What is a Federal Unsubsidized Stafford Loan?

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  • Written By: N.M. Shanley
  • Edited By: Michelle Arevalo
  • Last Modified Date: 22 October 2019
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In the United States, a federal unsubsidized Stafford loan can be used to cover most college costs. Applicants that apply for unsubsidized loans do not have to prove financial need. Students who have defaulted, or are delinquent, on any existing federal student loans cannot qualify for Stafford loans. Acceptance is not based on the applicant’s other credit history, or credit score.

Unsubsidized loans usually have higher interest rates than subsidized Stafford loans. These loans also begin accruing interest immediately. Stafford loan rates are generally lower than other personal loan rates, and, usually, Stafford loan payments are deferred until graduation.

Stafford loans are typically used to supplement the student’s other resources, including personal and family funds, scholarships, grants, and work-study programs. Private institutions, such as banks, provide Stafford loans to students. All federal student loan programs are monitored by the U.S. Department of Education through the Federal Family Education Loan Program (FFELP).

Student must be enrolled at least half-time at a school that participates in FFELP to qualify for a federal unsubsidized Stafford loan. The student must also be a United States citizen; national, permanent resident; or eligible non-citizen to apply for a Stafford loan. Applicants also need to complete and file an online federal financial aid application, known as a FAFSA.


Usually, federal unsubsidized Stafford loan funds are sent directly to the student’s school. Tuition and other school fees, books, supplies, room, and board can all be paid for with Stafford loan funds. Transportation, childcare, and even computer costs may also qualify as expenses that can be paid with this type of federal unsubsidized loan.

A Federal unsubsidized Stafford loan has both annual and lifetime borrowing limits. These limitations vary based on whether the student is considered a dependent in another household, or is independent. Also, undergraduate loans have different limits than graduate Stafford loans.

Using deferment, students can delay making loan payments until they finish school. Students must remain in school at least half-time to keep this deferment active. If the student chooses to take fewer credits, then the deferment no longer applies. In this case, the student will have to start making loan payments before graduating college.

Even though a good credit score is not required to obtain a Stafford loan, these loans are included in a student’s credit report. Credit agencies treat this type of lending like other loans when it comes to missed or late payments, which can lower a credit score. Graduates who make timely payments on a federal unsubsidized Stafford loan can improve their credit scores, and build a solid credit history.



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