loans come in two varieties depending on the student's financial circumstances, as filed annually by the FAFSA: subsidized and unsubsidized. Subsidized Stafford loans are usually offered to those who exhibit an extreme financial hardship, and qualified students generally are not charged interest on their loans as long as they are attending school at least part time. The amount the student can borrow is determined by the school once they have reviewed your FAFSA, and there are different loan limits for undergraduate students who are dependents of their parents, students who no longer are, as well as graduate and professional students. After a six-month grace period following graduation, students are expected to repay the principal of the loan, while the lending provider instated by the federal government covers the rest.

On the other hand, the more commonly approved Stafford loans are unsubsidized, meaning the student will be responsible for the interest accrued on the loan while they were enrolled in school. However, students are not obligated to begin repayment of any portion of the loan until after a six-month grace period following graduation. Unsubsidized Stafford loans usually have lower interest rates and payment options that can accommodate the borrower's budget. Students can either pay the interest that accrues while they are still in school, or they can choose to pay an overall higher amount if they only begin paying once their grace period or any deferments end. There are caps on interest available in some situations, e.g., if the student is in the military.

Under special circumstances, Stafford loans can be discharged or forgiven. For more information, visit the Department of Education's website on Stafford loans.

Paying for school is not easy, but we are here to help. OEDb's student finance section will help you find the money you need to pay your tuition and other college expenses. We cover scholarships, college grants, and student loans. Scholarships and grants are both forms of "free money", meaning they don't need to be paid back. Scholarships are typically awarded by businesses or individuals, with the money being earmarked specifically for tuition. They can be awarded based on a student's location or by religious affiliation, such as Catholicism or Islam. Grants are typically awarded by governments or non-profit organizations and the money often can be applied to several different expenses a student may incur, not solely tuition. They can be awarded based on location or ethnicity, for instance African American or Hispanic. Loans are not considered "free money", because unlike scholarships and grants, they do need to be paid back after graduation. Common federal loans include Perkins and Stafford. Loans are also available by location.