Stafford Loan

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DEFINITION of 'Stafford Loan'

Federal, fixed-rate student loans available to college and university undergraduate and graduate students who are attending college at least half-time. Stafford loans are intended to supplement existing personal and family resources available for higher education costs, including scholarships, grants and work-study. Stafford loans can be used to pay for the costs of education, including tuition, room and board, books, and other education-related expenses.

BREAKING DOWN 'Stafford Loan'

A Stafford subsidized loan is a federally-guaranteed loan that is based on financial need. The maximum amounts that may be subsidized are $3,500 per year for freshmen, $4,500 per year for sophomores, $5,500 per year for juniors, and $5,500 per year for senior or fifth-year students. Students must first be accepted to a college or university and complete the Free Application for Federal Student Aid (FAFSA) prior to applying for the Stafford student loan.

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RELATED FAQS
  1. Can my IRA be used for college tuition?

    You can use your IRA to pay for college tuition even before you reach retirement age. In fact, your retirement savings can ... Read Full Answer >>
  2. What are the long-term effects of delinquent accounts?

    Delinquency occurs when borrowers fail to make payments on their loans. All loan borrowers should do their best to avoid ... Read Full Answer >>
  3. What are the differences between delinquency and default?

    Delinquency and default are loan terms that describe failure to make a required payment. A loan in delinquency occurs the ... Read Full Answer >>
  4. When capitalizing interest, will interest accrue while you are in a deferment?

    When capitalizing interest, interest accrues while a person is in a deferment of his loan. In the event of a deferment, the ... Read Full Answer >>
  5. Why is more interest paid over the life of a loan when it is capitalized?

    More interest is paid over the life of a loan when that interest is capitalized because the capitalized interest is added ... Read Full Answer >>
  6. What is the difference between compounding interest and simple interest?

    Interest is the cost of borrowing money, where the borrower pays a fee to the owner for using the owner's money. The interest ... Read Full Answer >>

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