A Stafford loan refers to a loan product offered to students for enrolling in American institutions of higher education for providing financial aid for their education. The loans are provided under Title IV of the Higher Education Act of 1965 and are guaranteed by the U.S Department of Education either directly or via guarantee agencies.

Since the loans are guaranteed by the U.S government, the interest rates are relatively lower than the private loans. But the eligibility requirements and limitations are very strict on Stafford loans. The treatments for personal bankruptcy cases under these loans are also different.

Students applying for these loans should have completed Free Application for Federal Student Aid (also called as FAFSA ) . It refers to a form which must be filled by both students and at times, their parents to determine their eligibility for financial aid for education. Only if the student is found eligible , the loan will be granted strictly .

More Terms Explained here