We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is a Subsidized Federal Stafford Loan?

Jessica Ellis
By
Updated: May 17, 2024
Views: 2,519
References
Share

A subsidized Federal Stafford loan is one type of student loan given out by the United States government to qualified students. Subsidized loans are often preferable to unsubsidized loans as they result in a lower amount of accrued interest, and therefore a lower total repayment. Students attending or planning to attend a four year college or graduate school can apply for a subsidized Federal Stafford loan each year.

The original program behind subsidized Federal Stafford Loans was formed by the Higher Education Act of 1965, in an attempt to draw more qualified students to continue studies beyond high school. In the late 1980s, the loan was renamed as a tribute to Robert Stafford, a Republican Senator who focused much of his career on education reform in the government. The Stafford loan is now one of the largest federal loan programs operated by the US government, and allows thousands of students to attend college and graduate school with much-needed financial aid.

Stafford loans, both subsidized and otherwise, have a few basic conditions and terms. Eligibility is determined by financial need and at least half-time enrollment at an accredited school. There are certain limits regarding maximum amount of loans that can be awarded; generally, maximums for subsidized loans are lower than those for unsubsidized loans. Since 2006, Stafford loans have featured a fixed interest rate that is determined based on a pre-constructed table. Through 2013, this rate is fixed at 6.8%, but this may change after the initial agreement expires.

A subsidized Federal Stafford loan can save students a considerable amount of money in the long term. Unlike the unsubsidized variety, interest does not begin accruing on subsidized loans until the student has graduated or failed to meet eligibility requirements. With unsubsidized loans, interest begins accruing the moment the loan is disbursed, resulting in a far higher total repayment value. For this reason, most students are encouraged to take as much subsidized financial aid as possible.

To apply for a subsidized Federal Stafford loan, a student must fill out the Free Application for Federal Student Aid (FAFSA). This form is available online as well as in paper form at many schools and community colleges. Filling out a FAFSA requires accurate financial and personal information, such as tax return data, family history, and certain eligibility information such as past felony convictions or status as military personnel. Once the FAFSA is completed, a student can request a copy sent to their intended school of enrollment, and may also receive a data summary in the form of a Student Aid Report.

When possible, higher education should be paid for out of personal funds, grants, and scholarships. Unlike loans, these forms of payment do not need to be repaid and may allow a student to enter the workforce debt-free after graduation. If loans are the only option a subsidized Federal Stafford loan can be among the best possible choices, but consider available lenders and repayment programs carefully before making selections. Choosing a wise and thought-out repayment schedule can prevent serious financial trouble later in life, and may allow quick and efficient repayment of any loans.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources
Jessica Ellis
By Jessica Ellis
With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis brings a unique perspective to her work as a writer for WiseGeek. While passionate about drama and film, Jessica enjoys learning and writing about a wide range of topics, creating content that is both informative and engaging for readers.

Editors' Picks

Discussion Comments
Jessica Ellis
Jessica Ellis
With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis...
Learn more
Share
https://www.wisegeek.net/what-is-a-subsidized-federal-stafford-loan.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.