- Subsidized Stafford Loans -
The Subsidized Stafford Loan is available for both undergraduate and graduate
study. The U. S. Federal government pays the loan interest while your
child is in school at least half-time. Your child is responsible for
the interest during loan repayment. This need based loan is calculated
from the information provided during the application process, along with school
costs and other financial aid. The Stafford Loan is not a credit-based loan -
it is a need-based loan and your eligibility for it is governed by your FAFSA submission,
not your credit report.
For a Subsidized Stafford Loan, repayment of both interest and principal is deferred
until six months after a student graduates or leaves school.
- Unsubsidized Stafford Loans -
The Unsubsidized Stafford Loan is also available for graduate
and undergraduate study. Unlike the Subsidized Stafford Loan, with an
Unsubsidized Stafford Loan the student is responsible for the interest that is
accrued on the loan while they are in school. Interest may be paid
immediately or deferred until after graduation. Deferred interest is
added to the original balance of the loan.
This is not a needs based loan, so students may be eligible for an Unsubsidized
Stafford Loan even if they do not show a financial need for the loan. If
tuition is higher than the maximum limit allowed for a Subsidized Stafford Loan
then your child may also qualify for an additional Unsubsidized Stafford Loan.
For an Unsubsidized Stafford Loan, repayment begins when the loan is disbursed,
although the borrower may opt to postpone payments until leaving school; however,
interest begins to accrue immediately.
- Stafford Loan Interest Rates -
In school/in grace: 6.543%
During repayment: 7.143%
New Stafford Loans (disbursed after July 1, 2006) will be fixed at 6.8%.
The interest rate is capped at 8.25%.
Federal Stafford Loan borrowers are charged origination and insurance fees. These
combined fees cannot exceed 4% of the amount borrowed, and they are deducted from your
loan before you receive payment. If you don't make your loan payments on time,
you may also be charged collection costs and late fees. The normal repayment
term for a Stafford loan is 10 years. You may be able to extend repayment
by deferring or consolidating your loans.
For both loan types, fill out the:
"Free
Application for Federal Student Aid (FAFSA)"
Items covered in this section:
Stafford Federal Student Loans: Helping college students fund their college education!
Student Loans, College and University Student Financial Aid, Student Grants. There
are several different options available for students in terms of student loans; however, the
following are the Best Student Loan Options: Subsidized Stafford Loan, Unsubsidized
Stafford Loan, Federal Perkins Loan, Federal PLUS loan for parents, Direct PLUS loans,
Federal consolidation loan, Federal Nursing Loan, Federal Insured Student Loan,
Health Professions Student Loans, Private student loans.
A student loan is an unsecured loan made by lenders that receive government underwriting
assistance. Without this government assistance, student loans would not be
very practical. Lenders would find other more profitable arenas in which
to loan their money. Nobody would be able to get a low interest student loan –
without the help of a parent with a substantial financial history and reasonable
means. Like any government sponsored program, there are rules and regulations.
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