A Stafford loan is a government-issued student loan to those studying at least part-time at an accredited college or university, whether for undergraduate, graduate or professional studies. These loans are issued to eligible students. They do not have to be paid back until the person either quits or graduates from their higher education programs.

How it Works

Those seeking a Stafford Loan must fill out a Free Application for Federal Student Aid (FAFSA) and submit information about their income. Once their financial and educational information is analyzed, the applicants will find out if they are eligible for Stafford loans.

Borrowing Limits

Stafford loans do have borrowing limits. The limits depend on the year of education and whether the student is financially independent or still dependent on his parents. The borrowing limits range from $5,500 to $20,500 per academic school year.

Interest Rates

The interest rates on Stafford loans were once about 3 percent, but they have risen to around 6 percent as of 2009. Subsidized loans do not accrue interest while the borrower is in school; unsubsidized loans do accrue interest.

Subsidized vs. Unsubsidized

Subsidized Stafford loans are offered to students in the greatest financial need. Unsubsidized Stafford loans are available to a larger variety of students, including those whose parents earn a rather high income.

Lifetime Loan Limits

A person can borrow up to $57,500 in his lifetime for undergraduate study, while graduate students have a lifetime loan limit of $138,500. Those studying to be doctors are permitted to have up to $224,000 in Stafford loans.