 Federal Stafford loans are the most common source of college loan funds. They are fixed-rate, low interest loans for undergraduate students attending accredited schools at least half time. Lending institutions, such as banks, savings and loan associations or credit unions make federal Stafford loans to college and career school students. The U.S. government proposes these loans through the Federal Family Education Loan Program.
The Stafford Loan has two variations:
- Federal Family Education Loan Program (FFELP) loans are given by private lenders, such as credit unions, savings & loan associations, banks. The federal government guarantees these loans against default.
- Federal Direct Student Loan Program (FDSLP) loans are given by the US government directly to students and their parents, they are administered by "Direct Lending Schools".
Advantages
The Stafford loan is an excellent choice for both undergraduate and graduate students. It has longer repayment terms and less severe credit requirements than alternative private loans. Other benefits of the Stafford loan:
• Low interest rates
• 6-month grace period when you leave school
• No required payments while you attend school at least half-time
• No prepayment penalty
• Co-signer or credit check is not required
• Subsidized interest payments for those who qualify
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