Are Stafford Loans Need Based?

Q: Is Stafford Loan eligibility based on financial need? Do you have to be really poor to get a Stafford Loan?

A: No. You do not need to demonstrate financial need to qualify for a Federal Stafford Loan. Every one who needs a student loan should apply for a Stafford Loan.

However, if you do demonstrate financial need, then you may qualify for additional Stafford Loan funds in the form of Subsidized Stafford Loans.

There are two types of Stafford Loans: Subsidized and Unsubsidized.

You must have financial need to receive a Subsidized Stafford Loan because the government subsidizes the interest that accrues prior to repayment. The U.S. Department of Education will pay (subsidize) the interest that accrues on Subsidized Stafford Loans during in-school, grace and deferment periods.

Financial need is not a requirement to obtain an Unsubsidized Stafford Loan. Unsubsidized Stafford Loans, you are responsible for all of the interest that accrues on your loan, both before and after repayment begins.

Depending on your level of need, you may qualify to receive both Subsidized and Unsubsidized Stafford Loans. Your level of need will be determined when you complete the FAFSA form at

These loans are made through one of two U.S. Department of Education programs: FFEL or Direct Loans, depending on which program your school participates in.

Student loan money must first be used to pay for your tuition, fees and room and board. If loan funds remain, you will receive them by check or in cash, unless you give the school written permission to hold the funds until later in the enrollment period.

Student loans are borrowed money that must be repaid, with interest, just like car loans and mortgages.

Student loans cannot be canceled because you did not get - or did not like - the education you paid for with the loans, did not get a job in your field of study or because you are having financial difficulty.

Loans are legal obligations, so think about the amount you will have to repay before you take out a loan.

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