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Understanding Stafford Loans

Updated on November 2, 2019
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I have done a lot of SEO content writing for websites; thus, I have done a ton of research about loans, credit cards, and consolidation.

The Cost of Tuition is High

Books Cost a Lot of Money
Books Cost a Lot of Money | Source

Understanding Stafford Loans

Stafford Loans are government-backed and secured loans available to undergraduates at low-interest rates. Offered under Title IV of the Higher Education Act of 1965, these loans are backed and secured through guarantee agencies. What this means is everyone who meets the eligibility requirements has a fair and equal opportunity to obtain one of these loans to pursue their higher education.

Stafford loans come in both subsidized and unsubsidized loans. With subsidized loans, interest is paid by the federal government while the student is still attending school and the grace period. Not every student will be eligible for subsidized loans. These loans are given to students who demonstrate a financial need.

Students need not make payments on the loan as long as they are still enrolled in school full-time. Once a student graduates or drops out of school, he or she is given a 6 month grace period before the loan is required to be paid back. As it common with loans, the student is required to pay the loan based on a monthly loan payment schedule. During the payment periods, interest rates may increase from a lower rate while the student was in school, to a higher rate once the grace period ends as Stafford loans are structured on a dual interest rate.

Post-graduation and grace period, students may be juggling several loans from various sources, including their Stafford loans. Many chose to apply for student loan consolidations to combine all loans into one easily managed account and reduce their monthly payment. Lenders and private student loan consolidation specialists may offer various incentives and discounted interest rates as they compete for a student's business. See our guide on Consolidation Student Loans for additional information.

How students can apply for Stafford Loans

Unfortunately, the requirements for eligibility and limits on Stafford’s loans can sometimes be rather strict. Before a student can apply for a Stafford Loan, they must first complete a Free Application for Federal Student Aid (FAFSA). FAFSAs can be obtained by calling 1-800-4-FED-AID, or visiting your school's local financial aid office. Once completed, students have several options in pursuing their loan. Stafford loans are available through the US Federal Direct Student Loan Program (FDSLP),

Stafford Loan Eligibility Requirements

Not everyone will qualify for a Stafford loan. However, the loan requirements are fair enough to allow everyone equal opportunity to participate in the loan program. The following list details the eligibility requirements for students seeking a Stafford loan.

Stafford Loan Requirements

Study Hard and Pay Back Your Loans
Study Hard and Pay Back Your Loans | Source

Eight Requirements For Qualification

  1. Complete the FAFSA form - Before anything else, students are required to complete the Free Application for Federal Student Aid application for the appropriate academic year. The form is required for each semester of classes.
  2. Must be a US citizen or eligible non-citizen - If you have yet achieved full citizenship status, you will not be eligible for any government backed loans. Additionally, if you're in the U.S. on an F1 or F2 student visa, a J1 or J2 exchange visitor visa, or a G series visa you are not eligible for a Stafford loan.
  3. Must be enrolled in an institution of higher education - You must be enrolled and making satisfactory progress in some form of college or university, taking classes related to your field of study and seeking a degree.
  4. Must be at least a half-time student - You must be attending college and classified as at least a half-time student.
  5. Must NOT be in default of an education loan - Defaulting on a student loan, especially a Stafford loan, is the kiss of death for students. Not only will this adversely affect your credit status, it will continue to cause a ripple effect on your financial future. If you've defaulted on a student loan in the past, you've shown a tendency to be a risky and unreliable loan target, therefore you will be unable to be eligible for any government loans.
  6. Be registered with the Selective Services - Selective services is a system in the US used to draft people into the armed services. Once a young man turns 18, he is required by law to register with selective services.
  7. Have a valid Social Security Number - Social security numbers (SSN) acts as proof of US citizenship and is required when applying for a Stafford loan.
  8. Have a financial need - Although not technically a requirement, the Stafford loan program is designed to assist those who have a financial need and whom otherwise could not afford to attend college without financial assistance.

A Stafford Loan Can Put Cash In Your Hands

Bouquet of Cash
Bouquet of Cash | Source

The Door of Opportunity is Open.

As outlined above, the requirements for a Stafford loan opens the doors for millions of students across the country to get the financial boost they need to attend college. The federal government actually wants today's youth to have a successful and prosperous career in the field of their choosing, and they make that possible with their loan programs for Stafford loans!

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2019 Jason Nicolosi

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