Checkout this video:
What is a Stafford Loan?
A Stafford Loan is a type of federal student aid that you can use to pay for your education. Stafford Loans are offered to both undergraduate and graduate students. The loan is named after former Senator Robert Stafford, who was involved in the creation of the Federal Family Education Loan Program (FFELP).
Stafford Loans come in two types: subsidized and unsubsidized. Subsidized Stafford Loans are need-based loans. This means that you must demonstrate financial need in order to qualify for the loan. If you do qualify, the government will pay the interest on your loan while you are in school, during your grace period, and during any deferment periods. Unsubsidized Stafford Loans are not need-based loans. This means that you do not have to demonstrate financial need in order to qualify for the loan. However, you will be responsible for paying all of the interest on your loan from the time that the loan is disbursed until it is paid in full.
You can apply for a Stafford Loan by completing a Free Application for Federal Student Aid (FAFSA). If you are eligible, your school will send you a financial aid award letter that will include information about your Stafford Loan.
How do Stafford Loans work?
Stafford Loans are named for the Stafford brothers, who both served in the U.S. Congress during World War II. These loans are available to undergraduate and graduate students, and they can be either subsidized or unsubsidized.
Subsidized Stafford Loans are available to students who demonstrate financial need, and the government pays the interest on these loans while the student is in school. Unsubsidized Stafford Loans are not based on financial need, and the student is responsible for all interest that accrues on these loans.
Both types of Stafford Loans have a fixed interest rate, and repayment begins six months after graduation or after the student drops below half-time enrollment. Students can choose from a variety of repayment plans, including income-based repayment plans that tie monthly payments to the borrower’s income.
What are the benefits of a Stafford Loan?
There are a number of benefits to taking out a Stafford Loan, especially if you compare it to other types of loans. One of the biggest benefits is that the interest rate on Stafford Loans is fixed, which means that it will never change over the life of the loan. This makes budgeting for your loan payments much easier since you’ll always know exactly how much you’ll need to pay each month.
Another benefit of Stafford Loans is that they offer flexible repayment options. You can choose to make payments while you’re still in school, which can help you keep your overall loan costs down. You can also choose a repayment plan that extends your loan term up to 30 years, which can make your monthly payments more manageable.
Lastly, Stafford Loans come with a number of protections and forgiveness options that are not available with other types of loans. For example, if you become unemployed or have difficulty making your loan payments, you may be eligible for deferment or forbearance, which would allow you to temporarily stop making payments or reduce your payment amount. There are also several forgiveness programs available for borrowers who work in certain public service jobs.
How to apply for a Stafford Loan
To apply for a Stafford Loan, you must first complete the Free Application for Federal Student Aid (FAFSA®) form.
The FAFSA form is used to determine your eligibility for federal student aid, which includes Stafford Loans. You’ll need to have your most recent tax return on hand to fill out the form.
If you’re eligible for a Stafford Loan, your school’s financial aid office will send you a financial aid award letter that includes information on how to accept the loan.
You can usually accept your Stafford Loan online through your school’s student portal. If you’re unable to do so, you’ll need to complete and return a Master Promissory Note (MPN). The MPN is a legal document in which you agree to repay your loan according to the terms and conditions outlined in it.