Federal Stafford Loans

Posted on October 19, 2018 by

Are you needing to apply for one of the Federal Stafford Loans? The are two types of Federal Stafford Loans available to both undergraduate and graduate students. Federal Stafford Loans are supported by either the Federal Family Education Loan Program, (FFELP), or the William D. Ford, Federal Direct Student Loan Program, (FDSLP). Some schools may elect to provide both programs, though they are not required to do so. In both cases, the eligibility requirements are identical. There are however some differences regarding loan repayment.

Do you want to apply for Federal Stafford Loans? 
The two types of Federal Stafford Loans which you may be eligible for are:

Subsidized Stafford Loans: Subsidized Stafford Loans give students an opportunity to attain college funding at low-interest rates, without having to pay the interest until six months after being less than half enrolled in school.

Unsubsidized Stafford Loans: Unsubsidized Stafford Loans are similar to that of subsidized Stafford loans except that the student is required to either pay the interest while attending college, or the loan interest accrues while attending school, and payments are deferred until six months after the student is no longer enrolled more than half the time.

The qualifications for either of the Federal Stafford loans are first determined by filling out a Free Application for Federal Student Aid (FAFSA). After the school has made a determination by reviewing the results of the FAFSA, they will present the options for which you qualify. In the event that you are not in the position to avoid any student debt and are approved for a Federal Direct Stafford Loan – the Department of Education will be the lending institution which is providing you the loan. If your school participates in the FFEL program, they may suggest that you consider their preferred lending institutions. You are not required to accept a loan from the school’s preferred list of lenders, and it is up to the each student’s discretion which lender they choose to carry their Federal Stafford Loan through.

Below, are some points to consider when determining a lender for Federal Stafford Loans:

  • Does the lender offer the ability to handle all of the types of loans you have?
  • What are the interest rates and the terms of the loans that they are offering?
  • Do they offer an easy way to apply for the loans – Can the loan be applied for online?
  • Is their repayment plan relatively simple, or is it complex?
  • Can you obtain information from their customer service representatives easily?

With both types of Federal Stafford Loans; Federal Direct Stafford Loans & FFELP Stafford Loans, you will be required to file a master promissory note (MPN), acknowledging acceptance of the agreement for the conditions of the loan amount that you are borrowing, and for the terms which are set forth therein. See also this post about Graduate School Scholarships when you’ve completed your Master’s degree and are thinking about continuing your education.


Going to college was the easy part. Paying off your student loans is the hard part. And if you’re not careful, it may take you a lifetime to do it. In the meantime, making your monthly student loan payments for the next ten, fifteen or thirty years will leave you feeling drained.

Some Startling Facts

According to Finaid.org, student loan payments are strangling a lot of college graduates. They offer some startling facts. For example:

• 65% of 4-year undergraduate students graduate with student loan debt.
• The average student loan debt is over $23,000.
• 14.6% of student loan borrowers graduated with over $40,000 in debt.

Instead of spending a lifetime digging out of student loan debt, the smart graduate will work to pay off their educational loans early. By creating a plan and sticking to it, student loan borrowers can pay off a small loan in one to three years and a moderate loan in four to six years.

Five Ways to Pay Off Your Student Loans

Here are five things you can do to get out from under your student loans early so you can stop paying and start living. See also this post on Nursing Scholarships.

1. Eliminate extras: Cut out designer coffee, movie nights and dinners on the town. You can use the cash you save to pay down your student loan debts.
2. Sell your car: The money you spend on car payments, insurance and gas can be reallocated to lightening your debt load. Use public transportation or get a bike.
3. Move home: Getting out from under Mom and Dad’s thumb may be a dream-come-true. But if you stay at home for an extra year you can chip off a big chunk of your debt.
4. Take a second, or third, job: By taking a minimum wage job and working twenty extra hours a week you can earn seven thousand additional dollars towards your student loans in one year.
5. Sell your stuff: It’s just stuff. And most of it you probably don’t need. Cashing out your trash will help slice your student loans.

What Not To Do

Don’t be tempted or get too creative. You may regret it. Some solutions may seem attractive at first, but in the end, they’re a recipe for trouble. Here are a few tricks you’ll want to avoid:

1. Skipping payments: If you fail to pay your student loans or don’t pay on time, your credit rating may be adversely impacted.
2. Using your credit card or a home equity loan: Rolling your educational debt into another loan won’t solve your problem. It will just create more debt.
3. Cashing out your retirement funds: If you tap into a 401K plan, you’ll likely take a big tax hit. In the end, you’ll end up losing money instead of saving.

Don’t spend the rest of your life paying off your student loan debts. Make a plan and stick to it. If you do, you’ll be out of debt before you know it.