What types of Stafford Loans are available?
There are two types of Stafford Loans or Direct Stafford Loans.
1. Direct Subsidized Loans: These loans are only available for undergraduate students with financial needs. The Department of Education pays the interest while: (a) you are in school at least half the time; (b) you are in a grace period (first 6 months after graduation), and you are on hold (you have chosen to defer your loan payments). For this reason, it is in your interest to issue a “subsidized” loan, if you qualify, before taking out another loan.
2. Unsubsidized Direct Loans: These loans are available to undergraduate, graduate, and professional students, and there is no need to demonstrate financial need. Unlike a “subsidized” loan, you have to pay interest on the unsubsidized loan even while you are in school, in a grace period, or in deferment. Since interest is accrued, you will have to pay interest if you can afford it during the period. If you can’t, the accrued interest will be added to your principal and you’ll have a larger overall amount to pay back.
While the Department of Education is the lender, these loans are serviced by nine lending organizations/companies tasked with helping the government manage the collection and other services for your loans, such as FedLoan Services. You can have more than one service provider if you have multiple federal student loans.
2. Are you eligible for Stafford Loans?
To qualify for a “ subsidized ” loan, you must meet ALL of the following requirements :
First, you must demonstrate financial need, which will be assessed based on the data you provide in the Free Application for Federal Student Aid (FAFSA).
Second, you must be a US citizen or US citizen, OR fall into one of the following categories of eligible non-citizens who have:
- green cards;
- A Form I-94, “Arrival-Departure Records,” showing “Refugees,” “Asylum Granted,” “Cuban-Haitian Participants,” “Conditional Participants” (valid if issued before April 1, 1980), or “Parolee”;
- A battered immigrant status, Or the child of someone with battered immigrant status; or
- A T-Visa (for victims of human trafficking).
Third, you must have a valid Social Security Number, unless you are a United States Free Pacific citizen (the Marshall Islands, Federal State of Micronesia, and the Republic of Palau).
Fourth, you must be registered with Selective Services, if you are a male between the ages of 18 and 25.
Fifth, you must be enrolled in an eligible degree/certificate program m. Check with your school’s financial aid department to confirm eligibility.
Sixth, you must be registered at least half the time.
Seventh, you must make Satisfactory Academic Progress (SAP ) by maintaining a certain grade point average (GPA), taking a minimum number of credit hours per semester, and staying on track to complete your degree within an acceptable time period. SAP standards vary from school to school, so talk to your school’s financial aid office to see what you’re expecting.
Eighth, you must certify with the FAFSA that (1) you are not in default on a federal student loan and do not owe money on a federal student grant, and (2) you will use federal student aid for educational purposes only.
Ninth, you must have a high school diploma, GED, approved homeschool education, or eligible career path program. Talk to your school’s financial aid office to find out if your school offers an eligible career path program.
Requirements for “ unsubsidized ” The loan is the same, except that you don’t have to show financial need. “
Once you receive a Direct Stafford Loan, be sure to maintain your eligibility for as long as you need the loan. If you lose your eligibility, you can take steps to get it back.
3. How do you apply for a Direct Stafford Loan?
To apply for either of the two Stafford Loans, you must fill out the FAFSA form. The FAFSA, which is free to fill out and submit, is used by current and prospective colleges to determine student eligibility for various forms of financial aid.
Filling out the FAFSA can be a lengthy process requiring financial and other information, so be sure to start early and sign in as soon as possible. The open date each year is October 1, so you have plenty of time to fill it in before the federal deadline of June 30.
States and even schools also have their own deadlines for FAFSA submissions, so it’s best to check with your school’s administration to make sure you get your forms on time.
You must complete the FAFSA annually if you wish to remain eligible for a Direct Stafford Loan, so be sure to stay abreast of any changes in the form and adhere to deadlines.