Stafford Loans Explained
Stafford Loans Explained
Students applying for federal financial aid may find themselves confused by the various loan programs available to them. Specifically a student may qualify for a Stafford Federal Family Education Loan (FFEL) or a Direct Loan. Aside from the fact that both are loans, what are the differences in these two programs that both boast “Stafford” in their names? Well here is a quick breakdown to better explain so that you might find the loan that is right for you.
Stafford Direct Loan
The Stafford Direct Loan is also known as a FFEL program. The main difference is instead of utilizing a private lender; the student is financed directly through the U.S. Department of Education and it is based on financial need.
In regards to both loan programs, both graduates and undergraduates can qualify for the Stafford student loans. Interest rates usually run in the five percent range. Each program provides up to at least 10 years for repayment. To apply for Stafford loans, borrowers must fill out a Free Application for Financial Student Aid (FAFSA). The meticulous application determines a student’s eligibility not only for student loans, but federally funded grants as well. Stafford loans can then be awarded to the students in a subsidized or unsubsidized form.
Aside from the Stafford Loan Program, private student loans are also available to students. Parents wanting to assist with their dependent child’s education can consider a federal PLUS loan. Both private student loans and PLUS loans require a solid credit history before funds can be granted.
All student loans, federal or private, require repayment in full plus interest.
