Stafford Loans are federal student loans offered by the Department of Education to undergraduate and graduate students. Stafford loans are a desirable form of federal financial aid, as they have relatively low fixed interest rates, with generous borrowing limits. Stafford Loans are intended to provide financial assistance to students who need help covering the costs of attending college, from tuition to living expenses.
There are two types of Stafford Loans: subsidized Stafford Loans and unsubsidized Stafford Loans. Subsidized Stafford loans are need-based, meaning they are only awarded to financially needy students. Unsubsidized Stafford loans are unique in that interest does not accrue while the student is in school; instead, the government covers it. Naturally, this makes subsidized Stafford loans very desirable. Unsubsidized Stafford loans are not need-based, meaning any student can receive one; as they are unsubsidized, though, the student is responsible for any interest that accrues while in school.
For the 2011-2012 academic year, subsidized Stafford loans have a fixed interest rate of 3.4%, while unsubsidized Stafford loans have a fixed interest rate of 6.8%.
The amount a student can borrow in Stafford Loans depends on several factors, including the student's dependency status, year in school, and undergraduate or graduate status.
To be eligible for a Stafford loan and other types of federal aid, a student must: