Financial Aid College

Fill out the form below for your question on student loans and you will be contacted shortly by one of our qualified financial advisors.


How much do Federal Stafford Loans Contribute to College Financing?

We have investigated the range of college financing options available to you in previous articles. There are several different types of federal student loans and federal grants to help you pay for your further education. One of the largest contributors to the astronomical amount of student financial aid available is the federal Stafford loan. But just how much of a monetary contribution does this loan make to enabling students from all walks of life to take the course they have always dreamed of?

Before we look at the facts of just how important the federal Stafford loan is in financial terms, let's just summarize what a Stafford loan is and what types of this loan are available.

What is a Stafford Loan?

A federal Stafford loan is a loan awarded by the government to students to help them pay for college. The funds are either provided by the federal government themselves or by selected private lenders. As it is a loan it does have to be repaid but the interest rates are extremely favorable.

What types of Stafford loan are available?

This loan can either be awarded as part of you financial aid package as a subsidized loan or you can apply for an unsubsidized Stafford loan to cover any expenses that your financial aid award does not cover.

  • Subsidized federal Stafford loan

A subsidized federal Stafford loan is true to its name. If you receive a subsidized Stafford loan as part of your financial award, the government or college you wish to attend have deemed that you have financial need. In this instance the federal government will pay your interest payments whilst you are still attending your college or university and will subsidize the interest rates when you have finished your course to ensure that the interest accumulated remains low.

  • Unsubsidized federal Stafford loan

An unsubsidized federal Stafford loan has to be applied for and is not awarded. You will still find that the interest rates are far lower than that of an alternative student loan such as a private loan, but you will have to start to make repayments whilst you are in college.

How much does the federal Stafford loan contribute to college financing?

The raw facts enable us to determine just how crucially important the federal Stafford loan is to financing your college course.

  1. According to the College Board, the federal government awarded 81.5 billion dollars in grants and loans in the 2003-2004 academic year.
  2. Almost 70% of this was financial aid originated from the federal loan aid with the remainder being sourced from federal grants and work study programs. The federal Stafford loan was the largest type of loan awarded, accounting for over 48.4 billion dollars worth of federal financial aid.
  3. This equates to over 85% of all federal loans granted!

The facts speak for themselves really. The federal Stafford loan is crucially important but you must remember that if you do not submit your FAFSA you will have no opportunity whatsoever to be eligible for such a loan.