college

Stafford loan

Financial laws and their namesakes
Stafford loan

Stafford loan

A Stafford loan is a financial aid option for college students.

The low-cost federal loan program was created as part of the Higher Education Act of 1965, which itself was part of President Lyndon B. Johnson's Great Society domestic initiative.

The college loan program was renamed in 1988 after Robert T. Stafford, a former U.S. Senator who represented Vermont. The Republican lawmaker's colleagues respected Stafford's work on higher education reform and so named the loan after him.

Stafford loans are available in both subsidized and unsubsidized versions.

Loans through the Federal Family Education Loan Program, or FFEL Program, were provided by private lenders, such as banks and credit unions, but were backed by the U.S. government.

Loans through the Federal Direct Loan Program are provided directly by the U.S. government to students and their parents. Currently all federal student loans are administered through the direct lending program.

The loan rate is fixed for the life of the loan until it is repaid. Recipients might be able to deduct some of the loan's interest on their tax return.


 

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