A Stafford student loan is a government-issued loan meant to pay for college tuition and student living expenses. Granted to qualifying students at American universities, the Stafford student loan can help defray the cost of college, at least until graduation. Stafford loans feature a fixed interest rate, and may be subsidized, unsubsidized, or partially subsidized to ease repayment.
To apply for a Stafford student loan, prospective students must fill out a Federal Application for Student Aid, or FAFSA. The application is usually given to high school seniors and continuing college students between January and March, although applicants can also fill out the entire form online. The questionnaire is very detailed, and requires information regarding financial status and history, family data, grades and what schools the student is considering attending. Applications are typically due mid-year, and students may receive a letter or email detailing their expected financial contribution and financial award.
One of the most common federal student loans, the Stafford student loan is available for both undergraduate and graduate students. There are limits for how much a student can borrow each year, although the amount increases slightly each year. Graduate students typically have a much higher upper limit of borrowing, as post-secondary education tends to cost more and living expenses are likely to increase.
Most students will end up with a blend of subsidized and unsubsidized Stafford student loans. Subsidized loans means that the government pays the interest while the student remains at school at least half time. With unsubsidized loans, interest begins accruing immediately, resulting in a much higher total debt upon graduation. Financial aid experts urge students with unsubsidized Stafford student loans to try and pay the interest continually while in school, in order to reduce total debt.
There are various methods of repaying a Stafford student loan after graduating. Students can pay loans back over a period of years with regularly scheduled payments. Repayment can be made in even amounts, or may be based on income and increase as wages go up. If after graduation, a student finds themselves unable to repay a loan, there are a number of options that allow the student to delay payment. Be wary, however, when using these options, as interest usually continues to accrue on deferred loans, and the total debt will only increase as time goes by. If payment can be made, it is usually best to start as soon as possible to avoid possible penalties and reduce the amount of total debt repaid.