Stafford Loans

When you read anything about applying for funding for college, the article, book, or other resource points you to federal funding first, particularly mentioning Stafford Loans. These are the primary source of federal government lending for student aid in postsecondary school attendance and come in a variety of packages. How do Stafford Loans work, what do you need to do to qualify, and what options are there available to qualified parties?

Stafford Loans are loans that are guaranteed by the government. There are versions of the loan available for both undergraduates and graduate students, available in varying amounts and under a number of different circumstances and criteria that are met.

Stafford Loans come in two varieties: the subsidized Stafford Loan and the unsubsidized Stafford Loan. The former is a rarer offering, made to those who present extreme financial hardship based on completion of the FAFSA. If you qualify for a subsidized Stafford Loan, this means that you will not have to pay interest on this portion of your college funding. When the loans come due, you will simply begin to repay the principal, with all interest having been repaid to the actual lending source by the federal government.

Much more commonly, the federal government approves unsubsidized Stafford Loans, in which the student will be responsible for the interest on the loan. However, students are not obligated to begin repayment of any portion of the loan until a six-month grace period beyond graduation has ended. While accruing interest, these loans are guaranteed to have low interest rates that accommodate the budget, as the primary goal is to help students achieve their goals of pursuing a higher education with a secondary focus on profiting from the loan.

Several private agencies can help you fund a Stafford Loan with extremely low interest rates, including SunTrust, Wachovia, and Bank of America. You can also work with the government-appointed institution in the state where you will be attending college to receive Stafford Loans funded by state tax exempt bonds, helping you to save even more on the cost of your loans. You may also be able to get incentives such as interest cuts for continuous on time payments or direct withdrawal payments.

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.