Stafford Loans are federal loans that are funded by the United States government. In order to qualify for these loans, students must be attending an accredited school, at least half time. Also, the student must not be in default with any other education loan, and must demonstrate financial need. The first step to attaining a Stafford Loan is to fill out the Federal Application for Federal Student Aid, or the FAFSA. This document will provide the government with financial information about your family to help determine how much financial need your family has. If you are a declared "independent" student, your process is somewhat different than a student who is still dependent on his or her family for financial support. Basically, an independent student will qualify for more Stafford Loan funds, after they fill out their own, individual FAFSA.
A loan that is funded by the Stafford Loan program has a fixed interest rate. Also, if the loan is subsidized, then the federal government pays the interest that is accrued on the loan, until the student completes his or her studies. An unsubsidized loan, however, accrues interest from the time of disbursement, and although the student can opt to not pay this interest until graduation, the interest does continue to build.
Repayment of Stafford Loans can be fitted to suit most borrowers' needs. Approved Stafford Loan lenders will offer several payment options, including graduated repayment, income sensitive repayment, extended repayment, and emergency forbearance. All of these options provide flexibility for borrowers who find that their other financial obligations make it difficult to keep up with standard repayment of a Stafford Loan by spreading out the principal balance of the loan over time. However, keep in mind that by extending the payment term, you will end up paying more money in interest.
Undergraduate, dependent students may borrow up to $23,000 in Stafford Loans; independent students may borrow up to $46,000. There is also a Stafford Loan program for graduate students, and these students may borrow upwards of $100,000 for graduate study. It is important to keep in mind that just because Stafford Loan money may be offered to you as part of your financial aid package, you need to borrow only as much funds as you will absolutely need for college, in order to avoid exorbitant student loan payments after graduation.