Federal Stafford Loans - No Collaterals, No Credit Checks
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by SHANI
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Most college students who are in need of financial aid get federal Stafford loans as one of their financial aid options.
What is a Federal Stafford Loan?
A federal Stafford loan is one of the most flexible financial aid options for college students. Federal Stafford loans actually refer to two loan programs, the Federal Family Direct Loan Program and the Federal Direct Loan Program. Most schools choose one program or the other in which to participate. The student will qualify for the loan based on their need as determined through the FAFSA application.Federal Family Education Loan
The Federal Family Education Loan Program, or FFEL, is one of the versions of the federal Stafford student loans. With FFEL loans, the student borrows the funds from a lending institution, and not directly from the federal government. You repay the loan to the institution that you borrow it from. The loan could be through participating credit unions, banks, savings and loan associations, or other lending institutions, that have chosen to participate in the student loan program.Federal Direct Student Loan
Federal direct student loans are borrowed directly from the federal government. The government funds the direct federal student loans through the US Department of Education. The student will pay the government back for the balance of their loan.Subsidized vs. Unsubsidized Stafford Loans
When choosing your federal Stafford loans, you have two options. You can have either federal subsidized Stafford loans, or unsubsidized Stafford loans. What you choose will depend on the results of your FAFSA. The amount of money that you are qualified to borrow based on the results of your FAFSA can be in the form of a subsidized loan. A subsidized loan is a loan where the federal government actually pays the interest the loan is earning while you are attending school, and for the first six months after you graduate.If, however, you do not qualify for subsidized loans, or if your subsidized loan amount is not sufficient to pay for your education, you can also apply for unsubsidized loans through the Stafford loan program. In this case, you are responsible to pay the interest the moment you start receiving the loan, and the federal government will not help with loan payments. In many situations, you can receive both subsidized and unsubsidized loans at the same time.
