Federal Stafford loans are the most common type of loan.

Important: Colleges choose to participate in one of two programs that provide Federal Stafford and PLUS loans for students. The two programs are similar, with the main difference being where the money is coming from. Your college will let you know the program it participates in and how to apply for a Federal loan. Here are the two programs:

• Federal Family Education Loan Program (FFELP) - Banks, credit unions, and savings banks make the loans.
• William D. Ford Federal Direct Loan Program (Direct) – The U.S. Department of Education lends the money to the student through the college.
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Iowa Student Loan works with banks, credit unions and savings banks to provide federal loans through the FFELP program. Through Iowa Student Loan and its participating lenders, borrowers can save hundreds of dollars through its Stafford Loan Borrower Benefits Program

Typically, your college will let you know the amount you are eligible to borrow and how to apply. Expect your Stafford loan to come in at least two disbursements. First-time borrowers may have to wait 30 days after the start of school to receive their loan funds. Generally, repayment of the loan begins six months after you graduate, leave school or when enrollment status drops to less than half time. For loans first made on or after July 1, 2006, the interest rate is fixed.

The two types of Stafford loans available:

• The Subsidized Stafford Loan is awarded based on financial need. The federal government pays the interest while you are in college.
• The Unsubsidized Stafford Loan is not based on financial need. You are responsible for the payment of the interest while you are attending college. You do, however, have the option of paying this interest during the in-school period or adding it to the principal amount of your loan. Paying interest while you are in college will save you money in the long run.