Stafford loans are perhaps the most popular type of loan with the student community; they are an integral part of a student’s financial planning to go through college. There are basically two types of Stafford loans – subsidized and unsubsidized. Both loans offer fixed interest rates, the main difference in repayment of each loan type is that with subsidized loans you are not responsible for paying the interest accrued while with the unsubsidized loans you have to bear the cost of the interest from the time you receive the full loan amount.

Here is a lowdown on what you can expect from the two loan types:
The eligibility requirements for both loan types are the same; basically you should be a U.S citizen or an eligible non-U.S citizen with a valid social security number. You should maintain good grades and not have any repayment on a federal grant.

The advantages of a Subsidized Federal Stafford Loan are:
• You do not have to worry about loan repayment and any accruing interest so long as you are in school half-time.
• You can continue to maintain the subsidized status by staying enrolled in an educational program. There should be no changes to your family’s Expected Family Contribution (EFC).
• Your payment period begins six months after you are no longer a half-time student.

The disadvantages of a Subsidized Federal Stafford Loan are:
• There is an upper limit to the combined amount of subsidized and unsubsidized loans that you can borrow.
• This loan type is not the most flexible one around in terms of eligibility. The amount you can borrow depends upon your grades.
• Origination and insurance fees are deducted automatically.

The advantages of an Unsubsidized Federal Stafford Loan are:
• You can defer payments till after you graduate.
• Unsubsidized loans are an important funds avenue for those that do not qualify for the subsidized loans.
• Since financial condition is not a criteria, your academic performance is a factor which is plus for meritorious students.

The disadvantages of an Unsubsidized Federal Stafford Loan are:
• There is more competition for these loans as everyone is eligible.
• You have to pay the interest that accrues during the deferment period.
• Loan fees are deducted automatically at the time the loan is disbursed.