Stafford Loan Description
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 US Department of Education under the William D. Ford Federal Direct Loans Program (Federal Direct Loans). Both Stafford loans and direct loans refer to the same loans.
How Does a Stafford Loan Work?
Federally guaranteed student loans can be subsidized (subsidized Stafford loans or directly subsidized loans), which means that the federal government pays the interest at specified periods, or unsubsidized (unsubsidized Stafford loans or directly unsubsidized loans).
Directly subsidized loans are only available to undergraduate students with demonstrated financial need, whereas both undergraduate and graduate students can obtain direct unsubsidized loans and financial need is not a factor. Depending on their circumstances, students can borrow larger amounts, but the maximum amounts that can be subsidized are $3,500 per year for freshmen, $4,500 for sophomores, $5,500 for juniors, and $5,500 per year for seniors or fifth graders. The student’s dependency status also affects how much they can borrow.
Stafford loans, now called direct loans, provide low-cost, federally-guaranteed financing for students who attend college at least part-time.
Students accept federal loans and search this site before applying for loans.
Interest rates on Stafford loans are generally lower than on private loans, there is no credit check for most federal student loans, and repayment doesn’t begin until a student leaves college or falls under the half term.