Federal Stafford Loan Subsidized and Unsubsidized Student Loans

Federal Stafford Student Loans are a form of financial aid offered to students planning to start or continue their college education. Federal Stafford Student Loans are guaranteed by the US Department of Education or by a guarantee agency. A Federal Stafford Student Loan is generally offered at a lower interest rate than a private non-government backed loan. Federal Stafford Student Loans are either Subsidized or Unsubsidized, and the amount each student can borrow each year is limited, read also Stafford student loan limits.

Stafford loans are available to any qualifying student (see Stafford student loan eligibility) either directly from the US Department of Education through the Direct Loan program or from a preferred lender through the Federal Family Education Loan Program (FFELP).

While enrolled as a full time student, you don't have to make payments on a federal Stafford student loan. Student loan repayment generally won't begin until after your 6 month grace period has ended. The 6 month grace period begins upon graduation or when your full-time student status changes to part-time. All Federal Stafford Student Loans must be repaid as promised with the exception of some qualifying fields of study that have either offer reduced repayment plans or debt elimination. For more information, see federal student loan discharge.

Subsidized Federal Stafford Student Loans

A Subsidized Federal Stafford Student Loan is one where the US Federal Government pays the interest due while you're a college student, so that when you finish your degree, only the principal amount of the loan is due. After you finish your degree and your grace period has ended, any future interest due on a Subsidized Federal Stafford Student Loan becomes your responsibility to repay.

Subsidized Federal Stafford Loans are need-based and in order to qualify, you must file a FAFSA application. The FAFSA uses a calculation and takes into account family income and assets in order to make a determination of a students ability to pay for his or her education. The calculation also takes into consideration the Expected Family Contribution (EFC).

Once these factors are taken into consideration, you'll be notified if you qualify for a subsidized Federal Stafford Loan or an unsubsidized federal Stafford loan.

Unsubsidized Federal Stafford Loans

Unsubsidized Stafford loans have the same low interest rate as subsidized, however, the interest that accumulates while your a full-time-student and during your grace period is added to the principal amount at the time your loan becomes due. You may of course, pay the interest rate while attending school and during your grace period. This will lower the amount borrowed for your education. And, result in a lower monthly payment for the remainder of your loan.

Related Student Loans Ed Web Pages » Federal Direct Loan Programs
» Federal Stafford Loans Overview
» Federal Perkins Loan Program
» Repayment of Student Loans
» Student Loan Default