I’ve been asked a few times recently, including on comments on this blog, “what is the best loan to get?”

I think very few people would  disagree with me when I state that Stafford loans are the “best” kind of loan.  Why do I say this?

1. They are taken out in the student’s name
2. They are Federal Loans – backed by the government
3. Interest Rates are usually the best available (current fixed at 6.62 while in school, 7.22 percent in repayment)
4. There are 2 kinds of loans – subsidized and unsubsidized.  With subsidized loans, the Federal Government pays the interest while you are in school.  With unsubsidized, it accrues until you graduate.
5. Schools award these loans with your financial aid package – no credit checks are needed.  Plus, the school tells you how much you can borrow.

So what are the requirements for a Stafford Loan?

• You must have submitted a FAFSA.
• For Subsidized Stafford Loans, you must have financial need as determined by your school.
• You must be a U.S. citizen, permanent resident, or eligible non-citizen.
• You must be enrolled at least half-time.
• You must not be in default on any education loan or owe a refund on an education grant.