The most popular loan for higher education is the Federal Stafford Loan, a loan available to undergraduate and graduate students. The amount that may be borrowed each year is capped at levels well below the cost of most colleges. Loans made before July 1, 2006 are variable-rate, with the interest rate adjusted on July 1 each year based on the 90-day T-bill rate plus a margin of 1.7 percent or 2.3 percent depending on repayment status. Stafford Loans first disbursed on or after July 1, 2006 are subject to a 6.8 percent fixed rate of interest. A student demonstrating financial need may have the interest waived for a period of time (subsidized Stafford Loan). Unsubsidized Stafford Loans are available to students regardless of need.

A Stafford Loan has the following characteristics Stafford Loans may be either subsidized or unsubsidized

A PLUS Loan is a loan made to a parent of a dependent student. A creditworthy parent may borrow up to the full cost of undergraduate schooling, less any Stafford Loans or other federal financial aid received by the student. Beginning July 1, 2006, PLUS Loans are also available to graduate or professional students who reach their Stafford Loan limits. The federal government provides for two types of PLUS Loans, those made directly by the government, and those that are made by institutional lenders but guaranteed by the federal government. The Direct PLUS Loan is made under a program called FDSLP. A PLUS Loan made by an institutional lender is made under a program called FFELP.

Perkins Loans are loans made by a school to students demonstrating exceptional financial need. Loan funds are provided by the federal government to participating schools. The interest rate is fixed at 5%. Some schools do not participate in the Perkins Loan program, while other schools that do participate may not receive sufficient funds to satisfy the needs of every eligible student.

A current or prior student with outstanding student loans may choose to refinance those with loans with a Consolidation Loan. The primary benefit of a Consolidation Loan is that it combines existing variable-rate loans into one fixed-rate loan. By locking in a low interest rate now, you may be able to save substantial interest if student loan rates climb in the future. The interest rate on a Federal Consolidation Loan is based on the weighted-average interest rate on loans being consolidated, rounded to the next highest one-eighth percent, not to exceed 8.25%. You will also extend the repayment period, thus lowering your monthly loan payment.

The eligibility requirements for participation in student aid programs administered by the U.S. Department of Education are spelled out HERE.

No. Federal student loan programs are designed for half-to-full-time students with demonstrated financial need as well as for those without need. However, the Stafford Loan program requires that the Free Application for Federal Student Aid (FAFSA) be filed even when you are not counting on a need-based subsidy. For information on filing the FAFSA. Subsidized Stafford Loans and Perkins loans are available only to students who demonstrate financial aid through the FAFSA process. Unsubsidized Stafford Loans, PLUS Loans, and private education loans may be sought regardless of financial need.

If you meet certain requirements, you can deduct up to $2,500 of student loan interest in in a year-even if you don't itemize. The loan doesn't have to be a federal student loan, but it can't be a loan from a relative, or from a related entity (such as a corporation you control), or from your 401k account. It has to be a debt incurred to pay qualified higher education expenses for you, your spouse, or someone who was your dependent at the time you took out the loan. Qualified education expenses include tuition, fees, books, equipment, and other necessary expenses, such as transportation, for a student attending at least half-time and enrolled in a program leading to a degree, certificate, or similar credential. Qualified expenses are reduced to the extent that you take advantage of certain other education tax benefits. You can't claim the deduction if you're a dependent, or if you're married filing separately.

Student Loans Covering Off-Campus Housing Yes, you can use your student loans for anything you want related to college. Grants have to be used for tuition or books, but loans can be used for anything. I used mine to pay off credit cards I had used to pay for school the previous year.

Stafford loans Schools generally participate in one of these Stafford Loan programs: The Federal Family Education Loan (FFEL) Program The William D. Ford Federal Direct Loan Program. Under the Direct Loan Program, the funds come directly from the federal government. Funds for your FFEL will come from a bank, credit union, or other lender that participates in the program. The terms and conditions of both lending programs are similar. The amounts you may borrow are the same whether you get a Direct Stafford Loan or a FFEL Stafford. The major differences between the two programs are the source of the funds and certain repayment provisions. For either type of Stafford Loan, you must fill out a Federal Student Aid Application (FAFSA). After your FAFSA is processed, your school will review the results and will inform you about your Stafford Loan eligibility. You will also have to sign a promissory note. If you have financial need remaining after your EFC, the amount of any Federal Pell Grant funds you are eligible for, and aid from other sources are subtracted from your cost of attendance, you can borrow a FFEL or Direct Loan to cover some or all of that remaining need. If you are eligible, the government will pay the interest on your Stafford Loan while you're in school, for the first six months after you leave school, and when you qualify to have your payments deferred. This type of lending is subsidized. If you are eligible for a subsidized loan, the government will pay interest while you're in school, for the first six months after you leave school, and when you qualify to have your payments deferred.