Stafford Loans

Going to school to college can be a hard thing to do. You have to worry about how you are going to pay for the classes, books and housing if you are going away for college. You can get students loans to help you finance you college degree.

Stafford loans are the most popular loans for students going to college. No payments are expected on the loan while the student is enrolled as a full- or half-time student. This is referred to as in-school deferment.

Deferment of repayment continues for six months after the student leaves school either by graduating, dropping below half-time enrollment, or withdrawing. Because the loans are guaranteed by the full faith of the US Government, they are offered at a lower interest rate than the borrower would otherwise be able to get for a private loan. On the other hand, there are strict eligibility requirements and borrowing limits on Stafford Loans. Students applying for a Stafford Loan must complete a FAFSA (Free Application for Federal Student Aid).

Stafford Loans are available to students directly from the United States Department of Education through the Federal Direct Student Loan Program. Stafford Loans are available in two forms subsidized and unsubsidized loans. Subsidized loans are offered to students based on demonstrated financial need. The interest on subsidized loans is paid by the federal government while the student is in school. For unsubsidized Stafford Loans, students are responsible for all of the interest that accrues while the student is enrolled in school.

Stafford loans that have been disbursed between 7/1/2009 and 6/30/2010 will have up to a 1.5% fee. This is made up of a 0.5% federal origination fee and a 1% federal default fee. Graduate Stafford Loans have a fixed interest rate of 6.8% through 2013. A Stafford Loan can be obtained through a variety of lenders, and one should give consideration to the repayment policies of each lender before choosing one. Financial aid representatives may advocate for the student choosing several lenders. As with all loans students should keep borrowing to a minimum.

Typically a student loan will have a lower interest rate than a personal loan. Always explore all of your financial options before making a decision. You should always consult a financial advisor!

There may be other options available to help you pay for college. Always consult your school’s financial advisor. They can help you with grants, loans, scholarships, etc.