Stafford, who had been in declining health, was surrounded by family at a Rutland nursing home when he died at 9:30 a.m., said Neal Houston, his former chief of staff.
Stafford served two years as governor, 11 years in the U.S. House of Representatives and 17 in the Senate before retiring in early 1989.
As ranking Republican on the Senate's environment committee, Stafford repeatedly defended the U.S. government's Superfund program to clean up contaminated sites and shepherded bills combating acid rain and automobile pollution.
In 1988, Congress renamed the Federal Guaranteed Student Loan program the Robert T. Stafford Student Loan program. The low-interest loans are now known almost universally as Stafford loans to the millions who qualify for them each year.
According to the federal Education Department, about 14 million Stafford loans were given to postsecondary students in 2006.
"From the higher education finance program that now bears his name or his advocacy for clean air and water, Americans will continue to benefit greatly from his legacy of success," Gov. Jim Douglas said in ordering flags flown at half-staff.
Retiring Sen. James Jeffords, the independent who took over Stafford's seat in 1989, said Stafford was always willing to offer support.
"Whenever I had a problem when I got into Congress and all, I'd go to him for counsel," Jeffords said.
Sen. Patrick Leahy, a Vermont Democrat, described Stafford as a mentor who touched the lives of millions through his leadership. "And he gave the nation a lifelong lesson in civility and decency, in the finest tradition of his beloved Vermont," Leahy said in a news release.
Stafford, who once considered himself conservative, even hawkish, wasn't shy about bucking presidents of his own party. He led a successful effort to override former President Ronald Reagan's veto of amendments that strengthened the Clean Water Act, and tangled with industry when he believed it was thwarting efforts to clean the environment.
"If you ever want a piece of paper saying you are a certified (S.O.B.), come to me,"' an auto industry executive once told him, according to a 1989 story in The Boston Globe.
Born Aug. 8, 1913, Stafford got a bachelor's degree from Middlebury College in 1935 and a law degree from Boston University in 1938. In his official biography, he listed degrees from the University of Vermont, St. Michael's College and Norwich University, the last one coming in 1970.
Stafford served in the Navy during World War II and for two years in Korea.
Upon his return, Stafford landed a job as a state deputy attorney general and in 1954 won his first statewide race, for attorney general. "I enjoyed that job," he said. "I thought I would stay there four years and then go back to Rutland."
He was persuaded by then-Lt. Gov. Consuelo Bailey to run for lieutenant governor two years later. He held that office for two years, then won the 1958 election for governor.
Two years later he won his first term in Congress, where he stayed until he was appointed to the Senate in 1971. He remained there until his retirement.
Stafford stayed mostly out of the public eye after that, though he pleaded for civility in the 2000 election campaign, the year the state passed civil unions, giving the benefits and responsibilities of marriage to same-sex couples.
"It occurs to me that even if a same-sex couple unites in love, what harm does that do anybody or any society?" Stafford said days before the election.
Stafford is survived by his wife, Helen, and their four daughters. Houston said a private family service was being arranged. A larger public memorial would be held in January, he said.