Stafford loans are available to students with financial need simply by filling out a FAFSA or Free Application for Federal Student Aid. Stafford Loans are offered at more than four thousand schools nationwide, enabling students to attend the college, university or trade school of their choice. In order to obtain a Stafford Loan, a student is required to fill out a FAFSA and submit it to their school’s financial aid office. But before you get prepared to fill out the FAFSA, it’s important to know a few things about Stafford Loans and how they relate to the FAFSA.
Filling out a FAFSA correctly is important if you hope to get a Stafford Loan. There are two types of Stafford Loans, and often students are offered a combination of both:
Subsidized Stafford Loan: A subsidized Stafford Loan is an educational loan provided by the federal government where payments are not made and interest is not charged while you are still in school at least half time. Once you stop attending school or complete your degree, payments must be made on a monthly basis, and interest will begin accruing at the very low rate of 4.5%.
Unsubsidized Stafford Loan: An unsubsidized Stafford Loan begins accruing interest from the time it is dispersed at a rate of 6.8%. Like the subsidized version of this loan, payments are not required while you are in school, but interest will be charged on a monthly basis. For this reason, it is suggested that students at least pay the interest on their unsubsidized student loans while they are in school.
The FAFSA can be used to determine your eligibility for a Stafford Loan, including the total amounts that you will be awarded for each loan type. While the maximum Stafford Loan amount per year is $12,500, some students will only receive a fraction of that, while others will receive Stafford loans in addition to federal grants, scholarships and work study.
Being that the FAFSA determines eligibility for Stafford Loans for both graduate and undergraduate students, the process to get a subsidized or unsubsidized federal student loan will not change much from year to year.
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