Stafford College Student Loans
The US Department of Education administers the Federal Family Education Loan (FFEL) Program as well as the William D. Ford Federal Direct Loan (Direct Student Loan) Program. Both the FFEL and Direct College Student Loan programs consist of what are usually known as Stafford College Student Loans and PLUS College Student Loans (for parents).
All schools do participate in either the FFEL or the Direct College Student Loan program but can sometimes participate in both. Under the Direct Student Loan Program, the funds for the student loan will come directly from the federal government. Funds for the FFEL will come from a bank or other financial institution that participates in the program. You can always research your options by using the internet. Eligibility rules and college student loan amounts are identical under both programs, but repayment plans do differ somewhat.
In order to apply for a Stafford college student loan, you do have to first complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is used to apply for all kinds of federal college student aid offered and serves as your application for the Stafford college student loan program as well.
If your school is a Direct Student Loan school, your school will provide all the necessary instructions for you to obtain your Stafford college student loan. If your school is a FFEL School, you will have to choose a lender for your college student loan. However, your school will also have a list of preferred lenders you are able to use. Use the internet to help you compare your options so you can find the lender and college student loan program that is right for you. As stated, your school may present to you a list of lenders from which to choose your college student loan. However, you are free to choose any lender that does participate in the FFEL. There preferred lender list is simply provided to you as a convenience because hundreds of lenders do offer Stafford college student loans.
It is most important to research your options. While the terms and rates are set by the federal government, lenders will offer an array of incentives that can reduce the cost of borrowing.
Once you have chosen the right lender for you, you will then have to sign a promissory note. The promissory note is your legally binding agreement that you promise to repay your college student loan. Your school will also conduct an entrance interview that you must complete in order to receive your college student loan proceeds. The entrance interview should be conducted in person or online and is an informational session to ensure you do understand your rights and responsibilities connected with borrowing a federal college student loan.
Your school should determine your eligibility for either a Subsidized and or an Unsubsidized Stafford college student loan. Subsidized simply means the government pays the interest on your student loan while you are in school. Unsubsidized just means you are responsible for either making interest only payments on your student loan while you are in school or deferring the interest (allowing the interest to be added to your student loan principal) while you are in school.
