Stafford Loans: What You May or May Not Have Known About This Popular Student Financial Aid Option
Many people assume that if they make too much money (or their parents do), they won’t qualify for financial aid help. However, only filling out the FAFSA form will tell you and your parents for sure if you are indeed not qualified. One financial option is the subsidized and subsidized Stafford Loans. There are at least seven features that make them popular to students but before you sign on the dotted line for that help, you need to learn what stipulations come with it.
You already know that loans are imperfect and that all of them must be paid back. However, if you’re looking for a close to perfect loan, then you need to check out Stafford Loans. These loans are the most common student loans available and nearly everyone will qualify for it in their financial student aid package. Their features make it the biggest reason why they are so popular.
Here are seven big features of the Stafford Loan:
- Easy qualifications
- Little interest
- Both undergrads and grads qualify
- Credit check not needed
- Grace period of six-months after graduation
- Interest paid by government on subsidized loans (so long as student is attending school)
- Student gets higher yearly limits every year
A Look At The Stafford Loan: What It Is and How Does It Help Students
When you look at Stafford Loans, what you’ll see are loans that are government guaranteed either through the Federal Direct Student Loan program or with a lender who partakes in the Federal Family Education Loan Program (or FFELP). These loans were created so any American student could receive some kind of financial, low-cost aid.
Two Kinds Of Stafford Loans: Subsidized Stafford and Unsubsidized Stafford Loans
Subsidized Stafford Loan – This loan is based on the monetary need of the student. You, while in school and during the six-month grace period, will not have to pay the interest on the loan; the government will pay the interest. However, after that six-month time period is over, you will need to repay your loan according the terms.
Unsubsidized Stafford Loan – This loan is not based on need and is awarded more often. It’s not uncommon for students to carry both kinds of Stafford Loans. If you have this kind of loan, you’ll be responsible for any accrued interest from the moment you receive the loan. Of course, you can defer these payments until your graduation. These also have a six-month window before you must start paying them back. Once this time period is over, you must start paying them back.
The Interest Rates and Fees Found On The Stafford Loan
Any Stafford Loans that began before June 30, 2006 are subjected to a variable interest rate, which adjusts yearly and is capped to no more than 8.25 percent. However, any type of Stafford Loan that began after this date (July 1) has a fixed 6.8 percent rate. In 2012, the fixed rate will reduce to 3.4 percent on the Stafford Loans.
Are You Qualified For A Stafford Loan
Remember that you won’t know if you qualify if you don’t try for it. Regardless of whether or not you believe you qualify, fill out the FAFSA form; you may be surprised by what you get.
You may be eligible for Stafford Loans if you meet the basic requirements. They are:
- Must complete the FAFSA form
- Be US citizen (or permanent resident)
- Be enrolled in school half-time or more
- Meet income requirements for Stafford Loans
How To Apply For A Stafford Loan
The first thing you must do when you want a Stafford loan is to complete the FAFSA form. If you qualify, you’ll be notified by mail. Now bear in mind that you can apply for the unsubsidized Stafford Loan money above the monies you receive from the subsidized loan.
The second thing you need to do is sign the Master Promissory Note. This note will tell you all the details of the Stafford Loan such as the repayment terms and your responsibilities.
How To Repay Your Stafford Loans
With both the subsidized and unsubsidized loans, you get a six-month grace period before you need to start paying back the loans. During your grace period, you’ll learn more about the repayment schedule and payment amount and be reminded of all the terms.
If you notice you’re having problems with paying your loans, immediately apply for the federal consolidation loan.
Remember that Stafford Loans are, by far, the most affordable student loans a person can get from their FAFSA application. So it’s in your best interest to get that form filled out quickly and completely.
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