<p>I agree with thumper1.
Take out the stafford loan this year.
Divide your planned savings for the 4 yrs of college. That should be your anticipated budget for each year. She can plan to take the stafford each year. In the meantime, there is always her earnings from a job and possible scholarship opportunities, that may negate borrowing for any particular year. By the time senior yr comes, you may not need to borrow and if there is anything left over, pay off whatever you can. I wouldnt wait til senior year, things happen, things change. Plan now!</p>