Stafford Loan

Frequently Asked Questions

Q:What is the difference between subsidized and unsubsidized Stafford student loans?

A:The difference between the subsidized and the unsubsidized Stafford student loans is simple to understand. The characteristics of both the loans are more or less the same in that they both have relatively low interest rates and a similar borrowing limit. The essential difference is that for subsidized stafford student loans, the government pays the interest on the loan while the student is in school, while it does not do so for unsubsidized stafford loans.

Q:What are the Stafford Loans limits on borrowing?

A:Stafford Loan limits on borrowing are determined by various factors, such as the applicant's level of education, dependency status, and the year of enrollment in the degree program. Overall, the Stafford loan limits are up to $20,500 per year, depending on the borrower's status. Students can borrow up till the entire cost of education less any other loan, scholarship, or grant gained. Students who applied to the unsubsidized Stafford loans will receive as much loan as they qualify for, which can be less than their entire cost of education.

Q:I want to apply for a Direct Stafford Loan but I might not be able to prove my financial need. What should I do?

A:There are two different types of direct Stafford Loans: subsidized and unsubsidized. The subsidized Stafford loans are need based, whereas the unsubsidized Stafford loans do not have any such restrictions. Therefore, if you cannot demonstrate your financial need or do not have any, you can apply for and will receive an unsubsidized direct Stafford loan. Unsubsidized Stafford loans can be acquired by graduate as well as undergraduate students. Students can pay the accumulated cost of loan after graduation or alongside acquiring education. The interest rate for the unsubsidized Stafford loans is fixed at 6.8%.

Q:What are subsidized Stafford loans?

A:Subsidized Stafford loans are federal loans offered to graduate and undergraduate students who are facing financial constraints. In order to receive this loan, an applicant must have a low Expected Family Contribution (EFC) as demonstrated on his or her Free Application for Federal Student Aid (FAFSA). Subsidized Stafford loans are loans for which the interest rate is paid by the government for the time the student is enrolled in the degree program; after graduation, the interest rate remains both low and fixed. Students may begin repayment upon graduation, though subsidized Stafford loans also allow students a six month to one year grace period after graduation to find employment and begin repayment on the loan.

Q:What are unsubsidized Stafford loans?

A:Unsubsidized Stafford loans are federal loans offered to graduate and undergraduate students irrespective of their financial need. Interest accrues on unsubsidized Stafford loans while the student is in school, as opposed to subsidized Stafford loans. Students can borrow up to the entire cost of education less any other federal financial aid or loan received. The interest rate for unsubsidized Stafford loans is 6.8%, which accrues over time if the student chooses not to pay it off while continuing their degree program. Loan repayment schedules are deferred and allow students a grace period to find a job and start paying off the loan.

Q:What are the eligibility criteria to apply for federal Stafford loan?

A:To apply for a federal Stafford loan, the applicant needs to be United States citizen, must have a Social Security Number (SSN), a high school diploma or GED, complete and sign the Free Applicant for Federal Student Aid (FAFSA), and must not have defaulted on any other federal financial assistance program. To be considered for subsidized Stafford loans, students must display financial need and be enrolled in an institute at least as a part time student.