The Story on Stafford Loans: What Is It & Do I Want One?

The  Stafford Loan is the most popular student loan, and possibly the first loan you’ll have. For that reason, you might want to become acquainted with the seemingly invisible green that allows for most Americans to receive higher education.

Do I want a Stafford Loan?

Unless you privately have the funds to pay for college, you want a Stafford Loan. Stafford Loans are government loans with low interest rates. You don’t have to make payments on them until six months after you’ve left college and the payment plans are flexible.

Do I want subsidized or unsubsidized loans? 

You want to take subsidized loans first because the government pays the interest on those while you’re in school. You are required to pay all interest on unsubsidized loans.

How do I apply for a Stafford Loan?

By filling out a FAFSA online at, your college will create an “award package” that may include Stafford Loans as well as other loans and scholarships you may be eligible for. You do not have to take all that is awarded to you in your award package; however, you will be responsible for what you do take.

How much money will I get?

There are a variety of factors that determine how much money you will be eligible for, including whether you are a dependent or independent student, your parents’ or your income, the school you’ve applied to, the date you’ve submitted your FAFSA, the amount of student loans you’ve taken out previously, and many more. Your college will determine the amount you’ll receive. While there is a maximum amount of money you can borrow from student loans, certain health professionals such as those pursuing a medical degree, can borrow more.

What do I have to sign?

Before you take out a Stafford Loan, you will be required to sign an MPN- Master Promissory Note. This is essentially a contract that outlines your loan and the amount you’ll be required to pay back with interest. By signing this document, you’re agreeing to pay your student loans, even if you drop out of college, can’t find a job in your field, or were unsatisfied with the education you received.

How do I use the loan?

Your school will use the loan money to pay for your tuition, your dorm room, and your meal plan. You may also ask the school to use it to pay for your textbooks. After several weeks, usually the second or third week of classes, you will be refunded with any amount leftover to use for school supplies and other school-related costs.

When do I pay up?

You will be given a grace period (six months after leaving college) before you’re required to make any payments on a Stafford Loan. You won’t be surprised by this bill, as you will receive in the mail several notices counting down when your first payment will be due. If you’re unable to make payments, you may have the option to defer the loan temporarily (which will accumulate interest) or adjust your payment plan.

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