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Stafford and PLUS LoansStafford Loans - Subsidized or UnsubsidizedThe subsidized Federal Stafford Loan is based on financial need. The government pays the interest while you are in school.
The unsubsidized Federal Stafford Loan is not based on need but family income is a determining factor. You pay all the interest, although you can have payments deferred until after graduation.
- A Free Application for Federal Student Aid (FAFSA) is required.
- The Stafford loan is a simple interest loan (unlike credit cards, home equity loans and other loans which are based on compound interest.)
- Interest may be tax-deductible.
- You may prepay Stafford loans without penalty.
PLUS (Parental Loan for Undergraduate Students) LoansCreditworthy parents of dependent undergraduate students and
graduate/professional students can apply for this loan, which is not based on need.
- A Free Application for Federal Student Aid (FAFSA) is required.
- Simple interest loan.
- Interest may be tax-deductible.
- PLUS loan proceeds are disbursed directly to the school on the dates determined by the school.
Note: Before July 1, 2010, Stafford, PLUS, and Consolidation Loans were also made by private lenders under the Federal Family Education Loan (FFELSM) Program. As a result of recent legislation, no further loans will be made under the FFEL Program beginning July 1, 2010. All new Stafford, PLUS, and Consolidation Loans will come directly from the Department under the Direct Loan Program. Visit their website for complete details.
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