Ace:
No, Stafford loans are not based on income or credit. That's why the Stafford lending program is such an important part of the financial aid system, and why so many students rely on them.
To become eligible for a Stafford loan, all you need to do is complete the Free Application for Federal Student Aid, better known as the FAFSA. You will only be denied a Stafford loan if:
You are not a "regular" student (as opposed to conditionally enrolled)
You are not working on a degree or certification granted by your school
Your school is not a participant in the federal student aid program
You are not a US citizen, or eligible non-citizen
You are in default on a previous federal student aid loan
You owe an overpayment on previous federal student aid
You were convicted of certain drug offenses that occurred while you were receiving federal student aid.
If none of those things apply to you, you will automatically be offered an opportunity to borrow from the Stafford lending program. The catch is that the Stafford program has annual borrowing limits.
A financial aid dependent freshman can borrow a maximum of $5500 for the entire academic year. Sophomores can borrow $6500, and juniors and seniors can borrow up to $7500.
The Stafford loan has THE lowest interest rate of any educational loan (other than the Perkins, which is only offered to the neediest of financial aid applicants). You'll pay a 6.8% fixed rate for the entire life of the loan - and you'll have 10 years to repay. The repayment obligation does not begin until 6 months after you leave school.
The Stafford application asks no questions about your income, your debts or your credit history, and the loan is entirely in your name. There are no questions about your parents, and you will never be asked for a cosigner.
The government offers another lending program that complements the Stafford, the PLUS loan program, but that program is only available to the parents of undergraduates. If your parents are looking for a way to help you with the costs of school, they can borrow up to the full cost of your attendance with a PLUS loan. The PLUS program is different in that it IS a credit-and-income loan - your parents' application would be subjected to traditional lending analysis, to determine whether they qualify for the loan.
If the Stafford (and possibly the PLUS) is not going to solve your financial need, you have a significant problem. The only other type of loan is the so-called "private" or "alternative" loan - educational loans that are offered by banks outside of the government's programs. First of all, these loans are almost always far more expensive, with higher interest rates and higher fees, second of all, these loans are all credit-and-income loans, which are only approved for applicants who can satisfy the bank's conservative lending criteria, and finally, there are a small handful of banks that are still making this kind of loan at the present time. If you go to Chase or Citi or Wells Fargo, it is nearly 100% likely that you will be required to provide a cosigner if you are going to be approved for a "private" educational loan.
I hope this information helped you - good luck!
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