Stafford loans are by far the most popular student loans offered through the United States Department of Education. These loans have been devised to meet the educational expenses of students who do not have the necessary finances to afford higher education. Stafford loans can be secured in a variety of ways and there are a variety of Stafford loans. Not only the tuition fees but these loans are meant to meet a lot of other associated expenses.
Stafford loans have been created by the United States Department of Education and they are offered through the Federal Family Education Loan (or FFEL) Program or the William D. Ford Federal Direct Loan (or simply Direct Loan) program. Both the programs offer loans to students and there are also a few that offer loans to the parents of the college going students. Majority of the colleges as well as universities in the US offer both the programs but there are a few which are affiliated to only one of the programs. The Direct Loan Programs created by the federal government provides the necessary funding to both the programs. On the other hand The Federal Family Education Loan Program is funded by a bank, credit union or other third party lenders.
The Stafford loans are basically of two types – subsidized and unsubsidized. In the subsidized loan, the government pays up the interest, while the student is in college. The government also pays the interest during the grace period too, which is six months from the time of graduation. Deferments may also occur when the students want to pursue another course in the same college or remains unemployed or is not in a financial position to pay back the loan. The subsidized Stafford loans are need-based and these loans cannot be approved if the loan is not need-based.
The second type of Stafford loans are the unsubsidized ones and these are not need-based loans. Students who do not qualify for the need-based subsidized loans can always apply for the unsubsidized loans. The government does not pay any interest on behalf of the students and the students have to pay the interest even when they are in their college. The repayment of these loans can be deferred till the time the student graduates or takes up a job.
Both the Stafford loans are meant to provide financial assistance to the students who want to have a great career by pursuing higher education.