What Are Stafford Loans?

You may have heard of Stafford Loans, named in 1988 for Robert T. Stafford, a U.S. senator from Vermont, to honor of his work on higher education. While no Stafford Loans have been issued in the past 14 years, they were very popular: As of the second quarter of 2024, there was more than $890 billion of Stafford Loan debt outstanding, according to Federal Student Aid data.

This type of loan is still the most popular type of student loan the U.S.  Department of Education offers, though now they are referred to as federal Direct Subsidized and Unsubsidized Loans. You may still see the term “Stafford Loans” used by schools. Learn more about these loans in this guide.

Key facts

• Stafford Loans were originally issued under the Federal Family Education Loan (FFEL) program, which ended in 2010.
• Some colleges still informally use the term “Stafford Loans,” but today it refers to federal Direct Subsidized Loans and Direct Unsubsidized Loans. 
• Stafford Loans for students can help pay for college, and they have a host of benefits, like income-driven repayment plans and access to loan forgiveness. 

Types of Stafford Loans

Once the FFEL program was phased out, federal loans started being issued under the Direct Loan program. Though the original Stafford Loans are no longer disbursed, the name is still used informally by schools and the public. If you receive “Stafford Loans” as part of your financial aid package for college, they are actually one (or both) of these loans:

• Direct Subsidized Loans: These loans are exclusively available to undergraduate students who demonstrate financial need. The government subsidizes the interest on these loans during school, the six-month grace period after graduating and any other period of deferment.
• Direct Unsubsidized Loans: These are available to both undergraduate and graduate students. There aren’t any financial need requirements, but borrowers don’t receive an interest subsidy. 

Stafford Loans generally refer to these two types of loans. However, there’s another federal loan option available for graduate students and parents, called Direct PLUS Loans. PLUS loans don’t have any interest benefits, and they have higher interest rates than other types of federal loans. They also require a credit check, and you typically can’t qualify with adverse credit. On the plus side, they have higher loan limits than Direct Subsidized and Unsubsidized Loans.

Am I eligible for a Stafford Loan?

To qualify for a federal student loan, you must meet basic eligibility requirements:

• Be a U.S. citizen (or eligible noncitizen)
• Have a Social Security number
• Be enrolled/accepted for enrollment in an eligible program
• Maintain satisfactory academic progress in school 
• Have a high school diploma, GED or similar proof that you’re qualified to obtain a college education 
• Demonstrate financial need (for Direct Subsidized Loans)

In addition, when you fill out the Free Application for Federal Student Aid (FAFSA), you must agree to have your tax information transferred into the form, and you’ll need to sign a certification statement. 

Current interest rates 

Federal student loan interest rates are set by Congress annually. They’re fixed, meaning they stay the same for the life of your loan. Here’s an overview of current Stafford Loan rates for 2024-25:

What expenses do Stafford Loans cover? 

If you qualify for federal Direct Stafford Loans, the funds go toward your educational expenses, including:

• Tuition
• Fees
• Room and board
• Any other school charges 

The funds first go to your school to cover the items listed above. If there’s a remaining balance, the rest will be sent to you, and can go toward books and other education costs. 

Pros and cons of Stafford Loans

Federal Stafford Loans can be a great tool to pay for college expenses. These loans are easy to qualify for, come with fixed interest rates and are eligible for student loan forgiveness under some circumstances. 

However, there are downsides to consider. For example, there are loan limits in place, and graduate students don’t have the option to take out Direct Subsidized Loans. Here are the main pros and cons of Stafford Loans: 

Applying for Stafford Loans

To apply for Stafford Loans, you need to submit the Free Application for Federal Student Aid (FAFSA) by the deadline. Note that states and schools can have different deadlines. Your FAFSA has all of your pertinent information and gets reviewed by your chosen schools to determine your financial aid package, if you’re accepted. Your aid package can include grants, work-study and Stafford Loans. 

Alternatives to Stafford Loans 

Federal Stafford Loans can help students pay for college. But there are alternatives to consider as well. 

• Grants: You may qualify for grants if you demonstrate financial need and/or meet certain eligibility requirements. Grants are ideal because you don’t have to pay back the funds, which is why they’re often referred to as “gift aid.”
• Scholarships: There are many different types of scholarships available based on academic achievements, talent, identity, field of study and more. Scholarships also don’t need to be repaid.
• Private student loans: Financial institutions and private lenders offer private student loans. Generally, it’s best to max out your federal student loans before considering private loans. If you’ve applied for scholarships and grants and reached your federal loan limits, private student loans can bridge any financial gap. Unlike most federal loans, private lenders review your credit as part of the application process, and you'll likely need a cosigner to qualify. 

FAQ 

Are Stafford Loans eligible for forgiveness?

Stafford Loans from the Federal Family Education Loan (FFEL) program are not eligible for student loan forgiveness directly. However, these loans may become eligible for forgiveness through the Public Service Loan Forgiveness (PSLF) program or income-driven repayment (IDR) after consolidating with a Direct Consolidation Loan. 

Is taking out a Stafford Loan a good idea?

If you need assistance to pay for college, taking out a Stafford Loan (now known as a Direct Unsubsidized or Direct Subsidized Loan) from the federal government is a good option. These loans have fixed interest rates, multiple repayment options and opportunities for student loan forgiveness. 

How do I know if I have a Stafford Loan?

If you have subsidized or unsubsidized loans from the Direct Loan program or the Federal Family Education Loan (FFEL) program, you have Stafford Loans. To determine which of your loans are Direct or FFEL, log in to your StudentAid.gov account and review your loan breakdown and loan details to see if your loans start with “Direct” or “FFEL.” 

How do I tell if my student loan is a Direct Loan?

If your subsidized or unsubsidized loans were disbursed after July 1, 2010, they are from the Direct Loan program. You can also find out if you have a Direct Loan by logging in to your StudentAid.gov account and viewing your loan breakdown and details—you can tell if you have Direct Loans if the name of the loan starts with the word “Direct.”